First Published on 16th May, 2017
Ai Editorial: Airlines do acknowledge the potential of ancillary revenue generation but the existing “mindset” isn’t easy to change, writes Ai’s Ritesh Gupta
Airlines are reluctantly realizing that what they sell and how they sell has to change.
“The cinema makes more profit on the popcorn than the ticket, the profit for a petrol station comes from its shop selling a wide range of products. Like the petrol industry experienced, the distribution is also slowing down the innovation as that is where the profit sits in the chain,” says Paxport’s CEO Tony Barker. “Culturally the airline industry is very operationally-orientated, the focus is on cost and low risk. The first thought with any new innovation ideas are what if it goes wrong and then they think of all the systems that have to be changed, not possible, carry on as usual.”
Capitalizing on technology
Airlines have to plan and have a strategy to embrace the opportunities technology gives them in terms of actually lowering costs, creating revenue from different areas and how the passenger experience can be more seamless and predictive/ contextual that can also be driven by a spate of devices or by the passenger’s digital platforms/ social media accounts, chatbots or ecosystems like Google, Tencent etc.
This planning needs to done by experienced personnel, not Director of Operations or IT Director. Any commodity-orientated industry finds it difficult to accept, sweets and cigarettes for example can give more profit than petrol. Some people on the board need to come from retailing background to drive the change, otherwise it will not work, says Barker.
In an era where a digital transaction or marketing attribution is being scrutinized over micro-moments, a travel e-commerce purchase is a complex analysis, encompassing cross-device identification, cross-channel campaigns. Every carrier might not be doing it, but it is actually feasible. As an airline you first have to describe what you want to do in terms of the passenger experience, describe the improvements for the passenger and then forecast the anticipated increment in revenue generation and retention factor.
The key here is to crack the intent of passengers, aiding their decision-making at the right time that eventually results in a conversion or helps them in their journey. A couple of examples:
· Content via chatbots: A passenger opts to interact with an airline’s chatbot, can this passenger be shown the in-flight meal and allowed to be paid for the same? The chatbot should know the passenger is flying, consumers now expect this. Make it easy and attractive, 3 letter codes for a meal is not so mouth watering!
· If a passenger has to go into a website to order some extra services and reinput their booking number etc you are immediately at a conversion level 3-4 times lower than if an airline had actively offered the service to the passenger.
· Personalised video retargeting via Facebook: Say a user is looking at a friend’s holiday video on Facebook, can this user be shown a video related to the previously abandoned cart on airline.com?
Many services are now becoming valued as an experience, flying is not just a seat to transport a human from A to B. Passengers will pay more for an improved experience, it is likely that the cost of the ticket will soon be almost free, this is the price to “capture” a passenger and have the opportunity to sell them other services, this “data” is very valuable, you know what they are doing (business, holiday, visiting family) and you have their attention for a few hours, actually a retailers’ dream, imagine if you had to stay in IKEA for 3 hours! So if your prices are going down and you are not compensating this with other revenue it is not surprising the profit margin is being squeezed.
The arena of merchandising and digital commerce is evolving, so how are airlines responding to it?
Tech not a constraint, “mindset” is
“The industry (airlines) at large tends to be operationally, process and cost focused, and not so much on their customers (passengers) from a retailing perspective,” says Barker. Rather airlines need to exploit the data, content (not just the fare) and technology they do have available to make the travel more seamless, more predictive and come up with the right offer (at different opportune times), the battle between the reseller, airport or airline to control/ capture the traveller is on and at the moment the airline is not grabbing the same so well, indicated Barker. Airlines should help the indirect selling market sell more of their services not fight against them, for example.
As we dig deeper, it is clear that airlines at large aren’t savvy enough to embrace the requisite organizational change needed to become a retailing organisation. Some airlines are embracing the NDC to give them more control but there is still a long way to go. “It is very difficult to bring in change (in this industry), we have many years of legacy and those legacy systems are very well embedded ,” says Barker. BSP is celebrating its 31st year anniversary for example!
Airlines do acknowledge the potential of ancillary revenue generation but the existing “mindset” isn’t easy to change. Some airlines think loyalty cards and fare upgrades are the main ancillary services. Legacy technology is hard to deal with but if you expect to get a real retailing result using the same system it is like expecting a car with an old engine with a few tweaks to turn into a Formula One racing car.” Even if you have a Formula 1 car then make sure you have a good driver, not the one who drove the old car! You would not use a petrol pump engineer to design the shop?
In fact, a section of the industry asserts its time business processes that are still based on the paper-based workflows are done away with. If there is a full reliance on those legacy systems for back-office processes such as revenue accounting, revenue management, interline ticketing, and pricing, among many other functions, there will be limitations to the capabilities possible through digital transformation. With this weight on your shoulders, eventually the decision-making tends to drift toward – “we are different, e-commerce isn’t for us the way retailers do it, it is costly for us,”. Old tech isn’t ready, but making the most of SOA, microservices, API-led architecture etc. to extract data out of legacy systems, and embrace agility it is there. NDC, for example, is a worthy initiative, it is the key to the warehouse which can be offered to a wider market, then the next steps need to be taken.
Acting like a retailer
Barker recommends that there are several simple, smart merchandising techniques that can result in significantly stepping up the profit per passenger.
He cites the simple example of buying milk from a store where also the shopping trip ends up with a few other “spontaneous purchases” – placing the milk in a strategic place is no coincidence, as the shopper passes by he/she picks up other essentials or goodies. “One would not drive a few extra kilometres to buy those goodies” pointed out Barker. Airlines need to focus on design, content, frictionless checkout etc. to come across as a facilitator of travel essentials. There is no need to “heavy-lifting” like analytics for certain initiatives, may be cohort analysis or access to data related to a holiday is enough to sell ancillaries (opening up of PNR data). Similarly, airlines need to look at intricacies of capitalizing on the traffic or a booker, who can buy more items (during the booking flow, post purchase email or retargeting etc.). We know for example conversions went up by approx. 30% when we launched the post booking communication for some customers.”
Also, Barker categorically says technology isn’t a constraint (cabin crew today can be prepared to interact with passengers based on the purchase history and look beyond addressing one by mere name), airline’s content is being under-utilized for differentiation and data about a passenger can be plugged in (from CRM or a data management platform) to optimize merchandising opportunities. Some big, established traditional carriers are leading the change, some momentum is happening, but there is lot of hesitation from an organizational change perspective (a few skeptics in the camp & hurdles from the legacy providers),” he shared.
So how to overcome such hurdles pertaining to embracing change and optimizing merchandising?
Barker emphasised on a couple of points –
· Be clear about the position that the carrier has finalized, identify customer pain points within the framework of operations, and then act on it. If experience optimization can cover the entire journey of passengers, be it for simplifying check-in or enticing them to buy an upgrade, then the same can propel the overall merchandising strategy.
