What Makes Nordic Airlines Successful
Each airline is a masterpiece of planning and logistics. Yet some airlines managed to polish their processes even beyond. Nordic airlines gained high popularity due to their punctuality, passenger experience, operations efficiency. How did airlines in the Nordics reach that, what is the secret of their success? One of the factors is digitalization and readiness to innovations supported by reasonable risk appetite.
I’d like to bring up three airlines and the solutions that allowed them to stand out. These airlines are Finnair, Norwegian, and SAS. Why these three?
Finnair: Exceptional Passenger Experience and Satisfaction
Based in Helsinki, Finnair has no other option but to serve as a bridge between Europe and Far East Asia. This brings them into tough competition with Turkish Airlines, Singapore Airlines, and Gulf carriers.
Thus, Finnair must propose something exceptional to compete with airlines known for their one of the finest passenger experience in the world. And they choose digitalization and innovations to face this challenge.
The airline carries about 10 million passengers and ensures connection reliability close to 99%. To provide for this, Finnair invests in development of own software products and uses some of purchased solutions, attracts outsourced specialists and builds its own IT team. Just in 2017, the airline aimed to hire 70 new digital professionals, including developers, architects, analysts, UX/UI designers, and others.
In the area of passenger service and customer satisfaction, we can learn something from Finnair. It strikes all social networks and communication channels with its artificially intelligent chatbot, Finn, and an award-winning mobile app. The chatbot was launched on Finnair Facebook global account’s Messenger in September 2017. The mission of the chatbot is to help Finnair customers in Facebook during their Finnair journey. Finn is a self-learning solution and gets training from interactions with Finnair customers. For now, it provides information on arrivals and departures, can tell you if your flight is being delayed, sells tickets, and can redirect you to the Manage My Booking page or send a message to a customer service agent. The company plans to extend chatbot functionality with more languages (now it’s only English) and implement it in other social media platforms.
WeChat is another great example. In order to support its expansion in China, Finnair launched ticket sales via so popular in China social platform. The platform is really advanced and opens fresh opportunities, such as using WeChat Pay as a payment method. This allows completing the whole flights search and purchase process within the same platform directly through Finnair’s official WeChat account. And though China is a huge market – Finnair is the first European airline that entered Chinese ecommerce market with online flight bookings.
Finnair mobile app is another means of communicating with passengers in the manner that is convenient for them. The app has more than 100 thousand active users and is a winner of Reddot award 2016, EdAwards 2016 Silver, and Vuoden Huiput. It provides passengers with a capability to check-in, store travel documents, get information on connections, transfer airports, terminal maps, pay for extra luggage or meals. You may ask, why do we need an app? Looking at the far perspective, mobile app is one of the key elements in building comprehensive eco-system for the passengers to serve all their needs in travelling. It is a perfect way to engage customer into your environment. Serving as a unique and proper travel assistant it can drive passenger satisfaction up in the sky.
Thanks to increasing digital touchpoints with the customers, Finnair is able to obtain the most precious asset in our days – data. I need not to tell you how important data is for an airline. In the case of Finnair, analytics is applied to explore not only the market share and profitability of routes, but all direct and indirect destinations that may count thousands of possible flight destinations, understanding passengers’ preferences, predict passenger behavior, fares, and so on. Bringing all this data together creates enormous synergy for decision making. With all the pack of the planning and analysis solution in place, Finnair aims to double its revenue from Europe/Asia flights during this decade.
Norwegian: Operational Efficiency and Lowcost Long Haul Flights
The air transportation market has already seen attempts to launch lowcost long haul flights. When Norwegian announced about their plans to develop low cost international flights, many responded to this with skepticism questioning long-term sustainability of the fare model. However, several years since, Norwegian expands transatlantic routes covering 26 airports in contrast to 12 in the beginning of 2017.
The reason why Norwegian succeeded where others gave up is operational efficiency they’ve managed to achieve through different factors, including modern fleet and operational efficiency.
The airline has staked high investing into modernization of its fleet with Boeing 737-800s, Boeing 737-MAX and Boeing 787 Dreamliners. Now an average age of its fleet is 3.6 years, and it is one of the most modern and environmentally friendly in Europe. The use of modern fleet made Norwegian the most fuel-efficient airlines on transatlantic routes (40 pax-km/L), which means fuel savings enabling fare reductions.
Low-cost is all about efficiency and impeccability of the processes. Intense aircraft utilization, proper maintenance planning, crew rotation, aircraft handling with swift turnarounds are further factors to support low-cost carrier fare model. This may be achievable only with perfect software solutions handling all the operations.
They haven’t confined themselves to fleet and operations though. In the field of user experience, Norwegian did a great job with their remarkable website. No wonder it was recognized as World's Best Low-Cost Airline Website by World Travel Awards. Passenger experience is reinforced with the first ever Android powered in-flight entertainment (IFE) system. The IFE system includes an Android touchscreen, a USB port, and power outlet for charging gadgets. Passengers can see the interactive 3D map, watch video on demand, listen to music, shop duty free, order and purchase snacks.
All that requires enormous efforts and investments in technology. But at the end of the day, you become the Europe’s and World’s best low-cost airline according to Skytrax.
SAS: Efficient Planning and Cost Tracking
As a leader in air transportation and he biggest carrier in Nordic region, SAS builds its success using many components, including passenger experience, technological base, advanced logistics system, and, of course, swift planning and budgeting. Planning an airline budget for a new year requires considering an enormous number of factors. Thousands of prices, hundreds of different suppliers and cost types, including direct and indirect costs, millions of different input metrics, factors and parameters. Moreover, almost all of them need to be applied to each flight, then processed, transformed, calculated, somehow aggregated and distributed to several financial systems with tons of reports for approval. With obsolete systems, the process is lengthy, and becomes even lengthier, if repeated several times because some parameters must be adjusted or corrected.
SAS has transformed its planning systems to move to modern software technologies and improve the planning process. To reduce human errors, they’ve digitized data sources and replaced some of them with different types of software, like mobile apps or web applications. To further improve data quality, the airline has implemented automated data validation and auto-correction procedures with complex algorithms.
The resulting modern clustered high-performance systems boosted calculations 100 times and we are especially proud about that, because Sigma Software was involved in the development of these systems. In terms of passenger experience, the high-performance planning system transformed into more efficient routes, fewer delayed or canceled flights, faster and smarter decisions in case of disruptions.
The inner workings of an airline are just as important as other areas. After all, you need a solid basis to build a reliable and verifiable process: analyze current costs and compare them with budget, process and validate thousands of incoming invoices from external vendors, which are also prone to errors. To face this challenge, SAS established and developed an automated invoice control workflow for all invoices incoming from supplier’s internal systems or other platforms, like IATA SIS. The workflow is highly automated – some of examples include parsing invoices and matching them with SAS actual calculated costs, generating automated claims and sending them to vendors. The minimal human involvement at these tasks significantly reduces airline’s expenses, streamlines the procedures, and results in what we’ve started with – operations honed to perfection.
The airlines in this article - Finnair, Norwegian, and SAS – are the examples of how readiness to travel unbeaten paths and investments in IT solutions pay off. Their embracing of changes brought by IT technology is what made them successful, and IT keeps much more ideas and break-throughs. Let’s do them together!
My gratitude to Ilia Saveliev for sharing his expert knowledge and all the help in preparing this article.