Low-cost airlines bet on data to drive profit

Thu Aug 18, 2016 6:51am EDT
 
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By Conor Humphries

DUBLIN (Reuters) - Europe's low-cost airlines once mocked the air miles programs run by flag carriers as expensive relics of a bygone era. But after watching wide-eyed as customer databases were valued at billions of dollars, they are scrambling to catch up.

Europe's two largest low-cost carriers, Ryanair (RYA.I: Quote) and easyJet (EZJ.L: Quote) have both swallowed their pride in the past year and launched customer loyalty schemes and both have announced significant investments in data analytics.

Their aim is to ape retailers like Amazon.com and Tesco in driving profits by leveraging data from vast online customer bases to create highly personalized offers and adapt services to customer preferences more quickly.

"This has transformed retail and it's going to transform airlines," said Kenny Jacobs, a former Tesco executive spearheading Ryanair's digital drive as chief marketing officer.

He has overseen the hiring of 150 IT specialists since he was appointed two and a half years ago. "Airlines are not good at this. We're still crap compared to what retailers do."

easyJet chief executive Carolyn McCall, who last year appointed the company's first head of data science to oversee a team of 25 data analytics specialists, has described data as "incredibly important" for the airline.

A spokesman for easyJet described the potential benefits from digitization and data analytics as "exponential".

Both airlines have promised a detailed breakdown of their digital data drives and the financial returns in the autumn.   Continued...

 
Passengers wait for their flights at Lisbon's airport, Portugal June 24, 2016. REUTERS/Rafael Marchante/File Photo