· A basic example if choice of seating is not creating approx. €5 per passenger there is more work to be done. Quite a few carriers will say “we do choice of seating”, when you ask them the revenue, conversions and what channels passenger can buy this service there is normally a silence!
· Keep an eye on data flow and predictive, robotic marketing – how recognition of data patterns can make the most of every interaction, touchpoint? Is there already a tendency among today’s generation to switch over to voice search rather than typing keywords? Who is controlling the data flow, and what role the likes of Google are going to play? For instance, as also explained during Ai’s Ancillary Merchandising Conference in Palma de Mallorca in April, use interactions, especially on mobile, to connect data. Did a passenger respond to a push notification urging them to sign up for a new frequent flyer program or redemption offer? Did they activate a mobile coupon for free lounge access?
· Bring in outside expertise at least to understand how well the airline is doing and what could the first steps to do to bring them nearer to a retailing experience.
But even as airlines strengthen their initiatives (even the extent of digital transformation), one shouldn’t ignore some of smart ways to garner incremental revenue even today. There is a lot of low hanging fruit.
Barker referred to the “pre-order” service in Scandinavia. “Airlines experience a €70 average order buying, very often with a 15% conversion. Customers can choose their duty-free in advance. Technology isn’t an issue rather the drive or willingness to do it is the biggest hurdle. Look for right KPIs and return on investment with whatever is being done. Airlines should look at the 15% conversion rate rather than worrying about .5% fulfillment error!
Technology can also really reduce waste, many airlines accept a 35+% food wastage, with preorder of food not only do you reduce waste but you can offer a more appetizing range of food which will increase the demand and revenue. Fewer passengers will buy food before they get on plane! When you know and see what is being demanded you can respond as well, it does not need to take 18 months to change explained Barker.
Such initiatives aren’t dwelling on personalisation on individual basis. Sophisticated analysis isn’t too far off, and in fact, by starting with the basic analytics (demographics, income etc. of passengers) and banking on the power of APIs or standard language going forward, airlines can make real progress with revenue from other sources which will significantly contribute to the financial performance. Some customers achieve above normal profits today and a lot of that revenue is through the ancillaries that are offered, they just do it better.
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First published, 7th June 2016
Ai Editorial: How are airlines gearing up for retailing? The industry is gradually making moves in a way that IT is being linked to business value. Ai’s Ritesh Gupta identifies 3 core data and IT-related issues
Being a part of an industry that is often labelled as a “laggard” when it comes to being customer-centric is no fun. Full service airlines are often singled out for their archaic IT infrastructure, and it’s time they find ways to get rid of sluggishness on their part.
“If you look at other industries you can see that airlines are far behind in terms of retailing their products,” pointed out a source, referring to proficiency of some retail players in pre-empting questions like “When will a specific customer next make a purchase?” or “How best can we communicate to them to make it happen?”
“Airlines simply don’t have that information available,” added the source. As things stand today, airlines’ offerings aren’t personalised and importantly, the booking flow isn’t aligned to the way customers think. Also, once a flight booking is confirmed, post that there is no cross-sell longevity. And carriers try to sell everything at once.
This is where organizations like Ryanair are counting on digital transformation, looking at data and IT in a novel way.
Here we explore what modern retail infrastructure should look like in the era of omni-channel retailing:
· Flexibility - Platforms need to become more flexible, think of being retail-oriented rather than being “airline website” oriented, as Dara Brady, Ryanair’s head of digital experience, asserted during Ai’s Ancillary Merchandising Conference in Barcelona (held in April this year).
Delving deeper into this, Paul Byrne, Senior Vice President of Development at OpenJaw Technologies, says, “It implies focusing on all the major retailing principles required for a true omni-channel retailing. Websites are just one part of the overall jigsaw. A rich customer experience requires rich, curated content, targeted / tailored products, adequate pricing models and a seamless experience across all channels.”
“Airlines require core platforms that are highly flexible. Airlines are still using very inflexible platforms. These are either based on shared community models or platforms that require a lot of development/ programming to facilitate every change,” says Byrne. He says to create and manage rich omni-channel customer experience, airlines require platforms that provides extensive business model control (rules-based) plus strong product and channel management capabilities. “These platforms must have a modular open architecture that fosters a partner eco-system for collaborations. Structured and well defined APIs form a key requirement for collaboration and innovations.”
· Dealing with existing IT set up – IT strategy and business strategy are being seen as inseparable, especially with digital transformation coming to the fore. IT is being linked to business value.
This inevitably makes one think – how can airlines gear up for transformation?
One can’t discount airlines’ existing infrastructure that is already in place. Re-developing these old systems would cost a lot of money. There are already specialists that offer modern PSS systems, some already fully NDC compliant as they say. “But if you are running one of the old legacy PSS systems it’s indeed the right way to make sure that you gain the desired customer-centricity by implementing the necessary systems around or on top of your current IT landscape. There are already cloud-based solutions available that provide you with an offer- and order management including detailed rules engines. In the back they’ll connect to your internal IT (e.g. legacy PSS system, CRM, pricing engine, etc.) to get input for the offers they generate. This is also the way how the IT landscape would look like in an NDC world,” shared PROLOGIS’ Matthias Hansen.
IT needs to showcase its proficiency and power change. The digitization trends are social, mobile, cloud, big data and the Internet of Things.
In a recent blog post, referring to hybrid infrastructure, Hewlett Packard Enterprise highlighted that big data can also be used to improve the existing infrastructure. The role of big data in itself is to pave way for simplicity irrespective of the situation. “… and hybrid infrastructure is nothing if not complex, particularly when it's built atop virtual servers, storage, and networking architectures, and then populated with numerous mobile, sync/sharing, and data productivity apps.” The same post did acknowledge that optimizing hybrid infrastructure is an intricate part of transforming legacy infrastructure into a modern, abstract data environment. Yet the entire ecosystem “must be funneled through an intuitive albeit comprehensive user interface that allows knowledge workers to define their own data and infrastructure requirements (within limits, of course).”
· Being data-driven - To keep up with the pace of personalization and omni-channel retailing airlines will have to implement a system that can link all the data that is being gathered together to enable intelligent offer management capabilities based on the identiﬁcation of customers and their preferences.
Airlines need to focus on how business functions create and use data in the context of day-to-day operations. For instance, how can e-commerce work on a use case for site traffic and conversion optimization? It could be about understanding my intent from the source I land up on an airline website or say I search on Google and then open an airline mobile app. “A lean experimentation approach would be beneficial initially. Firstly do enough homework to identify some of the low hanging fruits (short-term goals). Digital marketing and operation teams are key contributors at this stage. Identify and outline what you want to know from the data and to do what? Now identify the data sources needed to answer your queries and start aggregating / massaging the data sets,” said Byrne. “The point is that you might not initially require the Big Data storage and technologies. Try out small first and then hire a specialised vendor/ partner, when you are ready to go big. It’s a specialised area with high costs associated to it. A strong collaboration is needed between strategy, marketing, operations, analytics and IT teams for this to be successful.”
