Korea’s Kumho Asiana Group Wants to Be on the Leading Edge of the Digital Transformation

In February 2019, Korea’s Asiana Airlines announced the implementation of a travel recommendation and payment function for its Artificial Intelligence (AI) chatbot, Aaron. These functions are just the latest in a series of technological evolutions in a bid for the airline company’s owner, the Kumho Asiana Group, to achieve its goal of “IT convergence” across all of its business verticals. Aaron is a joint development between Microsoft and a Kumho Asiana Group subsidiary, Asiana IDT, which oversees the development and operation of Information Technology (IT) systems for the conglomerate. Aaron uses Microsoft’s cloud platform, Azure, as well as its Natural Language Processing (NLP) software, Language Understanding Intelligent Service (LUIS). The chatbot is available through KakaoTalk and Facebook and is poised to significantly reduce wait times for passengers engaging call centers, offer customized travel recommendations based on passenger details like travel purpose and length of trip, and enable cashless payments.

Beyond Aaron, the airline also offers Location-Based Services (LBS) via a hybrid beacon technology, which uses Bluetooth Low Energy (BLE) beacons to track passenger locations within the airport even when Bluetooth is not turned on. The adoption of BLE beacons allows for a streamlined end-to-end passenger journey experience as the airport can interact and provide services for passengers via Machine-to-Machine (M2M) connections. For instance, passengers would be automatically notified about the time needed to reach boarding gates depending on their location, have their electronic boarding passes show automatically on their smartphones when they approach security checkpoints, and receive real-time flight information.zzzz

With a 7.7% increase in demand for air travel in 2018 compared to the previous year, Korea responded by licensing three new budget carriers. This brings the total of Korean airlines to 11, creating a highly competitive and crowded market. Competition for Full-Service Carriers (FSCs) like Asiana Airlines is intensified as passengers using Low-Cost Carriers (LCCs) increased by 32.3% in 2017 and those using FSCs dropped by 3%. Airlines must innovate to attract and retain passengers and seek ways to reduce cost without sacrificing their quality of service. Digital transformation can provide the competitive edge airlines require to differentiate themselves. Collection and analysis of passenger data will generate insights that improve airport efficiency, increase tourism profit, and create a personalized airline experience. Many companies are moving into this space by leveraging AI to deliver value. One such company is Utrip, which integrates Machine Learning (ML) with travel companies. Utrip analyzes customer data using ML and offers them a customized travel itinerary, increasing customer engagement. Chatbots are also being used to deliver quality customer-facing services. LogMeIn is a software chatbot company that improves customer engagement with clients by using NLP to answer questions through helpful conversations with users.

The successful implementation of AI in chatbots by Asiana Airlines demonstrates the three benefits of AI that ABI Research outlined in an earlier report titled AI in the Enterprise: Conversational Interfaces (AN-2767):

• Improving Core Functionality: A chatbot using NLP can gain contextual awareness via voice recognition and detect emotional cues in the user’s voice, which can give rise to an “AI early warning system” to advise the machine or a subsequent human service provider to take the most appropriate next step. For instance, a frustrated consumer rushing to catch a plane could be redirected to a priority service or have a human service provider dispatched to the consumer’s location. The airline’s customer service will also undergo a digital transformation as it becomes more self-service oriented. The adoption of self-service builds core functionalities by developing a digital knowledge base that allows customers to access information anytime and anywhere. Due to the vast array of heterogenous information that resides in different airline employees, a centralized knowledge base that includes procedures and frequently asked questions allows knowledge to grow and services to be more precise and customized. Users can then access this information at any time and have mundane questions, such as which documentation is required, answered on the spot.
• Generating New Insights: With payment and travel recommendation functions added to the chatbot, the enterprise can gain valuable new data about the user. ML algorithms can create customer segmentations based on data points like frequency of travel, average price paid per ticket, and average travel duration. These insights can be developed for further advances in dynamic pricing, customer feedback analysis, and offering airline promotions based on predictive analysis of a user’s purchase behavior.
• Automation: Evidently, an AI chatbot would replace several conversational interactions currently performed by humans. This would reduce the bandwidth of customer service calls and could potentially automate form and transcription-based activities as the chatbot evolves. The chatbot can also train customer service agents by identifying common pitfalls and offering training simulations via recorded user interactions.

ABI Research forecasts reveal that South Korea has the highest IoT connections Compound Annual Growth Rate (CAGR) at 59% for the public sector from 2021 to 2026 compared to all other researched countries, which includes China and the United States. Revenue for IoT connections for the travel industry in South Korea is commensurate with the high growth of connections in the public sector and is projected to reach US$148 million by 2026. The latest developments by Asiana Airlines represent a larger movement of the IoT and AI chatbots entering successful commercial implementations that not only supports Business-to-Consumer (B2C) models, where airlines can offer a superior travel experience, but also opens up Business-to-Business-to-Consumer (B2B2C) opportunities, whereby airline businesses can offer data to analytics companies to create customized advertisements or services to customers depending on their location in the airport.

Asiana’s foray into using hybrid beacons for LBS should be leveraged and merged with its AI chatbot service to create a holistic IoT environment. Currently, the LBS technology Asiana implemented is siloed and does not extend beyond proximity technology that merely prompts customers with offers and reminders. ABI Research believes that Asiana’s hybrid beacon technology allows for a true always-on location service, but a technological convergence between the chatbot AI and LBS can create value-added services, such as ambient intelligence. Ambient intelligence includes elements of contextual awareness to respond with context-sensitive behaviors. With customer segmentation possible through the chatbot’s AI, user modeling, which seeks to establish the user’s current state (i.e., their social identities, identified moods through voice recognition, etc.), can be established alongside sensor integration. This will then allow for the appropriate response to be achieved, such as a beacon adjusting its message based on the user’s current mood and situation.

There is a need to use other indoor location technologies, such as Wi-Fi, small cell, and Near-Field Communication (NFC), rather than rely on beacons alone to achieve the sensor fusion required for ambient intelligence. Furthermore, the indoor location market is rapidly developing and many new revenue opportunities will present themselves if the technology is implemented and used effectively. One such opportunity would be in-application advertising that takes advantage of user profiles by using the services of a digital mapping company. One such mapping company, Naver, which ABI Research estimates to have the third largest market share for the digital map market in Korea, has recently launched a location-based advertising mobile-only Display Advertisement (DA) product. This product aims to attract visitors by providing information, such as reservations, directions, etc., targeting only users that are in the proximity of the advertiser's retail outlet. Another opportunity would be analytics services, which Kumho Asiana Group can offer to retailers in a B2B business model by monetizing the data they gather. Another option would be to partner with analytics firms like IBM and Accenture to gain deeper analysis of their customers via the integration of third-party data through Application Programming Interfaces (APIs). By doing so, Kumho Asiana Group can digitally transform the way it understands its customers, by analyzing customer behavior alongside third-party data, such as retail sales or total airport traffic.