First class insight: a data strategy for airlines

In the last 100 years, flying has gone from experimental to experiential. As the decades have passed, the airlines industry has innovated, becoming cheaper and more accessible, and allowing more people the chance to travel further.

Fast forward to today and, for the majority of flyers, price is the more pressing concern. As competition has increased and technology has developed, allowing faster, longer and cheaper air travel, airlines have to compete even harder to retain a slice of the market.

Initially, it might seem that the travel market has two main customer segments: the luxury travellers, for whom price is less of an issue than comfort and experience; and the budget travellers, who will sacrifice luxury for a cheaper air fare.

The blurring of traditional boundaries

However, the clear distinction between luxury and budget is increasingly becoming a thing of the past. British Airways recently announced a new class available to passengers, allowing passengers to purchase a basic ticket and then purchase add-ons if required, mimicking the system used by many budget airlines. Air France have gone one step further and created an entirely new budget airline aimed at young millennials wanting a cost-effective getaway.

Meanwhile, the budget airlines, once confined to closer destinations and short trips, have begun to branch out, offering long-distance routes at budget prices. This has worried the luxury players, who were once content to allow the budget carriers to dominate the short-haul trips while they continued to reign supreme in the long-haul category.

However, the budget airlines, though expanding in most cases, are also looking over their shoulder, competing as they are in a highly competitive market with new players joining the game every year.

A treasure trove of data

One factor common to all airlines is their extensive range of data: they hold a wealth of information on customers, ranging from addresses and phone numbers to most visited destinations and travel preferences. Yet this data is used in different ways, depending on their target customers: luxury airlines are more focused on utilising data to improve the overall customer experience, while budget airlines use the data to help boost add-on purchases.

But whether British Airways or Ryanair, both luxury and budget airlines will experience the same problem: their data offers them an incomplete picture of their customers, only allowing them to see fragmented pieces of information from a variety of unconnected data points.

This is where social data can be useful – or, to be more precise, Starcount’s unique method of ‘social clustering’. We analyse the passions and likes of social media users and cluster them together into different segments based on similar passions, using our pioneering platform, The Observatory. This method is different to, and much more effective than, ‘social listening (if you would like to understand more about the differences and why social clustering works better, read our guide here).

We dug into The Observatory data to investigate how social clustering could be used both by luxury airlines, in their quest to make a better experience, and by budget airlines, hoping to upsell with every ticket purchase.

To do so, we created two segments within The Observatory: Luxury Airline Travellers, comprising a range of luxury airlines, and Budget Airline Travellers, formed from a group of budget airlines.

The Luxury segment

Luxury airlines have two major issues: how to ensure loyalty from those travellers who can afford to fly with them; and how to attract and retain budget customers who might otherwise choose to fly with the new long-haul budget airlines.

So far, the typical luxury airline will have data comprised of names, addresses, flying frequency, destinations and reason for trip (business or leisure). While all of this information is extremely valuable, it only allows for limited personalisation when it comes to customer communications and it leaves them still struggling to predict whether a customer will prefer luxury or budget.

Firstly, by enriching the airline data with social data, we can immediately distinguish whether a customer is more likely to be a luxury customer or a budget customer, by analysing what they follow online.

Looking at the luxury airline segment, for example, we can see that this audience’s top brands are Marks and Spencer, Virgin, John Lewis, Waitrose and Harrods. Meanwhile, the top brands for the budget travel segment are Sainsbury’s, Asda, Aldi and Debenhams – clearly differentiated from the luxury segment.

This insight can then set the tone for the airline’s entire communications strategy, allowing personalised recommendations from the initial ticket purchase right through to the moment the customer arrives at their destination.

It also allows airlines to tailor their loyalty programmes to align with their customers’ passions and preferences. If you are a luxury customer, you might appreciate points that can be spent on similar high-end items and experiences, such as on hotels or clothes. The Observatory reveals that the top non-airline brands for the luxury segment are Dior, River Island, Mulberry and Radisson Hotels. This insight allows an airline the chance to partner with brands like these, offering luxury travellers the chance to use their points with brands that they already love.

Social clustering also helps to identify influencers that will resonate best with a particular audience. Many airlines (such as BA) are now using celebrities in their in-flight safety videos; by using social data, airlines can choose individuals who already resonate with their customers, guaranteeing a positive response. For example, the top influencers for the luxury airline segment include Jamie Oliver, Mo Farah and Clare Balding, all of whom could be used in airline marketing campaigns or safety videos.

The Budget Segment

Budget airlines might be expanding into the realm of the traditional luxury airlines, but they themselves are also under threat from new brands entering the market. With more and more people looking to purchase budget airfares, competition in the industry is fierce and every penny counts.

That’s why, with such cheap airfares, the main focus for many of these airlines is in convincing passengers to purchase add-ons. Ryanair currently uses all the data it gathers to segment customers into different groups depending on how they are utilising the airline, such as ‘City Breakers’.

While this is useful insight, it still offers an incomplete picture of the customer: it tells you why they fly based on how they do it and where they are going, but it doesn’t reveal what motivates them to fly with a particular airline, nor what they are passionate about, information that can help an airline to personalise their communications and offer better rewards.

In regard, to the add-ons, social data can reveal a lot about what a person is likely to purchase. If the data shows that they are passionate about certain sports, such as skiing, it is more likely that they will need extra baggage. If they are passionate about websites or brands concerning young children, it is likely that they might be travelling with a baby or that they are pregnant. In these cases, the airline can use this information to make sure that when the customer is booking, that the necessary add-ons, reflected through the social data, are made clear or even that tailored offers on certain add-ons are presented to a person based on their passions.

To illustrate this further, we can turn to The Observatory study once more. The top hotel brands that budget airline travellers are passionate about are Jurys Inn Hotels, Premier Inn and Hilton Hotels. A budget airline could look to partner with brands like these, offering them tailored deals on rooms when a customer flies with that airline.

In an increasingly competitive market, where the old boundaries that separated the traditional players from the new brands are blurring, airlines will need to work harder to attract customers. Cheap prices on the one hand and comfortable seats on the other will not be enough. But by taking the extremely valuable data that airlines already have, and enriching this with social data, brands can gain a much more complete picture of why different people fly with them, allowing them to conquer both luxury and budget.

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