As for personalisation, there are still challenges that organization face when it comes to data: How to integrate different technologies involved in this industry’s value chain, so that they all work together for the same purpose. “It’s easy for one of the links (technologies) of the chain to fail. Although it is a challenge even for our direct channels, indirect channels are the biggest challenge for data collection, customer recognition and the effective use of the information,” shared Maria Cardenal, head of product development at Vueling Airlines, in a recent interview with us. She also referred to the high cost of implementing personalization, and customer acceptance i. e how much you can personalize before annoying customers.
Hear from experts about how to go about prioritising data and IT infrastructure for retailing at the upcoming 3rd Mega Event Asia-Pacific, scheduled to take place in Kuala Lumpur (23-24 August, 2016)
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First Published on 25th May 2016
Ai Editorial: Is PSS really an enigma? Rather than writing off PSS, airlines need to work around their IT set up by fostering harmony between IT and other departments, including e-commerce, writes Ai’s Ritesh Gupta
Over the past year, I have spoken to several industry executives including ones from full service carriers about their IT infrastructure and the possible areas of improvement as far as their distribution and data-driven merchandising is concerned.
There is consensus over the fact that if airlines want to avoid being a commodity product they either need to demand that their PSS technology is customer-focused or they start using tech outside the PSS to do this kind of work.
Discussions did invariably touch upon IATA’s NDC standard, which is not mandatory for any airline to focus on, and also the role of PSS.
NDC as a development is interesting as it talks about control over content and offers, and at the same time being customer-centric, too, matching passengers’ intent with right content and offers. As much as control over indirect distribution, including work on apt API strategy that let XML messages in and out of a web service, is paramount, we shouldn’t forget airlines are looking at strengthening their own digital assets, too. If you are in digital domain, you are finding ways to be data-driven, and you need your IT infrastructure to complement it on order to excel in the arena of customer experience and personalisation.
Here we discuss few issues around PSS and legacy messaging, and how to bring about a positive change towards better control over offers:
PSS isn’t an enigma: One of the core issues where discussions tend to focus on is the current status of the PSS.
When I spoke to an airline IT specialist about the talk around the limitations of legacy infrastructure especially PSS, he pointed out that the mainframe has been written off too many times. “I see the “anti-mainframer” campaigners fixated on removing the “legacy” system without understanding what it does and how it works,” he said. He added, “Many have failed to replace it. Amadeus do not publicise the fact, but they still have a TPF4.1 system behind the scenes some 15 years after purchasing the British Airways and Qantas Mainframe staff and systems. We have the world’s most reliable mainframe real-time systems with massive throughput of tens of thousands of messages per second with fast recovery (z/TPF IPLs in less than 45 seconds) yet there is no GUI with z/TPF or ALCS.”
“Green on black” works, he asserted. “But Generation Z does not like Green on Black.”
“Getting rid of the “Mainframe” is not the answer. Working with the mainframe, using the immense processing power, high reliability, throughput and recovery, to let the mainframe do what it does best is the way forward.”
Where do IT and e-commerce agree? There is a difference in opinion when one talks to various departments.
As for IATA’s vision, it asserts NDC technical standard provides the opportunity to implement a modular environment where valuable assets are leveraged, out-of-date assets are renovated and new assets can be added easily. In effect, this modular architecture will allow airlines to respond rapidly to changes in their business environment; this is a must for retail organizations. IATA has been working on plans to modernize the multiple and rigid booking, ticketing, delivery and accounting methods with a single, flexible order management process.
An IT professional with over 3 decades of experience says, “The problem I often see is that people who have never used a core PSS system, have never come from the traditional (Swissair and British Airways) Airline Apprentice background of the 1980s where they would work their way up from being a Reservations Agent to an Airport Agent, to a Ticketing Officer to Revenue Management are now making the decisions. Those new people, many from non-airline backgrounds, simply do not understand what the core PSS does. They see a “legacy” system and think it must be replaced. This approach will fail.” He adds, “The driver is getting to know the top passengers much better than at present. The data is there. The core PSS is not the place to analyse data, but it can be the place to place the offers and incentives to the passenger face to face.”
And this is what an ecommerce executive told me: “Legacy PSS systems should be actually redeveloped almost from scratch if it brings any major improvement, and this is something which isn’t going to happen in a very near future.”
So digging further the core functionalities of airline IT systems and data management can be improved in following manner:
FSCs have been looking at separate engines and modules such as availability and pricing, customer database, merchandising, NDC interfaces etc. outside of PSS as legacy systems are not effective enough to be used for sharpening their retailing strategy. Effectively it means that in the near future PSS may only used for routine operation such us PNR creation. In order to craft a rich omni-channel customer experience, airlines requires platforms that provides extensive business model control (rules based) plus strong product and channel management capabilities. These platforms must have a modular open architecture that fosters a partner eco-system for collaborations. Structured and well defined APIs form a key requirement for collaboration and innovations.
A PSS specialist agrees and refers to the way availability is handled now. But the same adds, “Offload as much data as possible. But keep the mainframe for its phenomenal message processing capability. Use the data which is there on the mainframe, but do that analysis offline.”
An e-commerce specialist, too, says currently there is a problem of data integration from different systems based on completely different philosophy and aggregation methods. “I would find legacy PSS systems as a major obstacle in getting quick and well aggregated customer view as it requires complicated interfacing which may impact data accuracy and reliability. I would rather focus on real time PSS data reliable interfacing to the external contemporary system where the proper data aggregation could be maintained. This would result in a mirror of PSS database outside of PSS, which could be used for generation of the accurate offer for individual passengers.”
As for data about passengers coming from the indirect channel, airlines struggle with knowledge about the passenger from 3rd party channels, where they know almost nothing while it is usually lion’s share of the business. So in the future airlines need to get the most out of search and booking message flow that NDC will deliver.
From EDIFACT onto XML: As things stand today, the usage of NDC -XML by airlines and GDSs varies in its shape and form, resulting in a mix of EDIFACT and XML connectivity. It is not correct to suggest that an airline should be all NDC or all EDIFACT. EDIFACT will continue to exist for some time, even in carriers that adopt NDC enthusiastically. For example, it would be perfectly acceptable for an airline to offer NDC to partners but to retain current EDIFACT connectivity for interlining. At present interlining NDC-to-NDC business requirements and schemas is work in progress that complexity will take some additional time to address. NDC provides some short-term benefit from personalised shopping and ancillary distribution that EDIFACT can’t keep pace with, even if EDIFACT is needed for later parts of the process.
