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Transcript:

Keith Kirkpatrick: Hello everyone. I’m Keith Kirkpatrick, Research Director with The Futurum Group, and I’d like to welcome you to Enterprising Insights. It’s our weekly podcast that explores the latest developments in the enterprise software market and the technologies that underpin these platforms, applications and tools. This week I’d like to discuss how enterprise software can be leveraged to balance product demand against CX using the current challenges in the airline carry-on baggage space. And as always, I’ll close out the show with our rant or rave segment where I’ll pick one item in the enterprise software market and I will either champion it or criticize it.

So the genesis of this week’s podcast, it really is around an article that I read last week from The Atlantic. The title of the article was The Carry-On-Baggage Bubble Is About to Pop. It was written by a writer named Ian Bogost, I hope I’m saying his name properly. At any rate, I read that article and as someone who travels quite a bit for work I felt like I needed to add in my two cents on LinkedIn. And not surprisingly, I did put in my thoughts and I got a ton of responses. So let me set the scene a little bit and I promise you we’re going to get to how this relates to enterprise applications.

So the gist of the article was that as anyone knows who flies even semi-regularly, when you get onto an airplane there’s always a backup trying to get onto that plane because you have people who are carrying on their luggage and are struggling to put it in the overhead bins because either they’re, A, trying to put a bag that just won’t fit, or they’re trying to put in a bag while they’re doing something else, or they’re perhaps carrying more than one bag and trying to put that into the overhead. This is especially a problem on narrow body aircraft that only have the one center aisle. So if one person stops try to get a bag in and takes more than a couple of seconds, it starts a chain reaction of delays. And as we’ve seen here time and time again, these delays can do a number of things.

One thing, it’s a frustration for people who want to get out, who want to take off. It’s also a challenge and a frustration, I’m sure, for the attendant crew who they don’t really get paid, they don’t start getting paid until that cabin door is shut. And if they’re busy trying to help people stuff bags that are overstuffed in the overhead bin and then squeezing past other passengers, that’s a real point of frustration. It’s also a point of frustration for passengers who are already seated in the plane. They’re sitting there and someone is struggling with the bag, basically leaning over them, particularly if they’re in an aisle seat, trying to get that bag into the overhead bin. Or because so many people are bringing bags on the plane, you’ll have someone who’s walking up and down the aisles trying to find an empty space, sometimes it’s way behind where they’re seated.

So this is clearly an issue. And why are we even here? Well, we have to go back a few years ago when airlines decided that checking a bag is something that they could charge a fee for. So instead of just being able to as part of your ticket check of bag, you could check a bag, they would start to charge fees. And if I recall correctly, the fees were pretty modest when they began. I believe they were like 10 or 20 bucks or something like that, per bag. And as time went on, those fees kind of crept up.

Now, there are certainly exceptions to the rules. Southwest is one of them where they have always said you can check a bag as part of your ticket price. And that’s something that they’ve really gone to market with. And of course, if you have status with an airline you’re often allowed to check a bag for free. But, there’s really a couple of things going on here. One is, if you think about the current state of air travel today, particularly for business travelers, they want to get on that plane and off that plane and know that they have their bag with them because they don’t want to wait around at the luggage carousel. They don’t want the delays there. They don’t want to have a situation where if they have to pick up a connecting flight, they want to make sure that their bag is with them as opposed to being who knows where, even if you’re tracking it using an AirTag, if your bag is on a flight somewhere where you’re not going, that is a massive hassle and an inconvenience. Particularly for a business traveler who may only be going somewhere for a day or two and they need to have their back.

So I put this theory or this potential solution up on LinkedIn where I suggested that in an effort to make CX better, the customer experience better, for everyone involved, for all stakeholders, that airlines should consider imposing a fee on people who want to bring their bag on board. Now, why would I suggest yet another fee for the airlines who seem to be charging fees for everything? Well, there’s a couple of reasons. One is that right now, luggage fees are a huge money maker for airlines. I’m looking at some figures here from the Transportation Department.

In the first nine months of 2023, US airlines alone brought in more than 5.4 billion, and that’s billion with a B, in baggage fees. That’s up more than a quarter, basically up more than 25% from that same period, same nine month period in 2019. So it’s clearly a revenue generator for airlines who claim that they need this extra revenue to account for increasing pilot salaries, the cost of fuel, so on and so forth. That they’re claiming they need these extra fees in order to recoup some of these costs. Otherwise, they would have to just charge more per ticket. Now what I was proposing. Full disclaimer, I’m not an airline analyst or anything like that, I’m just a guy who flies a lot for work.

