Uberization of Air Travel

Technology

Which is the largest taxi company and hotel company in the world? The obvious and immediate answer would be ‘Uber’ and ‘Airbnb’ respectively. But let us rethink. Neither Uber nor Airbnb holds any asset i.e. taxis and hotels respectively. They are only the enablers and media. Today, tech companies can sell anything, anywhere and anytime.

Likewise, the aviation industry is set to disrupt in the next couple of years. ‘Annual Meeting of the New Champions’ (AMNC) is the World Economic Forum’s annual global gathering on science, technology and innovation where leaders from companies, media, academia, government and civil society discuss the future of business and society. At AMNC 2017 conducted in China, B. G. Shrinivas endorsed the same view. He recommended ‘uberization’ of air travel’ and pushed the idea of smaller (but many) city airports to reduce congestion. Shrinivas is the former Managing Director of Infosys and presently working as Executive Director at PCCW.

wings — Photo Courtesy: Shruti Shirhatti

Thoughts in the Air

Airlines and passengers might transact via an app-based platform like Uber. This would change the entire airline business. Currently, a transaction takes place through online travel agents (OTAs) like Make My Trip or Expedia. If such a system becomes real, we would get rid of these OTAs. It would also reduce the cost to a greater extent. The benefits would be numerous if the same system worked for cargo planes!

Would It Take Off?

Before imagining such a flight, let us clear smoke in the air. If the frequencies of taxi and air travel are compared, you would realize that unlike taxis, air travel is not so common for any person. It could be sometimes once in a quarter or once in a year. Another pinching fact is the cost. Lower or middle class would prefer railways than airways. Apart from such inherent restrictions, we might face problems with infrastructure and fuel cost. Every city does not have an airport and it is not feasible to build airports in each city. Also, with the current ratio of airports to planes or airlines to planes, the system might not be profitable to both airlines and airports. This would require constructing more airports and increasing competition in the sector. If more players are involved and more airports are built, the demand for aviation fuel would increase which might be burdensome for the national exchequer and affect the airlines’ profitability. These are some valid hindrances affecting the take-off of such a new system.

Industry’s Permission

The industry might be reluctant to take such a bold step. The aviation sector is highly oligopolistic in every country. A market in which there are few sellers and a large number of buyers is called an oligopolistic market. Due to less competition, such industry operates at higher prices. If such a move is taken, the airlines would lose their dominance and lobbies. Also, OTAs and their sub-agents would lose their jobs. These are some more reasons why airlines and allied industries would not favour such a system.

Some Other Concepts

There are two notable concepts buzzing in the aviation industry viz. Winding Tree and Poppi.

“Winding Tree connects suppliers (hotels, airlines, etc.) and travel agencies to a single marketplace. Suppliers will be able to put information about their availability and price onto the database, where it would be easily discoverable by agents. Agents then have the ability to buy that inventory and pay for it instantly. All these interactions are designed to be performed without human intervention. “

In this concept, the Winding Tree would be the middleman between the airlines and agents.

Poppi is an extremely attractive concept. It is not a plane or company. It targets the consumer experience in the entire journey. Following are some of its features:

Reducing cabin luggage: Smaller compartments above the seats and a special bag that can be clicked under the seat. This would reduce rush inside the flight.
RFID and NFC bag tags: Without using thermal papers, passengers would be given NFC tags to notify its location and make the luggage ready to pick up in-hand on-arrival.
Valuable middle seat: Every one avoids middle seat. But Poppi would crave you to get it by giving extra facilities.
Seat trading: An app-based trading platform to swap the seats.
Better rewards for loyalists: Most loyalty points end up giving extra miles, which are scarcely used by anyone. It proposes to give tangible incentives than miles; like one given in Starbucks or Amazon Prime.
Using technology to avoid queues and haste at the airports.
Well-designed merchandise and a new style of categorisation of class.

Future

App-based bookings, online web check-ins and entertainment on board are the only visible gifts of technology at the moment. There is tremendous potential in making this journey happier and more interesting. It will be amusing to see how aviation industry takes these suggestions.

India is the ninth largest civil aviation market in the world but one of the least penetrated markets accounting for 0.04 trips per capita per annum. (China – 0.3 and USA – more than 2). Considering the potential of the market, aviation industry in India is set to disrupt in the coming years. Meanwhile, the Indian government has launched UDAN (Ude Desh Ka Aam Nagrik ) scheme in January 2017 aiming at affordable air travel and regional connectivity. The scheme offers subsidized fares for 50% of the total seats. The scheme proposed smaller planes, construction of smaller airports at many places, rejuvenating inoperative airports and inviting more private players. In this year’s budget, the finance minister announced a new initiative – NABH Nirman, to expand the airport capacity more than five times to handle a billion trips a year. Could you find some resemblance between the government’s strategy and the abovementioned points (smaller but many airports, problem of high airfares, infrastructure requirement, etc.)? Is it a ground clearance by Indian government before taking off for such a huge disruption? Let us wait and watch…

If uberization is succeeded, in the near future you might land from “Uber Air”, board “Uber’s Self-Driven Taxi” from the airport, have pizza on the go (thanks to “Uber Eats”), enter the hotel booked through “Airbnb” and go to sleep ordering “Siri” to wake you up. Welcome to the Future!

– Swapnil Karkare

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