Where the PSS specialists get annoyed is when they have to deal with people who have not even bothered to research the current capabilities of the PSS. “They have not even bothered to go on a Basic Reservations, Inventory, Ticketing and DCS courses. They just see a “legacy” mainframe and want to get rid of it,” summed an IT specialist.
The way forward is probably to start building the things needed on the outside of the old/ existing logics, then to “bridge it” in the back office (e.g. Revenue Accounting processes) to make sure the new functionality works in parallel with the old. Then, whenever nobody is using the old stuff, it can finally be removed.
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First Published on 17th May 2016
Ai Editorial: Selling ancillaries is about identifying a need in a particular moment. The key here is to do it right. Because awkward personalisation can be worse than not personalising at all, says Vueling Airlines’ Maria Cardenal. She spoke to Ai’s Ritesh Gupta about getting it right.
Offering an ancillary product isn’t just about revenue maximization. If you can provide relevance and personalised service and service recovery at all touch points, then you have reached personalisation nirvana.
“Picture a transfer offer you receive while on your in-bound flight, the airline knows the actual hotel you need to go to and they are providing a free limo upgrade because your flight last week was delayed,” this is what an executive told me as he referred to the sort of travel experience he expects today.
These are exciting times indeed. And there are executives, who are striving hard to excel in this arena.
I really enjoyed my interaction with Maria Cardenal, head of product development at Vueling Airlines.
Barcelona, Spain-based Maria finds the continuous challenge of seeking the next big thing or the next step in improving the product as the most exciting part of her role.
“It’s a very rewarding feeling to create new services for our passengers or innovate in business models. I am also fortunate because I have the chance to meet diverse and really interesting people from a lot of different business areas. What is less satisfactory are the limitations that we face to offer all these new services or products across our sales channels. That’s not an easy task. But we have been successful in selling part of them in a bundled way through our branded fares,” said Maria.
Delivering what I am seeking
What to offer each individual customer, when, and through which channel is the new merchandising paradigm. What this means is that unique and personalised offers for individual customers based on their attributes.
Nowadays, most airlines offer a great deal of ancillary products, even the ones that have been slow in introducing them. And more are to come, of course. What is not so common is to offer them in a personalised way, says Maria.
“Selling ancillaries is about identifying a need in a particular moment,” says Maria.
It’s heartening to hear this. It clearly shows the intent and the desire to make progress.
Of course, this would only be possible when travel marketers capture all interactions as well as shopping and buying behaviour across all channels – airlines can commence building a unique contact strategy for each visitor, traveller or customer. Also, the use of predictive analytics to drive offers in practical terms means you stop asking the question “What products do I need to sell” and start asking “When will a specific customer next make a purchase?” and “How best can we communicate to them to make it happen?”.
But amidst all this one shouldn’t forget the significance of doing it right.
“Because awkward personalisation can be worse than not personalising at all,” says Maria. She adds, ”Here is where big data comes into play.”
Using data effectively for personalisation
According to Maria, there are four fundamental aspects for using data effectively for personalisation:
1. You need to collect enough data with enough quality.
2. You need to have the ability to draw the right inferences. Customer intelligence.
3. You need the right tools to transform the data into personalised messages or experiences.
4. You must do it at the right time and in real time.
Maria said all the above is possible with today’s technology, but, as airlines, we are facing three big challenges that make it difficult to offer what we would like to, which are:
1- The mix of technologies: or how to integrate different technologies involved in this industry’s value chain, so that they all work together for the same purpose. It’s easy for one of the links (technologies) of the chain to fail. Although it is a challenge even for our direct channels, indirect channels are the biggest challenge for data collection, customer recognition and the effective use of the information.
2- The cost-benefit balance: or the high cost of implementing personalisation.
There is evidence that personalisation is profitable because it drives conversion up, but there is also evidence that it only works when you get it right and only on a highly segmented audience. As a consequence, you have to be careful with the cost, both economic –high investment is needed- and also opportunity cost. Hopefully, personalisation tools and CRM technologies will be inexpensive in the near future.
3- Customer acceptance: or how much you can personalise before annoying customers or travel agencies.
Once you have the data and the right interpretation of that data aligned with the business strategy, as well as the technology to be able to use it effectively, then you need to use it in the right moment and with the right message so it will not be received as intrusive or wrong by the customer.
“Therefore, technology is not enough, you need to build your customer’s trust. The relationship with your customers is a quid-pro-quo relationship. Travellers are willing to provide more personal information if it means a better customer experience for them. If you make proper use of their personal information and the message you send is relevant to them, then it will not annoy them, but will develop trust,” said Maria.
She also added, “We have to be humble, we are at the beginning just looking into the horizon of what we might be able to do in the future.”
Selling ancillary products in a better way
Maria would like to see an improvement in easiness, convenience, relevance and self-sufficiency when it comes to ancillary products.
“From a technology perspective, to achieve this we will need as much information as possible from our customer. For that reason, we need to work in a collaborative way with our partners and the rest of the stakeholders involved in the travel experience, sharing more information across platforms,” she said.
Overall, airlines are in a “very good position” to offer a personalised experience for travellers, integrating the best deals and all of the customer intelligence that all the stakeholders involved in the travel experience could share, to achieve a common goal: a win-win relationship which results in an enhanced travel experience, more repeat customers and, consequentially, more business.
“In a very near future I would like to see Social CRM playing a bigger role than it does today. Along with this, new advanced ways of customer recognition, geo-localization and real time communication will enable us to deliver contextualized and relevant product offerings to our passengers,” concluded Maria.
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First Published on 13th May 2016
Ai Editorial: NDC has been around for a while. But one can’t ignore the slow adoption of IATA’s NDC modern messaging language, writes Ai’s Ritesh Gupta
The buzz around NDC data transmission standard has settled down.
So where do we stand today?
If respecting a traveller’s choice of who they fly with, the channel they choose to book their seats and being aware of what all airlines have to offer are major areas, then there are signs that NDC is proving to be fruitful. British Airways says this is what NDC is enabling them to do.
But at the same time one can’t ignore the slow adoption of this modern messaging language among the airline community.
A major reason is the way the business process change is being handled.
While some airlines have worked their way out, there are others that tend to struggle owing to innate problems - be it for existing processes and technologies or being traditionalist when it comes to embracing the requisite pace of change. Also, the industry hasn’t been too sure, with certain stakeholders building their own XML schemes, which also adds complexity related to interfacing and data flow.
“The challenge is that there is little to “see”,” says Ann Cederhall, PSS Consulting at Lufthansa, Hewlett-Packard.
