Airline group IAG buys stakes in tech start-ups
Investments in Esplorio and VChain come amid sector push into digital innovations
International Airlines Group, the owner of carriers British Airways and Iberia, is stepping up its digital investment by taking stakes in two technology start-ups following its first accelerator programme.
The company has set up a multimillion-pound corporate venture fund with the aim of identifying digital start-ups that could help improve the efficiency of its business as well as improve the customer experience.
Its first investments are in Esplorio, an automated travel journal app that builds a memory of a trip based on travellers’ social media updates, and VChain, a company that authenticates customer data using blockchain technology.
Stephen Scott, head of global innovation of IAG, said the group planned to make further investments. “Where we see strategic alignment we want to invest in new technologies that will help our business move forward.” The group would not disclose how much it had invested in the two start-ups but said neither were majority shareholdings.
The investments come as airlines are increasingly focused on digital innovation after being slow compared with other industries to realise the potential of the market.
Ryanair, the low-cost airline, has poured money into its Digital Labs team to overhaul its website and improve its mobile phone app. The budget airline has previously stated its aim to become the “Amazon for travel” in Europe. Lufthansa has its own “innovation hub” in Berlin to gain insight from Germany’s start-up scene.
While IAG has worked with technology start-ups in Israel and San Francisco, these are the first investments the group has made. Its accelerator programme — Hangar 51 — received more than 450 applicants, with five finalists spending 10 weeks with the company testing their products in the market.
Mr Scott said IAG planned to repeat the programme each year. “Some of the failings of accelerator programmes in the past has been this step from prototypes to integration because they haven’t done the hard yards with the processes first. We feel we’ve done that,” he said.
The group plans to spend another six months working with VChain, with the focus on using its technology to help IAG speed up the airport check-in process. It is then considering working with other partners to get the technology off the ground.
Mr Scott said the big benefit of investing in start-ups was getting innovative ideas quickly to market. “Speed to market in corporates has been more challenging over the years because of the highly regulated market we work in so to be able to construct innovation rather than just have ideas and get it into the market quickly is really important.”