How Would the Airline Industry Use Business Intelligence?

Airlines · 8 min read · Nov 14, 2022
how would the airline industry use business intelligence?

Rapidly developing technologies are making major changes to the ways companies in the airline industry communicate and understand customer behavior, make strategic decisions, and develop workflows. Moreover, customer satisfaction is at the top of the priority list for the airline industry as well as safety for the whole aviation industry.

Therefore, collecting and analyzing customer data is essential for airlines to achieve their objectives. And here is where Business Intelligence or BI tools play a vital role.

BI applications are used in a variety of industries, but perhaps nowhere is BI more important than in the airline industry.

Why is that? Well, probably because the airline industry is an extremely data-driven business. Decisions about everything from pricing to flight schedules to route maps are all based on data. And BI applications are the perfect tool for sifting through all of that data to find the nuggets of information that can give an airline a competitive advantage.

In this article we will take a closer look at how would the airline industry use business intelligence and explore some specific examples of how it can be used to improve operational efficiency and boost profits within the aviation industry. So, if you want to learn more about it, you are invited to keep reading.

Business intelligence charts in the aviation industry.

What is business intelligence (BI)?

Generally speaking, business intelligence is a broad category of computer software applications that perform statistical analysis of complex data sets to reveal trends, patterns, and relationships.

According to “Business intelligence (BI) leverages software and services to transform data into actionable insights that inform an organization’s strategic and tactical business decisions.

BI tools access and analyze data sets and present analytical findings in reports, summaries, dashboards, graphs, charts, and maps to provide users with detailed intelligence about the state of the business.”

This is why many industries, including the airline industry and the commercial aviation industry, use business intelligence to process data. This takes us to the next point.

Business intelligence information presented in charts for the aviation industry.

How does the airline industry use business intelligence?

Business intelligence tools are being used by airlines to track passenger behavior and preferences in order to improve customer service quality. By using customer behavioral data and customer feedback, the airline industry is able to understand what type of customer is buying what type of ticket, airlines can tailor their marketing and sales strategies to appeal to specific passenger types. They can also adjust ticket pricing fairly well to match the competition.

For example, an airline might use business intelligence to target business travelers with special deals on corporate rates. In other words, business intelligence can help airlines keep track of their marketing efforts.

BI tools can help airlines track customer satisfaction levels, brand awareness, and market share. This information can be used to refine marketing strategies and better target customers as well as offer carefully tailored services.

Another way that business intelligence can help airlines is by helping them stay on top of their operations. BI tools can help airlines streamline operations by tracking flight schedules, arrival and departure times, aircraft utilization, and maintenance records. This information can be used to improve on-time performance, reduce delays, and minimize cancellations.

In short, airlines are using business intelligence to make better decisions about flight routes and schedules. Data analysis on flight patterns and passenger destination preferences, helps airlines can optimize their routes and make sure they are offering the services that their customers want.

Business intelligence is also being used by airlines to improve airport operations. By tracking things like baggage claim wait times and security checkpoint wait times, airlines can identify areas where they need to make improvements in order to make the travel experience more enjoyable for their passengers.

Another way the airline industry uses BI is to monitor finances. BI tools can help airlines manage their revenue, expenses, and profit margins. This information can be used to make informed decisions about where to cut costs and where to invest additional resources.

Let’s see now some of these applications in more detail.

Business intelligence charts on revenue management in the aviation industry.

The main applications of BI and data science in the airline industry

Revenue management

Airlines have long used BI tools for revenue management, and for good reason—the right BI solution can help an airline optimize its pricing strategy to maximize revenue in an industry that is known for having thin profit margins.

By analyzing data on historic flight bookings, weather patterns, competitor pricing, and more, airlines can make informed decisions on pricing that will result in more tickets sold at higher prices. American Airlines, for instance, has used IBM’s SPSS software to develop a yield management system that has helped the company save millions of dollars.

In addition to pricing optimization, revenue management systems can also be used to forecasts trends and set inventory levels. This helps airlines avoid excessive overbooking (which can lead to dissatisfied customers and negative publicity) or underbooking (which means leaving money on the table).

Revenue management representation: Euro notes folded into an arrow going up.

Crew management

Business intelligence is used for crew management in airlines in order to optimize the use of resources. By analyzing data on past flights, airlines can identify patterns in crew usage and make adjustments accordingly.

For example, if it is found that a certain type of flight tends to require more crew members than average, then the airline can plan for that by assigning more crew members to those flights. BI applications can also help airlines determine the most efficient crew assignments for each flight, based on the individual crew members’ skills and strengths.

Cabin crew serving customers onboard an aircraft.

Operational Efficiency

Airlines are complex operations with a lot of moving parts, so it is no surprise that BI tools are also being used to improve operational efficiency. For example, United Airlines uses IBM’s Cognos platform to track aircraft maintenance issues in real time.

This helps the airline quickly identify and resolve potential problems before they cause delays or cancellations. Delta Airlines has also used Cognos for similar purposes, as well as for identifying new routes and assessing the feasibility of launching new services.