Ann, who is currently associated with HPE Travel and Transportation as a business consultant and since 2014 being outsourced by HPE to Lufthansa, added, “To look at a response being returned with ancillaries and told that this is all XML – it is not super exciting, is it? If we were to see something new and different like e.g. airlines selling ancillaries on other airlines or interlining based on NDC then I think it would become interesting and tangible.”
Ann explained issues in detail and gave recommendations regarding what needs to be done:
· Overcoming limitations of the community model: The challenge for business process change is the historical reasoning why airlines are the way they are. Back in the day technology was astronomically expensive and airlines moved to community models for reservations, inventory and distribution to leverage cost. “A community model works fine but you cannot expect it to enable you to differentiate and to be agile,” asserted Ann. She says having multiple components makes it easier to exchange systems for better technology. For example, PSS for reservations and inventory but different system for e-commerce, shopping, merchandizing, loyalty, a rules engine, feeds from analytics (powered by big data/ advanced analytics of unstructured and structured data to drive personalisation). “Airlines expect their PSS to deliver all as it historically did. And it astonishes me that community meetings still work in the same way they did 20 years ago, they discuss availability, fares, messaging as isolated silos,” pointed out Ann. “Typically airlines document thousands of requirements for RFPs just because you are used to documenting thousands of requirements anticipating that change will take years. The challenge is that retailing evolves and it is not possible to think up what the requirements will look like in 5 years from now. The business evolves.”
· Investment decision: Also, it’s difficult to see any direct return on investment from adoption of NDC, says Ann. “It is not like travel agents (or OTAs) are lining up to implement any airline direct NDC API, and unless there is a demand, it is difficult to convince airline management to prioritise the investment needed. For NDC to provide any sensible value to the users (or intermediaries), the content needs to be there, both in value and in logical comparability,” she said. “Only larger travel agents will be able to take on the effort to integrate NDC APIs from different airlines, and to add the “aggregator functionality”, meaning to send requests to multiple parties, receive the responses, then interpret them and make them comparable.”
· Nothing is ever removed: Ann says we just build layers on top of other layers and keep the complexity. “When we say that fares need to change – do we mean the transmission and updates of fares or do we mean the structure? To be quite honest – fare rules are just old revenue management fencing rules. I would like fares to be fares and the rules to become ancillaries, to buy changes, if you revenue manage your fares why do you need advance purchase, minimum stay etc. Are these not just antiquated rules? Taking out the rules and transform those into services would make it more consumer friendly. Remove complexity from name change and monetize. Same goes for availability, if legacy systems only allow us 24 booking classes perhaps we can rethink.”
· You can’t ignore retailing has out-paced aviation: Airlines are still to a large extent looking for industry specific vendors and solutions, and – in many occasions – still looking for a silver bullet to give them a 10 years leap forward. Ann agrees and says, “This is truly strange; when realizing that retailing has out-paced aviation, why don’t airlines look to major retailers for learning and to vendors/ systems in the retailing space, even without any airline special requirements?” She further added, “Personally I have started asking myself if there is a need for a merchandizing engine, wouldn’t just any powerful rules engine sitting in ecommerce suffice? To find best of breed is challenging and is time consuming. I actually see a need for more advisors in the industry helping airlines to assess in different areas what is best for them and how to move forward.”
· Demand a major change: So what areas of a PSS - reservations, departure control, fare quote and ticketing – are demanding a major change? All of it, says Ann. She says these systems are designed by engineers. They need to be redesigned from the bottom up to support customer shopping habits and aspirations. “In my view this is what Google has done, and will continue to do. If airlines want to avoid being a commodity product they either need to demand that their PSS technology is customer focused or start using tech outside the PSS to do this kind of work.”
Ann says in order to drive personalisation, airlines need to move towards a true super PNR environment/ strong relationship database. If it is not possible to drive change in the PSS enable systems on top. Should the super PNR environment drive personalization and loyalty? “Some industry vendors are working on this concept already such as the Amadeus TTR – Total Travel Record. However, this is a good example of why I think it makes perfect sense for airlines to start taking their data back home. A good start is to start building a local repository keeping a copy of all PNRs, tickets (e.g. a copy of the ETKT database not as in Revenue Accounting) and other related data. This would enable the super PNR for operational purposes, and also the continuous analytics (which should also be seen as an operational tool, and not as a “reporting tool” such as the old fashioned data warehouses).”
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First published, 27th April 2016
Ai Editorial: Merchandising needs to be supported by apt infrastructure and adroit front-end user experience to facilitate stronger affiliation with any e-commerce brand. Ai’s Ritesh Gupta takes a detailed look
If being flexible with the crafting of a new offering – say a new fare, a new ancillary product – can result in increased average order value or even augment the customer experience, then it would be a welcome change for any airline.
But how much time does it take to do so?
The technology is making rapid strides, and it is being highlighted that it shouldn’t take more than a day to 3 weeks (depending upon the fulfilment aspect of the new offering) to implement the same. Of course, testing is a vital component, but that shouldn’t restrain from trying out.
In addition to strategy, creativity and, technology, one has to follow “the gut feel”, as Farelogix CEO Jim Davidson pointed out during the recently held Ancillary Merchandising Conference in Barcelona. But all of this needs to be done as quickly as possible. So airlines need to assess the efficacy of technology, especially what can be done with today’s merchandising engine vis-à-vis the PSS. If the PSS/ IT specialist takes 6-8 weeks to do so, and there is another avenue that takes fairly lesser number of days, then it’s clearly a missed opportunity.
“There is a lot of scope for improvement for airlines for being flexible (in this context),” said Justin Steele, Senior Director of Innovation, Switchfly.
It also needs to be highlighted that the work that is done at the back-end to introduce a new offering should be done in a way that there is no amendment required in existing digital assets such as PC website, mobile app etc. Also, if an airline is pushing its content via NDC-enable API then any changes/ new offering is displayed across all the channels to sustain consistency.
The infrastructure behind the offer
Airlines are contemplating the performance of their merchandising and pricing engines, and looking at an apt way to extract the maximum from the same.
Davidson referred to a couple of options, the first one being airlines opting to develop engines on their own. Here the airline owns the IP. In this case, the entity must have the merchandising and pricing product, technical, and support expertise to build and maintain their merchandising and pricing engines. As things stand today, only few airlines have the required skill sets.
Alternatively, if a carrier opts to work with a proficient 3rd party solutions provider, this route can prove to be more cost effective than an airline developing and maintaining the engine on their own. A 3rd party here does all implementation and offers ongoing support (i.e. 24/7 help desk and tech support). General enhancements and updates are generally provided at no charge. However, the airline does not have total control. It also needs to be mentioned that some 3rd party providers will allow the airline themselves to host, operate, and configure the acquired engines.
Acquiring a set of engines that give the airline, rather than the vendor, more operational control is certainly beneficial.
Being smarter with the booking flow
Another area that is being closely looked at is airline.com’s ability to close a transaction on its own platforms.
