Innovation the Airline Industry Is a Service

Innovation

The airline industry is a service industry, but one where several firms have been able to innovate their service offering. Such innovations have been to create viable low-cost carriers (RyanAir, EasyJet, Air Asia) while other innovations have led to the creation of high-service airlines (Emirates, Qatar, Singapore). In either case the process of innovation has been roughly the same for all of these companies. The first component of the map is searching. All of these companies searched for niches that were either not being served at all (such as price-focused customers in Europe and Asia) or were not being served effectively (passengers traveling on routes between Europe and Asia).

Of the six airlines mentioned above, only Singapore is a legacy carrier. The others have entered their markets in the few couple of decades, and brought with them a number of critical service innovations. After identifying a core market whose needs were not being met, these airlines acquired the knowledge resources of how to run an airline. Experienced airline executives were brought in to these firms with the objective of applying their knowledge of the industry to the problems that had been identified as the premise of the new company.

The next step was problem solving. This is the most complicated part of the innovation process. Suppliers are a critical partner in the innovation process so they are introduced at this stage of the innovation. In particular aircraft suppliers need to work with the airlines to meet their needs. For budget carriers, their business model requires leased aircraft, typically all of the same type. The premium carriers typically own their aircraft, and they often want them designed to proprietary seat configurations. The newest aircraft possible are desired for these carriers. There is a similar two-way dialogue with other suppliers as well, such as airports and food suppliers, in order to ensure that the structure of the service offering is going to fill the identified niche effectively.

The final step is to implement the innovation. Initially, the implementation came in the form of a new airline launch, with the infrastructure supporting its chosen strategy fully in place, imagined fresh with each element as a solution to one of the identified problems. Feedback from the customers creates a cycle element for some individual innovations, but in an organization that has continuous innovation, feedback is part of the environmental scanning process that represents the start of all innovation processes.

Once the airline has launched, the innovation process becomes continuous. Both high-service and low-cost airlines succeed by being the best at what they do. This means that they must have a process of continuous innovation (Phong, 2011). The continuous innovation process is used by discount airlines to keep their costs down, and by premium airlines to ensure that they have high levels of service. As a result of these efforts, the path to innovation is imagined more as multiple parallel tracks. The same process is undertaken for each, but an operating airline might be conducting constant environmental scans to kickstart each innovation process anew, while other innovations are at different stages along the innovation pathway.