Travel / Hospitality

How big data helps airline profitability

The advent of big data technologies is impacting companies in all industries. But in the $743 billion global airline industry, big data analytics is increasingly the difference between successful airlines and those who struggle to prosper in an increasingly competitive field.
The airline industry expects to make a profit of nearly $20 billion in 2014, up about 50 percent from 2013 profits, according to figures released last month by the International Air Transport Association (IATA). That is an astounding turnaround from 10 years ago, when nearly half of the biggest U.S. airlines were in bankruptcy, and the industry was losing about $10 billion per year.
To be sure, there are many reasons for the improvements to the airline industry. Big mergers have reduced the number of airlines, and the remaining airlines have taken planes out of service, thereby boosting demand for the lower number of remaining seats. Fuel prices have eased somewhat since peaking in 2008. And the Great Recession has thwarted wage growth for workers, which is another big cost for airlines.
But there’s something else going on in the airline industry, and some call it big data. The most technologically progressive airlines have figured out how to use emerging data analytics technologies to boost sales and improve razor-thin profit margins. With profits hovering around $6 per passenger and projected to drop this year, airlines are under the gun to do anything to improve the situation.

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