Airlines need to do away with a typical nine-step (a general figure) selling process that is being employed to sell a seat plus ancillaries.
One needs to focus on testing, and ensure page flow configuration on their sites results in control – the sort of products that one intends to sell, at what stage during the booking flow and also for the routes and a set of customers chosen.
“Everything can’t be sold to the same set of customers the same way,” pointed out Steele.
Is the industry equipped to assess the booking flow in real-time, say what to display after the first click or the third click?
Not really at this juncture, but yes if a customer has logged in or chosen a branded fare it does help to an extent. There is decent progress that the industry has made in analytics, and merchandising technology, and airlines need to look into it.
Dealing with newness of merchandising
Airlines are looking at distribution freedom that is demanding control, as Farelogix stated. It’s all about - what products you offer, how your brand is presented, what the price is when, where as dynamic as you want to be as a retailer, and merchandising ends up being PSS and channel agnostic.
Such freedom needs to be supported by a proficient infrastructure and mechanism especially if a 3rd party is involved. Also, the digital assets owned by airlines must take into account not just transactional and behavioral patterns of a customer, but also contextual details and make all of this an integral part of the booking flow.
As for cracking the same, airlines need to build a solid culture of testing. Also avoid a lengthy RFP process without doing a bake off or trial, and rather plan relatively shorter-term investments and commitments to 3rd party providers under some type of trial program considering the relative newness of airline merchandising.
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First published, 21st April 2016
Ai Editorial, By Ritesh Gupta in Barcelona: It’s not easy for a majority of airlines to change their processes and infrastructure for merchandising, as they are not starting from the scratch. So how can carriers make progress?
Airlines need to avoid several gaps in order to generate better results with their merchandising. So be it for not optimizing content during the flight shopping process, sorting out internal issues or not being able to make changes dynamically, its time airlines do away with certain impediments.
We take a look at what needs to be done:
· Aligning the strategy internally: Overcome the structure problem, overcome the silo problem. Merchandising isn’t a one-time thing, it’s an all-time thing. This emerged as a key recommendation during the Best Practices in Airline Merchandising & Digital Commerce session.
In order to fully capitalize on the merchandising opportunity, various departments need to be aligned i. e. IT, e-commerce, distribution and marketing.
“A lot of progress has been made in understanding the intent, the profile and value of a customer, flying behaviour and preferences, what to offer, where and how etc. But there are areas where the entire organization needs to come together,” shared another senior executive, who added that airlines are showing signs of a unified approach. “A technology decision and implementation needs to be approved, there are numerous internal checks that need to be in place. And all of this takes time – in a bureaucratic organization like airline, in several cases it’s state-owned. So it is a long sales cycle,” mentioned the source.
· Differentiate your product during flight shopping: Focusing on personalisation, pre-empting what passengers are likely to buy is being attempted. Airlines are segmenting prospective buyers (say a first-time visitor arriving from a search engine, looking for a particular destination, planning a trip with family vs. a high-tier loyalty program member who regularly logs into an account with the airline), and display an offer accordingly.
But this can go futile if the industry doesn’t match the content to the offer.
Irony is that content exists, but the industry struggles to show the same in the transaction flow. “Get customers excited about your products,” mentioned Jonathan Savitch, vice president business development, Routehappy. Show them things go beyond pricing and schedule, they are likely to keep on looking for more. The whole exercise would be like showing breakfast at breakfast time, and dinner food at dinner time etc. If an airline invests in improving the quality of the food it serves, and if doesn’t show during the flight shopping process, then airlines is not fully leveraging its product. Also, there should be consistency in airline content, be it for airline-owned channel or 3rd party distribution. It's a combination of providing better information when consumers are searching for flights in general, but also helping airlines and consumer understand product attributes in up-sell offerings. Once we achieve that, then airlines and distributors can focus on more nuanced personalization like what kind of food or entertainment offerings are available. As an industry, we need to build our new foundation first. Of course, there is a need to test, and as they say test-learn, fail-fast approach.
· Making changes dynamically: Airlines have to work on plans that result in flexibility and centralized approach to merchandising. For instance, the web and mobile front-end should be accommodating so that it adapts dynamically when one adds or eradicates any fare, bundle or ancillary.
· Fulfilment: What is being promised needs to be delivered as well. So, for an example, if an airline identifies that a flyer tends to buy certain items on-board, let’s say a mango pudding, then the catering and crew needs to be informed about the same. “Adjustment would be required, say a change in record in PNR. Right piece of information to the right person at the right time in the airline is the main requisite. If the process isn’t streamlined then the whole passenger experience can go awry,” added the source. Today there are airlines that are already capable of pushing the offer via indirect channels, too, say via OTA front-end (website, mobile apps etc.) and via the traditional travel agencies. “A NDC API can facilitate an offer that is relevant to a booker, say offering a seat upgrade or a preferred meal at the time of booking on indirect channel, too.”
· Take a closer look at what can pave for better results: Airlines need to minutely look at different aspects of merchandising – content, crafting offers etc. and the available technology to do so. Airlines need to assess areas such as how content that can be show on any device, any touchpoint can easily be integrated with other platforms that are responsible for other aspects of merchandising. For instance, if a platform facilitates rich content alongside airline offers, then how it can work alongside its revenue management system. That means that amenity and product data can be integrated into other tools airlines use to inform prices and offers — and then that same product information can be integrated for display to consumers.
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Ai Editorial: Airlines are investing in their IT and retail infrastructure, and the NDC, too, has been around for a while. How all of this is shaping up? Hear from experts at this week’s Ancillary Merchandising Conference in Barcelona (20-22 April).
The buzz is unmistakable. The industry – airlines, OTAs, technology companies etc. – at large is working its way to shape up superlative experiences.
From the moment we start planning our next journey till the point we complete it or even get inspired for another trip, each touchpoint is being spruced up to deliver something beyond the mundane. Something that fits in with what we are seeking, what might surprise us and eventually builds a stronger affiliation with the brand.
So as we gear up for this week’s Ai’s 10th Ancillary Merchandising Conference in Barcelona, here’s what to expect, what the cream of the industry is going to discuss:
Personalisation: This is what everyone seems to be targeting – winning me over, my experiences through relevant, contextual content, offerings, service etc. just when I need it. So be it for the device I am using for my digital access or even my interaction with the staff, how easily can I be identified and helped out? A critical area is what does it take to “personalize” and how to do it. Airlines need to collect relevant data about the customer, often from a variety of sources. But is it resulting in a negative experience – say a retargeting campaign going overboard? Yes, it’s happening and it’s annoying.