Business intelligence charts with a calculator and a pen on the side.

Flight schedule management to reduce cancellations

Airlines use business intelligence for flight schedule management to reduce cancellations. Airlines use BI to predict how many passengers will fly on a particular route on a given day and make the necessary adjustments to their flight schedules.

BI applications also help airlines identify potential delays and cancellations before they happen and take corrective action. By using BI, airlines can minimize the number of flight cancellations and ensure that their passengers have a smooth travel experience.

A flight schedule on a screen at an airport.

Demand forecasting

Demand forecasting is the process of trying to predict how many passengers will fly on a given route at a given time of year. It’s a complex task because it requires taking into account factors like economic conditions, seasonal fluctuations, holidays, local events, etc.

But it’s an incredibly important task because if an airline can accurately forecast demand, they can optimize their flight schedule and ensure that they have enough capacity to meet customer demand without flying empty seats.

Customer satisfaction

In today’s competitive landscape within the aviation industry, providing excellent customer service is more important than ever before. Fortunately, BI tools can help airlines deliver a superior customer experience by collecting and analyzing data on customer preferences and behavior.

This information can then be used to make targeted offers and recommendations (such as offering a passenger an upgrade to first class based on their booking history or travel preferences). Virgin Atlantic has used BI successfully for many years to create personalized customer experiences—a major reason why the airline has such a loyal following.

Customer satisfaction survey for business intelligence in the aviation industry.

Air safety and airplane maintenance

As we said, air safety is at the top of the priorities for the aviation industry. And airplane maintenance is at the core of safety. Thus, airlines use business intelligence for air safety by analyzing flight incident data in order to identify patterns and potential risk factors.

They also use BI to monitor weather conditions, air traffic control information, and other factors that could impact safety within the aviation industry.

Airlines also use BI for airplane maintenance by analyzing data on the performance of different parts and systems on different aircraft models. This helps them to identify potential problems and determine when it is necessary to perform maintenance or repairs.

Some airlines using BI to improve operations

Let’s take a look at a few specific examples of how business intelligence is being used by some airlines:

United Airlines

United Airlines is one of the largest airlines in the world, and it relies heavily on business intelligence to improve operations. BI applications allow United to analyze data from a variety of sources, including passenger reservations, air travel patterns, and social media.

This data is used to identify trends and patterns that can help United improve its service and make better decisions about route planning, pricing, and marketing.

BI applications have also been used by United to improve its customer service operations. For example, United has used customer feedback data to create a “customer sentiment” score that helps it identify areas where it needs to make improvements.

United Airlines aircraft maneuvering in flight.

Delta Airlines

Delta Airlines is a major U.S. airline and is the world’s largest airline in terms of scheduled passengers carried per year. Delta uses business intelligence to improve operations by analyzing data collected from passenger surveys, reservation systems, and social media platforms. This data is used to identify trends and improve customer service.

Also, Delta Air Lines uses machine learning algorithms to automatically rebook passengers onto alternative flights when their original flights are delayed or canceled due to bad weather.

Delta airlines aircraft taxiing.

British Airways

British Airways is the flag carrier airline of the United Kingdom and one of the largest airlines in Europe. British Airways uses business intelligence to improve operations by analyzing data collected from its passenger reservation system and loyalty programs. This data is used to identify trends in customer behavior and preferences.

A British airways aircraft on tarmac.

Southwest Airlines

Southwest Airlines is a major American low-cost carrier that operates a point-to-point network with no hubs or spokes. Southwest Airlines uses business intelligence to improve operations by analyzing data collected from its passenger reservation system and social media platforms. This data is used to identify trends in customer behavior and preferences.

Southwest airline fleet parked by an airport terminal.

Main advantages of using business intelligence in the airline industry

The main advantages of using business intelligence in the airline industry are:

  • Make more informed decisions about pricing and seat availability
  • Identify which routes are most/least profitable
  • Pinpoint areas where costs can be reduced
  • Spot customer trends and preferences
  • Better understand why passengers choose one airline over another

What is business analytics and what is the difference with business analytics?

First of all, business analytics mainly refers to a subcategory of data analytics that is focused on the business side of any industrial operations. Moreover, business intelligence describes the current state of the business by utilizing data collection in real-time or data collected in the past.

On the other hand, business analytics is focused on predicting what is going to happen and prescribing what should be done to get better results based on data analytics.

Another clear difference that can be taken from the previous point is that business intelligence offers clear information for managers to make informed decisions whereas business analytics requires data science professionals to interpret the information before it can be used, especially when big data technology is being applied.

Some final thoughts

To wrap things up, we could say that the airline industry would be able to use business intelligence in order to improve their customer service, as well as their overall performance.

BI would help them to identify trends and patterns in customer behavior, as well as understand what their customers want and need. This would allow the airline industry to provide a better experience for their customers, as well as improve their KPIs and goals.

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Jet pilot @NASA

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