Sachin Goel is the Founder and Chief Executive Officer (CEO) of Optiontown, an innovative technology company that is bringing a paradigm change to the airline industry for the mutual benefit of passengers and airlines. He believes the industry has resilience and will bounce back, while only innovative entities will survive the impact of COVID-19, in this exclusive interview with Aviation & Allied Business Journal.
Leverage For Airlines, Passengers
The Airline industry has a fundamental problem; on one side you are spending millions and sometimes billions of dollars to buy aircraft, to build route network and yet, in the face of competitors, you have to fight for every dollar for every ticket you sell.
That is why now, using technology, we bring a new way of doing business in airlines, by offering personalized subscription services called Flight Pass that can allow airlines to get more loyalty, and also offer great benefit to passengers. You can buy 10, 20, 50 tickets or so in advance that you can consume over the next several months or years. It’s a smart pass for smart travellers – most convenient and economical way to fly.
The beauty is that as a passenger, you can decide to customize it the way you want, so you can fly to multiple destinations, and you can also add multiple passengers if you are a family, group of friends or small, medium, and large corporate business.
In Africa, there are huge numbers of small, medium and large businesses who would not only like to get access to lower fares but also fix the budget for their travels. So, Flight Pass gives them a fixed travel budget – and the pricing power is with the customer. For the same route, say between Addis and Nairobi, you could pay as little as $50 US dollars if you like or any price up to $200; this depends upon the level of flexibility you would like to choose. The price depends on the number of flights as well as the number of days before departure and other customization. For bookings which are 30 days in advance or exclude peak days, the price is much lower. The point is that it is transparent, and the choice is with the customer.
The second thing is that people spend a lot in Africa on finding deals and finding flights; but with Flight Pass all of that flight search is reduced. Once you have bought a pass it takes less than 60 seconds to book a flight because the price and every other thing is fixed. You just book whatever flight is available, and you can go.
So, African passengers can save up to 95% of their flight search time; thus saving 40-100 hours of productive time per year per traveler. So, it’s truly a win-win for passengers and airlines, and we are working with close to 40-plus airline partners globally and more than half a dozen airline partners in Africa and are ready to support many new airline partners in Africa. Africa is very important to us for many reasons.
Virtual Alliance Benefits Airlines
Our product has been running for many African airlines including, for example, EgyptAir, Kenya Airways, Ethiopian Airlines, RwandAir, Air Namibia, and so on. The benefits that airlines are getting is that they are able to generate higher incremental revenue. Some airlines are already producing more 2 than percent of their total revenues from Flight Pass.
One new thing that we are also doing is the virtual alliance, which could really be of benefit if the African airlines could be integrated in some kind of partnership. Through this technology we are able to form a virtual alliance between all airline partners without them having to be in an actual alliance. They can offer one flight pass across all African airline partners and the customer could travel across any one of these participating airlines once he buys the flight pass. This tremendously enhances the availability and network to a customer whether it’s a corporate organization or individual, so that way it’s a great benefit to the airline and the passengers.
Challenge Penetrating Africa
I think from the airline side there are not many challenges because there is no capital investment, and secondly, no IT development required.
But from the passenger side, there are some challenges: to communicate to the passengers that such a new service is available. To overcome this challenge, we are working closely with our airline partners and we are also doing big marketing and communications campaigns to inform the customer that this new service is available. And we are seeing that as soon as people know, they are attracted to know more about it. Many are also using it and getting benefits.
COVID-19 Impact In Africa
The current situation and the short-term outlook for the aviation industry in Africa is challenging, as it is elsewhere in the world. Demand is forecast to fall in 2020 year-on-year. Airlines in the region are expected to post a net loss this year as passenger revenues decline compared to the previous year. Before the COVID-19 crisis, aviation supported 6+ million jobs in the region and generated $50+ billion in GDP.
The ability of the aviation industry in most African nations to weather the viral storm and remain sustainable in the long term is crucial. In the short-term, however, African airlines will need some sort of government support to sustain and to keep important trade routes open, as noted by the African Airlines Association (AFRAA). Some governments have already responded to financial assistance requests from their national carriers with Air Senegal and RwandAir reportedly benefiting from government stimulus packages aimed at the transportation sector.
If the African aviation industry is to be sustainable in the long-term, creative and bespoke strategies need to be devised and implemented that cater to its unique challenges. As we look to the gradual resumption of operations and the future post COVID-19 era, we also see ourselves at Optiontown well positioned with our African partners to not only pick up where we left off, but make a much more significant impact considering the nature and uniqueness of what we offer, and how well suited that is for the future of airline travel in Africa.
Response To COVID-19
The airline industry has been in a freefall as travel bans have caused a significant decline in passenger numbers and revenues in rapid time. In response to the crisis and social distancing, carriers around the world have cancelled flights and are restructuring for the future.
IATA estimates US$252 billion in lost revenues and they have suggested up to US$200 billion of State aid in the form of cash injections and loan guarantees may be required to save the industry.
Carriers have slowly begun resuming limited operations and in time, we will see a phased increase globally. COVID-19 has brought about many challenges but at the same time, an equal or larger number of new opportunities. Only the innovative will succeed.
Changing paradigms under COVID-19, Optiontown has developed some of the industry’s first products to help airlines overcome these challenges, some of which include Social Distancing Option, Unlimited Flight Pass, Option Pass, and so on.
The industry has always been resilient and will definitely recover. We are confident about its future just as we are of that of Optiontown. In fact, we see growing rapidly again once operations normalize. Optiontown has done its bit in terms of innovation and we continue to see Optiontown as the next big thing in the Airline business arena.
Roundup 2019, Projection for 2020
In 2019 we had more than 100% growth and in 2020 also we were on course to do at least that or even better, although now Covid-19 has impacted that plan. However, we are still confident of great results.
Africa is a very large continent, with a massive population. So, air transportation and the growth of air transportation is probably one of the most viable solutions to grow the continent. You just need to facilitate it and that’s what we are working on in Africa.