The industry is also looking at in-flight experience as a key differentiator. The future of in-flight analytics should be able to offer you the rest of the movie you watched (and didn’t finish) on the last flight - recommendations of movies based on what I have watched - this could be applied to food, drink, duty free products, gifts and home delivery products. This is the same outside the cabin - offer me a specific coffee as I am entering the airport to have it available in lounge. Exciting, for sure.
Collaboration/ tie-ups for merchandising: As for the industry, there is lot of discussion around what can be done to present a passenger with relevant content/ offer and importantly, getting the timing right. That is to crack the device, intent, location etc. of a passenger. Farelogix, Sojern, Adara, Travelport, Amadeus, Sabre, ATPCO, IATA etc. are all addressing different aspects of the differentiation merchandising opportunity, each with a healthy respect for common platform and standards. For instance, how a flight shopping platform can be integrated with other platforms that are responsible for other aspects of merchandising innovation — such as revenue management systems and dynamic merchandising offers? As Routehappy’s CEO Robert Albert told me: there is no single system that will transform flight shopping itself. So it’s worth assessing how airlines, distributors, and technology partners need to come together to adopt common platforms and standards to make airline merchandising click.
Distribution: Airlines intend to be in better control, and that’s where the focus shifts to IATA’s new standard NDC. The NDC XML-based Standard follows four guiding principles: it is modular and flexible, it is not mandatory, is business model-agnostic, and can be integrated into existing processes and systems. So how are airlines, GDSs, technology specialists shaping it up? According to IATA’s update in March, 24 airline NDC pilots across five continents have been conducted and 15 of the top 20 airline groups (by revenue), have either deployed components of the NDC standard or plan to do so during 2016-17.
Also, the dynamics of 3rd party distribution are evolving. There are notable developments - booking on Google-hosted environment (or “Book on Google”), airlines offering direct access to its fares to agencies via direct connect, the introduction of a global charge for bookings made through GDS etc. As for GDS companies, we are already seeing that usage of NDC -XML by airlines and GDSs will vary in its shape and form, resulting in a mix of EDIFACT and XML connectivity. A lot to look forward to in this arena, too.
Retailing: Airlines acknowledge the need to revisit their IT infrastructure. But there is a long way to go before airlines come to grips with what’s needed and real differentiation happens. “I sometimes wonder if all this talk about “retailing” in the airline industry is really relevant,” this statement from a senior IT executive exemplified the status. Datalex asserts that unified commerce systems must deliver an unprecedented level of control and agility to support offer and order management across rapidly evolving channels and points of sale. Farelogix states that in terms of an API strategy, the future lies with airline-controlled technology that is PSS, channel and device agnostic. “The biggest disruptor (in airline distribution) is the overall movement toward airline retailing and personalization across channels, which drives the requirement for airlines to control their own pricing and offers. The way this happens will be many and varied ,” says Jim Davidson, CEO, Farelogix.
Also, airlines continue to get more sophisticated in the arena of ancillary revenue, fare families, bundling/ unbundling etc. An interesting area is how processes are being refined for product biasing, bundling, etc. In theory if you have 10 ancillary products, you have 45 possible 2-product bundles, or 120 possible 3-product bundles. However, many of these bundles don't make logical sense. So how to make every retail offer relevant?
So a lot is at stake. We know things are evolving. In this context, the sessions on 21-22 April and the overall event, including the Complimentary MasterClass with Farelogix on 20th April, is a must-attend one.
By Ritesh Gupta
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First Published, 14th April 2016
Ai Editorial: In an era where CX, data privacy and personalisation are vital to any organisation’s success, airlines need to capitalize on the strength of the likes of Facebook, Google, PayPal etc. Ai's Ritesh Gupta assesses how
Programmatic buying, deep linking, new payments options, progressive web apps, robots, mobile wallets…airlines need to make judicious use of all of this and lot more to attain the nirvana of a superlative customer experience.
Think of what’s all happening today in the world of ad tech, analytics, e-commerce, mobile technology, IoT etc. Organizations have to learn about new technology, test it and optimize the expenditure.
Of course, airlines have to rely on 3rd party sites and platforms in such quest. Here we explore the significance of the likes of Facebook, Google, LinkedIn, PayPal, Amazon, Twitter and others that have bigger grasp over the traffic and transactions (be it for facilitating them or letting users transact on their platforms).
We all dread the idea of creating a new username and passwords, filling registration forms etc. to access a site or an app. I find it laborious, boring at least when I am eager to test out something new or trying to avail a deal or offer. From user experience perspective, travel companies, too, are wary of the “password fatigue”.
So, even for a seemingly simple functionality like accessing a site or an app, travel brands can’t afford to slip up.
Now here social login can step up the CX, be it for a site/ app entry or completing a transaction. So it all boils down to completing something in one-click. Such integration also helps travel e-commerce brands to acquire more data points.
“Google, Facebook etc. are going to continue to provide more information to their users. They’re the backbone of the information age. Also, we’re seeing more and more airlines delivering information to their travellers through these channels (for instance, the recent initiative featuring KLM and Facebook Messenger),” says Michael Roche, VP - Consumer Authentication, CardinalCommerce. “Go with the flow. It’s the Judo strategy (implies that airlines use 3rd party sites strength to its own advantage rather than opposing them) of the information age. Use their momentum to carry your business.”
Plenty to gain
So talking of the Judo strategy and continuing with the example of social log-in, airlines need to evaluate and seek enterprise as well as customer-oriented benefits:
· Improving CX: With social log-in, one can offer an alternative to email registration. In Q4, 2015, Facebook’s market share of social authentications was 62% of the overall social login market, shared Gigya. For its part, Google’s share was 24% in Q4. Google’s major progress has been the unification of its services (Gmail, YouTube, Google Drive, Google+, etc.) under one unique ID per user.
So rather than losing out owing to a cumbersome registration process, companies can come across as a user-friendly platform. “It all comes down to delivering something convenient, familiar and secure to a consumer. The reason you would offer this is because you don’t have that 1-to-1 relationship with that shopper that the social networks have and by providing this option you’re delivering them something beyond transactional data,” said Roche.
KLM’s Meet & Seat app chose social login to offer a new functionality to its travellers around social profile information and seating arrangement.
Referring to outsourcing of the inbound account authentication of a shopper, Roche mentioned the chosen network responds back with all the relevant data needed to create the account and maintain a 1-to-1 relationship. “The benefit you get is that you’re now leveraging billion dollar infrastructure that has a deep connection with that person’s behavior. Airline’s move people across the world, Google, Facebook, Amazon, and PayPal specialize in maintaining that type of relationship they always have had with them,” he said.
· Revenue generation: The same case can be made for the platform payment networks like PayPal and Amazon. It delivers the same convenience, familiarity, and security that the social networks do, but it's combined with a payment option. We’re also seeing the social networks delivering payment options as well.
