4 airline industry tips for tech startups
Bringing emerging tech into the airline industry is easier said than done. For startups in particular, the airline industry can be both mysterious and daunting.
That’s one of the reasons why organizations like JetBlue Technology Ventures (JTV), Alaska Star Ventures, United Airlines Ventures, Plug and Play Travel & Hospitality, and the Trade & Travel accelerator exist. While partnership opportunities are out there so that tech startups don’t have to navigate the airline industry alone, there are also some critical steps startups can take on their own to greatly improve the likelihood of success.
Prepare for the risk aversion
Air travel is a highly regulated industry, and with good reason: to increase traveler safety. Regulatory bodies like Transportation Security Administration (TSA) and the Federal Aviation Administration (FAA) work to make sure airlines are up to snuff, especially when it comes to security and maintenance. So even something as seemingly simple as creating a de-icing product can take nearly eight years to get approved.
With all the oversight and priority on passenger safety, the airlines themselves have to be both deliberate and compliant in order to operate successfully. Not to mention airlines are a low-margin business, so risk-taking can also be tough when it comes to budgeting and new investments.
Having a proven record will give tech startups more credibility in the eyes of the airline industry, and having customers who can speak to the product’s effectiveness will go a long way.
Plus, success in another industry means diversified revenue and some runway to weather the next challenge on our list…
Plan for long sales cycles
Given all the regulatory red tape and tight profit margins, airlines need to take their time and conduct thorough due diligence when considering new vendors or products.
The best thing tech startups can do is to engage early and intentionally. Your startup might not be ready for a proof of concept or sale with an airline brand, but approaching early helps you connect with experts and learn about airlines’ needs as well as the ins and outs of this complex industry.
The early part is easy to understand. Engaging intentionally is harder to nail.
Tech startups should be fostering a relationship to win over a champion at the airline. Once you’ve earned that trust, it’s best to work as a team with that person to move the conversation along internally with the right teams at the right times. Don’t email the airline’s CEO or go behind your champion’s back if they’re still forging ahead on your behalf. Jumping the gun like that risks diluting the connection.
So who might tech startups reach out to at airlines? Target experts of your tech area or would-be users at the manager or director levels. The person you connect with to be your startup’s champion needs to make sense for your strategic priority, too. Consider carefully what part of the organization can be most helpful and who has enough influence internally. For example, if a tech startup reaches out to JTV first, we can help connect them with the right person at JetBlue. But if you’ve already reached out to folks at JetBlue, then there are more moving parts to consider.
From the jump, open with what you’ve done to mitigate the industry’s risk-aversion. Highlight happy customers that can sing your praises as well as illustrate potential cost-cutting or increased revenue opportunities for the airline.
Fine a niche within an old school industry
Perhaps unsurprisingly (for the reasons mentioned above and more), large legacy vendors dominate the airline industry, so the first proof of concept is always the hardest. Longstanding partnerships have grown far and wide in scope — in some cases kind of like monopolies in certain areas of airline operations. Think massive and complex software systems and integrations between tools and closely related products that airlines can buy all from one well-established vendor.
Tech startups should target niche opportunities to land and expand both in terms of airline customers and products. This cannot be overstated: the airline industry is not set up for fast disruption. Changes take immense amounts of time and money, especially when it comes to security and finance systems.
Therefore, tech startups’ best chance initially is to focus on one small, specific area within an airline that the startup can do better (rather than trying to overhaul a whole system that the airline has used for years and years.) One of our portfolio companies, i6, started with one niche fuel product, and now JetBlue is considering the entire suite of i6 offerings.
Beyond what product offerings to lead with, hone in on one top target airline for the best chance at a foot in the door. If you’re successful with one airline, then that airline is likely to share that success story with other airlines. Our portfolio company FLYR did great work for our partner Air New Zealand, and Air New Zealand then touted FLYR at an international event. It’s a small industry, and success at another airline is hugely validating and drives “FOMO” (fear of missing out.)
Ideas for the road
What areas are ripe for new tech in the airline industry? What do airlines need? How can startups best listen for those tech needs?
Airlines’ technical operations are both the biggest dinosaurs and biggest opportunities. Legacy players are hanging on in this area, but airlines need cutting-edge tech to improve technical operations. Operations and maintenance are also critical (with safety as the top priority, of course).
To keep a finger on the pulse of airlines’ strategic priorities, read what airline executives write about. Listen to them speak at events such as the IATA Conference or World Aviation Festival, and check out strategic focus areas like ours for insight into a corporate airline’s needs.
For example, sustainability was a hot topic on the speaking circuit five years ago and is now actually a high-priority need. Three years ago we had made two sustainability investments, and we have made five more in the past two years alone.
All that to say, understanding pain points and motivations will position startups to make a strong business case for their products. And if your startup is looking for strategic connections, opportunity insights, and product development expertise in the airline industry, there are steps you can take now as well as partners that can help so you don’t have to go it all alone.
