Travel disruption cost airlines and passengers tens of billions

Travel commerce platform Switchfly becomes the latest travel technology company offering to help airlines solve costly Irregular Operations (IROP) incidents by making passenger re-accommodation faster and easier.

In a new Travel Disruptions: Airline IROP Management report, Switchfly estimates the cost of IROP to airlines as at least $8.3 billion and the cost to passengers in lost time at $16.7 billion.

Hard costs rolled into Switchfly’s IROP figures include diluted profit margins, costs of hotel and meal compensation for affected passengers, rescheduling staff and redirecting aircraft, paying overtime to staff, waste resulting from unused flight preparations, like stocking aircraft with perishable meals, and ultimately a loss in demand.

Switchfly also points out that airlines suffer “soft costs” like negative social media feedback, brand damage, customer complaints, staff stress.

The company states in its report:

“On average, an airline’s cost of rebooking all passengers from a cancelled fight in the US, including transportation costs, has been estimated at $250 per passenger and $4,000 per crew.

“For international routes, the cost of re-accommodating passengers on a single fight can reach tens of thousands of dollars.

“Rather than focus on complex operational challenges, airlines can focus on passengers and transforming IROP from an expensive liability into an opportunity to satisfy customers and earn their loyalty.”

To accomplish this, the company suggests immediately communicating with affected passengers to provide information that might reduce stress; re-accommodating passengers through mobile systems, including by letting them select nearby hotels on mobile apps; tailor re-accommodation options available to loyalty customers based on status; offer ancillaries which may improve customer satisfaction, like up-selling hotels; and keep passengers informed on mobile at all times.

Prioritizing IROP

Managing disruption by using mobile devices, to better communicate with customers and offer swift solutions, has become a common proposed strategy among technology providers.

There is consensus that mobile solutions are ideal because they avoid customers having to queue up at service desks and relieve the burden on staff at the airport, on social media, and at customer service call centers.

Amadeus published its own Managing IROPS report, based on a study conducted with IT consultancy T2RL. It valued the annual costs to the airline industry at $60 billion worldwide, based on 8% of revenues.

The Amadeus report warns that, with passenger numbers expected to rise to 7.3 billion by 2034, it is critical for airlines to act now to implement IROP-resolution systems.

Some airlines, such as Qantas and Swiss, are already implementing Amadeus technology such as systems to speed up recovery following an incident.

Travelport, meanwhile, has taken a different tack and unveiled its Resolve tool for passengers to book hotels in the event of disruption.

Ira Gershkoff, principal consultant, T2RL and the report’s author is optimistic that airlines will apply technology more effectively to manage IROP events:

“There is every reason to believe the historic challenge of re-routing planes, crew and passengers during disruption will finally be addressed over the next several years.

“After a period of limited investment, the will has once again returned across airline boardrooms, driven in large part by the need to deliver reliably on ancillary product sales.

“What’s important is that service providers across the entire industry are collaborating to mitigate the impact on the traveller.”

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Marisa Garcia

About the Writer :: Marisa Garcia

Marisa Garcia is a guest editorial contributor. She has covered travel technology, design, branding, and strategy for leading publications, including Aircraft Interiors International Magazine, APEX Magazine, AirlineTrends, and Travel+Leisure. She also shares industry insights on her site Flight Chic. Fly with her on Twitter.

 

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  1. Matt Zito

    Does Switchfly mention in the report if they are using their own technology and or tool to enable this or are they using a 3rd party tool? It wasn’t clear in the article.

     
 
 

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