· Optimisation of spend: Benefits are there from both marketing and IT perspective, too. Travel companies are using unified social API to cut down on integrated related-costs. This means one can avail automatic API updates for social network privacy and policy changes as well. Also, with better profiling and authentic data, message targeting is sharper, too.
· Strengthening data strategy: Another major benefit is related to centralization of profile data. There is a provision to gain access to social profile data from the user’s social account after authentication. So by using permission-based identity data, one lays a foundation for personalized experiences. This is complemented by initiatives related to blending behavioral data — structured and unstructured – to consolidate unified user view.
· Gearing up for the future: User identity has a big role to play in the time to come. According to Gartner, managing identities and access is critical to the success of the IoT. In a release in February this year, it stated: the Identity of Things (IDoT) is a new extension to identity management that “encompasses all entity identities, whatever form those entities take”. These identities explain ties between entities — “between a device and a human, a device and another device, a device and an application/service, or a human and an application/ service.” So identity management would be vital when it comes to managing the data that flows between these identities.
What about Facebook, Google, Amazon, PayPal etc. becoming stronger than ever? As we use our existing social media/ other existing accounts for online registration, is there any perceived threat?
Not really, says Roche, “because they already have a relationship with that consumer on a whole different level that goes above and beyond a log in at a travel site. There will always be scepticism on what they’re doing with the information, but when you look at the policy agreements, they’re binding themselves to strict requirements.” Also, test it out, recommended Roche. “Most people at an airline probably have an account with any of these networks, they should be encouraged to test it, and use it. As a consumer, you’ll know quickly if they’re using the data in ways you don’t like. At the end of the day, you as a consumer will be the first one to see anything that would make your business uncomfortable and then you can remove the option. You’ll still retain all the relevant contact data to keep the account available and in touch with them.”
These networks (established brands) will never become airlines, and airlines shouldn’t try and build their competency. “It’s easy for you to connect the dots when you’re outsourcing the dot creation. Use what these networks have done as a stepping stone to delivering a great travel experience to a traveller,” stated Roche.
Also, realize these networks need you more than you need them. Making it easy for one of their users to travel is nirvana for them. Use this to your advantage, work with them, summed up Roche.
Hear from senior industry executives about how craft a superlative customer experience at the 10th Ancillary Merchandising Conference (to be held in Barcelona, 21- 22 April 2016)
For more info, click here
First Published, 4th April 2016
Ai Editorial: Airlines are gaining stronger control over what offers they wish to display, where, to whom and in which format in the era of omnichannel digital commerce. Ai’s Ritesh Gupta takes a look
Air search technology has come a long way. The blend of data and technology is enabling airlines to craft offerings that go beyond only price and schedule.
If we talk of meta-search engines, carriers can avail valuable propositions when it comes to sharing of data. Be it for quality (say complete fare pricing, branded offers etc.) and quantity (not worrying about futile hits, look-to-book ratios etc.), the efficacy of crafting customized sales offers is coming to the fore.
A case in point is the progress that Lufthansa had made in the last 12 months or so.
Lufthansa has been availing a pre-computed pricing offering, putting together what offers to distribute and also decides on the intermediary for the same. A major highlight is swiftness with which amendments can be done in fare, distribution frequency and markets for any existing or new partner. With such offering, the group managed to double the number of meta-search business partners last year.
Pre-computing and live computing
Lufthansa recently credited Vayant for its air search technology that enabled the group to scale its reach in the meta-search category. The group is pushing customized sales offers to meta-search engines without doing a single pricing and shopping hit to its host PSS.
I interacted with Eric Dumas, CEO, Vayant to understand how the blend of live computing and pre-computing pricing can optimize the results for an airline.
As Dumas explained, a live computing transaction means performing an air pricing calculation using real-time data. Such requests return the most accurate flight search results that can be booked by the traveller. Price changes or expired offers – while still technically possible – are minimal.
On the other hand, with pre-computed shopping, one generates flight offers (including branded offers) in advance and then store them in a smart environment that updates in response to changes in the outside world.
“The precomputed concept turns traditional search on its head: for one, you gain sub-second response time. The economics of pricing and search are transformed. You don’t have to worry about look-to-book ratios because looking no longer comes with a transaction cost,” said Dumas. He added that this opens the door to various kinds of value-added shopping tools like affinity shopping, dynamic packaging, long-range calendar shopping, best-price calendars, etc. “The benefits of this approach are significant, in terms of marketing and enabling a richer user experience. It’s perfect for airlines in case they intend to transform themselves into a rapid click-to-buy platform.”
The blend of two
Travel sellers worldwide can choose their own mix of live and precomputed options and find the best balance for their business. The logic of whether to pull results from a precomputed shopping system or to perform a query on the live systems is determined by the airline through a business rules engine, mentioned Dumas.
It’s all about flexibility, enabling travel sellers to achieve the optimum mix of distribution channels, feature richness and responsiveness. Airlines can handle high volumes of search queries from meta-search engines, introduce transaction-intensive applications (such as maps, calendars, various web, social and mobile promotions) and flexible search menus to search by budget, affinity, month and more - without touching their GDS or host.
“It (mixed live-transaction and precomputed shopping model) provides airlines with distribution control,” said Dumas.
Explaining further, he said airlines push custom high-accuracy data and modify the pricing and shopping logic per partner. Search times vary from milliseconds when precomputed data is used to a few seconds when live. For airlines that is crucial in order to enhance their ability to improve the travellers’ shopping experience and satisfaction and amplify their brand equity by offering unique search experience to the travellers.
Signs of progress
Not too long ago options for distribution of different formats and sales offer data through indirect channels were limited.
“NDC launched by IATA for the development and market adoption of a new, XML-based data transmission standard has unsealed the capability for the airlines to become better retailers using dynamic and media rich content,” said Dumas, who added that airlines no longer need to be limited to information such as price and schedule as the NDC standard allows airlines to transmit much more detail on their service offering to their partners.
The inclusion of rich content paves way for differentiation early in the travel buying process, and better description of the services included in the fare. Also, airlines have full control over how their products appear on distribution channels through visual presentations and comprehensive form of content (videos, pictures, description of the product etc.).
Dumas said the NDC will enable airlines to advance ancillary sales and make booking and search process more attractive to customers as well better predict passengers’ interests and likelihood to buy. Also to establish product positioning and time-to-market approach, access to a full and rich air content – all of which will help create a better understanding of their passengers and more accurate personalised sales offers.
For airlines it is vital to stay in control of their sales offers, attune personalization and dynamically craft their offerings to give customers the most relevant choice at any given time, through any point of sale, any channel, direct or indirect and via any device.
Hear from senior industry executives about how airlines are gearing up to be in control of their offers and distribution at the 10th Ancillary Merchandising Conference (to be held in Barcelona, 21- 22 April 2016)
For more info, click here
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