Qantas CTO imagines the damage from a digital new entrant

Qantas is starting to hypothesize what the arrival of a well-funded “Netflix-style startup” could mean for its own business as well as the broader Australian aviation sector.

Group chief technology officer Rob James has authored a paper - to be published across six weeks - that considers what an airline disruptor might do - and, by association, how Qantas might be able to react in that situation.

James argues that the arrival of a visionary, outside player is not out of the question, given “the traditional barriers of entry such as high capitalisation costs are becoming diluted.”

While airline models had been shaken up by the emergence of low-cost carriers (LCCs) and a range of technologies, James said that these had not produced the kind of aggressive change seen in other industries or markets.

“The backbone of this industry is built on distribution, sales philosophies and processes that had their birth almost 60 years ago,” James said in the first part of the paper, which has since been taken offline.

“The introduction of digitisation has, for the most part, taken the archaic processes and digitised them rather than reinventing them.

“The small pockets of innovation that have occurred in aviation have predominantly been around removing the need to check-in during the travel experience, online travel aggregators simplifying the shopping experience for customers, introduction of nannies on flights, wi-fi capable connectivity, or aircraft with a greater range.

“Emerging innovations such as drones, electronic propulsion, hypersonic travel, autonomous flight and biometrics are also challenging the historical processes.

“However, these are incremental and are paving the way for a challenger brand to attempt to disrupt the whole industry like Uber did to the taxi industry … or how Tesla has challenged traditional distribution models.”

James said that the “entire automotive industry has been disrupted in less than five years” - a clear suggestion that the horizon for something similar to happen in Australian aviation could also be relatively quick.

James said that any new entrant would put the customer at the centre of their offering. This in and of itself wasn’t too dissimilar from what traditional airlines strived for, though he noted that existing players’ ambitions were often “obstructed by legacy and constraints of the existing model.”

He said a challenge for Qantas and other airlines, if faced by an aggressive new entrant, would be to “anticipate, simplify and automate” the customer experience.

“When buying a bus or train ticket, we purchase the ticket, walk onto the bus or train, and sit in our allocated seat,” he said.

“There is no concept of ‘checking in’ that you do have on a flight. This is a relic of the past that has remained due to business models like ‘overbooking’ [where a flight is oversold].”

James suggested in a LinkedIn post that the paper would form an evidentiary basis for technology trials or changes to Qantas’ processes.

Though Qantas has recently discussed mid-term plans - including a cloud usage expansion through 2021 and its ongoing ‘Project Sunrise’, which aims for non-stop flights between Sydney and London - James’ paper provides a much longer outlook on where Qantas thinks it might play in the future, and the role technology might have in achieving that.