What my suggestion was is to try to take the fee structure and work closely tied it to the behavior of today’s currents passengers. So for example, if you have a flight that is going out to a business center like San Francisco during the weekday, you could probably assume, and we’ll get to going beyond assuming, that a large percent of the folks who are on that plane, particularly the ones that are going out super early in the morning, are there on business. They’re going to want to carry their baggage on board. Now, there are also going to be some people who are not going out for business and, well, they may be carrying it on board because they’re afraid that they are going to have too much time to wait at the baggage carousel or they’re afraid that their bags are going to get lost.

My suggestion is let’s take a look at these fee structure and incentivize people into different behaviors by either cutting the fees for the baggage. So you could say, instead of charging someone 30 bucks to charge a bag, drop it down to 10. And then of course you could then make up that other revenue by charging people who definitely want to be able to carry their bags on board because they may be business travelers who are okay with absorbing a little extra cost because they’re not paying for it directly, for the convenience. So the idea here is to take the fees and use them in a way to elicit certain behaviors.

Now, to just do that randomly, haphazardly makes zero sense, absolutely zero sense, because who knows if that’s even going to really address your problem. What you need to do, and this is where the software comes in. Thiis is where you need to take a look at passengers not in the aggregate but looking at them in a very granular way. Airlines capture a ton of information about travelers, particularly for those who are frequent flyers and even the ones who don’t have status but generally tend to book with that same airline over and over and over again. You have that information, you can see what their behavior patterns are.

When did they fly? Are they generally flying for business? And you can tell by where they’re flying and when they’re flying. Are they checking bags? Are they not checking bags? All of that type of stuff you can check to see even more granularly are they the type of people who check in 20 minutes before their flight leaves or 20 minutes before the flight boards, or are they there two hours before the plate leaves? All of that type of information is really useful to ascertain what is that particular customer’s priority, and you can see what are they willing to pay for versus what are they do they not care about? I think the real benefit to leveraging all of this information really only comes from a few different ways. One is you have to have software in place that can handle this, software that can actually capture all of this information and then make it available to anyone who needs it.

So obviously at first you need to have it when someone books and it could either be booking over the phone or it can be booking through some sort of an automated system. But you need to have that information available. You also need to have to have that information available for the gate agents. So if someone comes up and you can identify them, you can say Mr or Mrs so-and-so we see that you’re flying here, you’re with your family, and would you like to check your bag for free? Now, they do that already on flights where they expect that there is going to be a problem with an overcrowding issue. But by adding that personalized touch, you can create a CX win for that customer as well as the airline.

So if we look at today’s travel, you almost never find a flight where there is tons of space to stretch out. You almost always have a flight that is at capacity or is darn close to capacity. That’s why to maximize customer experience, it’s important to really think about how you can match the fee structure with what’s going on in the flight. If you think about when people board people who board first, they’re the ones with status. Those, you almost have to discount or keep them out of the equation because anyone who has status is going to expect to be able to do whatever they want because they fly so much with the airlines and they’re spending a lot of money.

But beyond that, you need to really take a look at, okay, you have folks who are boarding this airplane, you have people who are going to. The first ones generally you board from the back and you generally board from the outside in to make sure that people are able to find their seats and sit down basically before having someone else come down and squeezing them in. So it’s important to identify the customers that might be willing to forego having the bag with them because they’ll take up more space. So there it’s basically you need to go through and look at all their customer information to see what type of traveler they are, where are they going, what is the duration of their trip, if they are coming back on the same flight. And you might want to target them if they’re a leisure travel and say, hey, you can check your bag for 10 bucks instead of having to deal with all of this other fight for baggage space.

Similarly, if you know have a business traveler who is specifically sitting on the aisle seat, they’ve paid extra to move up to closer to the front of the plane because that usually means that they’re able to get off a little bit more quickly. Those folks you might be able to target and say, hey, we’re going to make sure that you have space on board for your bag if you pay an extra fee. And again, this is all based around the idea that airlines are never going to give up fees. I saw some of the comments on the LinkedIn post where everyone was complaining about fees saying that the airlines are greedy, they’re overcharging for everything. And you know what? They’re absolutely right. But there is no way they’re giving up those fees because for the airlines that have been charging them, they’ve already generated revenue streams, it’s almost impossible to remove them because they’re counting on that revenue now.

