New industry brief shows how airlines can minimize hard and soft costs of disruptions and improve revenue
SAN FRANCISCO, Nov. 27, 2017 /PRNewswire/ -- Switchfly, a travel commerce platform for direct channel booking and ancillary merchandising, has released an industry brief detailing the financial impact of "irregular operations" (IROP) on the airline industry. The brief, "Disrupting Travel Disruptions: Airline IROP Management," examines how airlines can minimize the hard and soft costs associated with IROP, improve revenue and increase passenger satisfaction during stressful travel periods.
Irregular operations – flights cancelled for non-weather reasons – leave millions of passengers stranded each year and in need of re-accommodation. IROP disruptions cost US airlines billions of dollars in lost revenue and billions more in lost demand as passengers avoid air travel.
Hard and Soft Costs of IROP Disruptions
Switchfly's "Disrupting Travel Disruptions: Airline IROP Management" industry brief puts bottom-line figures on IROP disruptions, while also discussing the soft costs such as ruined trips, social media backlash and brand damage. Figures Switchfly identified that have a negative impact on airlines include:
- One in three cancelled flights in the US were due to IROP in the first quarter of 2017, with over 3 million passengers in need of immediate re-accommodation
- On average, an airline's cost of rebooking all passengers from a cancelled flight in the US, including transportation costs, has been estimated at $250 USD per passenger and $4,000 USD per crew
- For international routes, the cost of re-accommodating passengers on a single flight can reach tens of thousands of dollars
- Each year, irregular operations (IROP) cost US airlines at least $8.3 Billion USD and even more in passengers' time lost at an estimated $16.7 Billion USD.
"There's a common misconception in the airline industry that in order to address complex issues like irregular operations, you must sacrifice margins," said Justin Steele, Vice President of Product Development at Switchfly. "The reality is that it's possible for airlines to transform IROP disruptions from a financial and logistical liability into an opportunity for customer – and employee – satisfaction, while building stronger brand loyalty and ancillary revenue."
Transforming IROP from Liability to Opportunity
The "Disrupting Travel Disruptions: Airline IROP Management" brief also looks at how airlines are struggling to overcome legacy technology and modernize business processes such as re-accommodation. IROP cancellations require overnight accommodations and re-booking for thousands of stranded passengers. This has always been (and still is) a laborious, manual and offline process that leaves desk agents frantically searching for answers, and passengers waiting in long lines to speak with an agent or on hold with a call center. Paper vouchers for hotels are still common in the airline industry, despite the availability of other technological options, like mobile devices.
The brief demonstrates that too often, airlines are scrambling to respond to an unexpected disruption when they should already have a streamlined, effective solution in place. Switchfly urges airlines to take action, concluding that "Now is the time for airlines to make direct, immediate improvements to the IROP process and invest in passenger-centric technology that will transform a logistical, financial and travel nightmare into a distant memory for the airline industry."
A copy of the "Disrupting Travel Disruptions: Airline IROP Management" industry brief can be downloaded here. For more information about Switchfly and the company's Airline IROP Management solution, or to interview Justin Steele, vice president of product development, contact Vanessa Horwell at firstname.lastname@example.org or visit switchfly.com.
Switchfly, Inc., is a travel ecommerce platform with the most robust global network of hotel, car, air, activity and insurance products for transforming travel experiences into maximum loyalty & revenue. Headquartered in San Francisco, Switchfly generates more than $2 billion in revenue for its clients annually and facilitates the redemption of more than 40 billion reward points and miles each year. The company's global client roster includes American Airlines, JetBlue and LAN Airlines; IAG Avios, Lufthansa Miles & More and United MileagePlus; InterContinental Hotels Group, Marriott International and Starwood Hotels and Resorts; and Groupon and Living Social. For more information, visit www.switchfly.com.