Airline to try paperless boarding

Thomas, I wrote to about the trend of paperless "boarding passes" a few weeks ago. I also wrote about some other features that airlines are trying out and which travelers can expect in the future.

Delays, lost luggage, increased fares, mergers and bankruptcies. Yet the luggage trolleys keep on filling and the passengers a’ flying – for now. Passengers, of course, are anxious about what is coming their way next. One thing is for certain; higher prices are here to stay. In this economic climate, the challenges facing the airline industry that will impact consumers most are fixed costs – the absurd fuel prices, and evolution of technology in the booking and boarding processes, like the the system being tested out by BMI. Obviously, airlines are looking at everyone aspect of their operational model to reduce costs and improve efficiency. They have no other choice.

Here are some other developments and trends on the horizon;

Higher Fares
Despite recent mergers and merger rumors, legacy carriers are finding it impossible to squeeze more savings out of their supply chains, in order to maintain low prices that consumers are demanding. With flights at 90%+ capacity on many major routes (and, airport and air-traffic infrastructure stretched to the max, unable to increase supply), fare prices will continue to rise. $150-per-barrel oil is the culprit as the #1 cost for airlines. Indirect fare increases, like the $25 surcharge on additional bags levied by some US carriers, most recently by American Airlines, will also increase. In the past, when legacies faced a fixed-cost squeeze, they responded by increasing load factors on planes. But in this era of pre-maximized load and ancillary revenues, look for carriers selling leg room options or window vs. aisle options, for a fee. Nothing will be sacred – blankets, pillows and headphones will also come at a price.

Low Cost, Long Haul
On the flip side, low cost carriers will continue to flourish and expand. LCCs, in stark contrast to their legacy brethren, have managed to unbundle their services to offer one core product, and then a multitude of add-on services – and consumers don’t seem to mind. With their unique business model, and by utilizing bulk purchasing alliances to offset high fixed costs, these airlines are able to offer such low fares. Increasingly, they’ll be to offer low fares even on long haul flights, including transatlantic routes, like Zoom. Look out for more long-haul, low-cost flights in the near future.

E-tickets and Web Check-in
E-tickets are already widespread - the cost-saving to airlines is enormous - but watch out for airlines expanding their DIY services further. Streamlining the boarding process with web check-in and the growing number of airport kiosks helps to avoid departure delays – it’s green too. It also reduces paper usage, shaving additional costs to pass on. Also, look for loyalty programs being integrated into more online transactions as ecommerce takes a prominent on more airline websites. Innovative new programs, such as the Privilege Outlet platform (being launched in June '08), are in the works.

The Rise of Airline Websites
Until now, booking travel online has been dominated by third parties, like Orbitz and Travelocity. That’s because they offer multiple booking options, in addition to just flights. Savvy airlines, particularly the low-cost ones, are starting to include more (and unique) options into their own booking systems, as a way of generating new revenues. For consumers, its boon as the airline sites will become a ‘one-stop-shop’, eliminating the need to book hotels or car-hire from different sites. Some of these website will also include loyalty programs and other value-add initiatives, resulting in more opportunities for passengers to upgrade or purchase other services. A new online platform that’s about to launch in Europe with a number of low-cost carriers, called the Privilege Outlet platform, gives airlines a new way to decrease unredeemed miles and points, and turn these tangible goods and services. Plus offering lots of excellent deals to their customers.

Lifestyle Travel
Last year’s successful launch of FlyKandi, a unique joint venture between lifestyle brand Hed Kandi and low cost carrier Monarch Air, provided a viable blueprint for lifestyle travel. By furnishing a plane with Hed Kandi’s designer touches and flying routes to established European party destinations (Ibiza, Mallorca), Monarch’s FlyKandi has tapped into a potentially lucrative market of travel-savvy city escapees, and other LCCs in the EU and Asia are bound to follow suit.

Indeed, it seems that the sky is the limit as the airline business model continues to reinvent itself.