So again, to repeat and to bring this back to really the gist of everything is airlines have a ton of information they need to utilize the systems like CRM systems to really understand their customers, understand their behavior and identify opportunities where you can match the particular service that they want or feature that they want. And maybe for some of them it’s hey, if it’s a leisure traveler and they don’t really care that much, cut them a break on the fee to check a bag and maybe they will gravitate for that. Because particularly if you think of a family to check 3 or 4 bags at 30 bucks a bag, that’s a lot of money. If you cut that down to 30 bucks for all of their bags, that’s a real win and you won’t have to even think about it. It’s a no-brainer to do that for a family traveling on vacation.

Whereas for a business traveler who wants to be assured, absolutely assured that they are able to have space on board, they might pay an extra 10 or 15 bucks to be sure that there is space. And of course you’re going to need to use the software to plan out to see what space is available to account for contingencies. And obviously this is a process that requires a lot of coordination between the system itself as well as the folks who are on the ground to actually manage this process. And that’s where ultimately training comes in. This whole idea of making sure that everyone is aware of these policies, it can’t just be something that’s done haphazardly because that’s when you have a lot of issues.

This really comes back to if we think about customer experience and good customer experiences, it comes down to people, processes and technology working hand in hand. And look, this is not an easy problem to overcome. It is really difficult. And looking at all of the responses, and I appreciate everyone commenting on my LinkedIn post, there are a lot of different views on this in terms of what should be prioritized, what should not be. And I think that in itself is food for thought for the airlines in terms of trying to figure out a solution that would work in terms of adjusting fees or providing incentives, what have you. I think there are ways to approach this problem using data, using software to make sure that the customer experience for each customer is as good as it can be, where you’re prioritizing things that are important to those customers.

So with that, I will leave that discussion to continue on LinkedIn. If you’re interested, if you haven’t seen it, just look up my name. It’s the post that has thousands and thousands of impressions right now. You really can’t miss it on my profile. But why don’t we move on from there and let’s talk a little bit about my rant or rave for the week.

This week I’ve got a rave, and this is about an announcement that just came through in the last week or so from Oracle. Now Oracle just announced that it is offering a new enterprise communications platform. So what is this? Well, according to Oracle, this is a platform that’s going to bring real-time communications to its suite of industry cloud applications. So what does this mean? Well, it means that you’re going to have a communications backbone and infrastructure to allow voice, video, IOT connectivity, all integrated within the Oracle Cloud infrastructure.

Why is that important? Well, if you think of the way that organizations communicate today, it isn’t just through one channel and it isn’t for one modality. It isn’t just voice. There’s a lot of information that often needs to be communicated throughout an organization at any one time. It could be video, it could be voice, it could be text, all of the different types of communication. And having a platform that can integrate all that information and then make it available to the people who need that information is extremely important.

Now, why am I raving about this? Well, because Oracle, when they announced this, instead of just talking about saying, hey, we have these features, which is great, they actually talked about some of the real world vertically focused potential use cases. In particular, they talked about ECP’s role in the Oracle public safety suite. So what are we talking about there? Well, that’s about providing real time secure communications for critical use cases. So clearly police, fire, emergency dispatch, first aid squads, all of that kind of stuff. That’s really important and I think it shows the power of that platform in a real way.

We’re talking about being able to capture video from body cameras, security cameras. That’s where we’re talking about being able to capture video from a number of different sources. Body cameras, tablets, security cameras, capture voice communications from police or dispatch, fire. All of that is really important to make sure that people have the information they need to do their jobs in a critical situation. And this of course could be extended beyond.

This of course could be expanded beyond police, fire, emergency. If you think of other types of industries where you have a lot of different information that needs to be moved in between a number of different stakeholders. It might be text, it might be email, it might be video, might be audio, all of that. Having a reliable communications platform is really important and to have all that information connected so you can get that information from anywhere anyone using the platform is really important.

And it’s great to see Oracle talking about it from a solutions point of view and particularly a vertical solutions point of view, because that is where decisions are made. It’s about what is my problem and how can we solve it? And okay, here we have Oracle that is willing to make this technology available, but frame it in a way where it’s about solutions and coming to where the customer is and their needs as opposed to just saying, hey, we’ve built it and everyone will come. And then you figure out how you make this work within your organization. So for that, I give that an unqualified rave for the week.

So that’s all the time I have today. So I want to thank everyone for joining me here again on Enterprising Insights. I will be back again next week in another episode focused on the happenings within the enterprise application market. So thanks for tuning in and be sure to subscribe, rate and review this podcast on your preferred platform and we’ll see you next time.