Ai Editorial: Airlines need to be “organizationally ready” for modern commerce
First Published on 23rd October, 2018
Ai Editorial: Talking of a standard like NDC, a module or an engine etc. or merchandising and distribution is pointless if airlines can’t overcome the issue of silos and have a well-structured team for an initiative like NDC, writes Ai’s Ritesh Gupta
Managing infrastructure and domain-specific IT systems for retailing, real-time data intelligence, running a digital asset on purpose-built, multi-cloud set up, payment optimization etc. are among the initiatives that airlines are undertaking to keep pace with their customers in digital economy. But all of this wouldn’t really deliver till internal alignment is sorted.
The case of selling is no different. Talking of any standard, engine etc. or merchandising and distribution is pointless if airlines can’t overcome the issue of silos. It is vital to work on a shared view of data and every piece of information required to finalize judicious decisions on every instance.
Be it for refining the product or what to offer, or even optimizing revenue generation via dynamic pricing, efforts need to be coordinated among various disciplines.
Even if an airline strengthens its XML data processing capability and counts on the NDC standard to strengthen its offering in the indirect channel, without coordination between various disciplines the entire initiative can’t be optimized. Even if airlines collect and process the recent search data across all their channels and put in place appropriate skills to analyze such data by market segment, formulate offers, set pricing and then adjust booking engine rules to deliver this at point of search, they wouldn’t justify this exercise if this doesn’t go beyond the e-commerce team. It is imperative for a revenue management specialist to evaluate demand for a particular O&D and travel date. The airline can benefit by sharing data around who is searching or travelling, what their travel intent is, where they are in their planning/booking process and what might be of interest to them. Making the most of shopping requests on both airlines’ direct channel and also via the indirect ones is going to be a key aspect. Taking into consideration enormous volume of unstructured data and blending it with data already accessible can enable carriers’ various departments to benefit from valuable insights.
Accentuating on the issue, Sabre referred to the functioning of planning and scheduling departments, and recommends that customer segmentation data must be fed back to them. Post finalizing of schedules, the next step is to focus on selling the seat via apt blending of customer segmentation and fares. As for offer management, Sabre emphasized on considering data sources (that help in understanding travellers). For this, it is imperative to gain information from data sets, and there must be integration across systems and departments. Working on same data sources in real-time will be the enabler to setting offer management apart. Sabre asserts that technology exists that breaks down silos across commercial-planning departments.
On a similar note, referring to dynamic pricing, Zachary Wynne, Lead Consultant, ATPCO, says for such initiative to yield best results, efforts need to be coordinated between airline pricing, revenue management, distribution, ecommerce, sales, and revenue accounting.
“It isn’t uncommon to come across issues pertaining to silos – a team often doesn’t necessarily understand what other groups within the airline do,” mentioned Wynne, who was recently in Bangkok for Ai’s annual MegaAPAC event.
Wynne also mentioned that lack of coordination among teams means the implementation timeline for initiatives such as “NDC messaging of baggage allowance to one travel agency takes far longer than it should”.
The industry also acknowledged that airlines, as an industry at large, are not organizationally ready to change for IATA’s XML standard, NDC. As Farelogix recently pointed out, airlines have to work out a well-structured NDC team to scale up. Referring to the likes of Lufthansa, it underlined that carriers that have made progress have “invested in (and grown) teams of 30 – 60 people” especially for this project. This means “restructuring and/or hiring, the design of new processes, training, documentation, and the adaption of internal systems (e.g. monitoring, settlement, and accounting).”
Hear from experts about NDC and retailing at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).
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Ai Editorial: Is any player good enough to offer a door-to-door journey?
First published on 22nd June, 2016
Ai Editorial on ground transportation: Ireland-based Kevin O’Shaughnessy, founder of Indigo.gt explains how the industry can improve the customer experience in this arena
Is reaching a destination, and then proceeding to a hotel or moving around in a city a smooth experience yet?
Before we delve deeper, there are many facets from which this aspect of a journey can be looked upon.
One could be sheer utility angle – just boarding a bus or taking a cab to reach my hotel. Of course, car hailing apps are there to avail, but what if going online isn’t possible. Yes, if you happen to be in an airport like New Delhi, just don’t assume you can go online that easily even if it’s free. Moving on one can also enjoy the peculiar ways one can travel – trams, bikes, train, vaporetto, gondolas, carts, cruise etc.
I will give you an example. I have been planning a trip to Switzerland. I chose Zurich, Lucerne, Lauterbrunnen, Montreux and Geneva as my places to visit. Yes, I could check options to reach hotel in each of the places via hotel website or via booking.com (post booking email/ in-app content link). But several of my questions remained unanswered unless I chose to research online. For instance, is there any option to take a cruise from Zurich to Lucerne? Not really, but one can enjoy cruise from Lake Zurich or Lake Lucerne. Directions and mode of transport can be checked via Google Maps, but there are times when I struggled with it. Google Maps came closest to sharing options – for instance, Hotel Astoria in Lucerne to Lauterbrunnen, one could find out the exact routing, time and stops for rail, car etc.
But I wasn’t completely satisfied with the experience. What if Gmail could analyze my emails – my dates of travel, air ticketing and hotel bookings – to send me a link for moving around! I would readily give access to any sort of permission Google might seek, and would rather present with me options.
Game changer
Ireland-based Kevin O’Shaughnessy, founder of Indigo.gt, a search and reservation platform for airport-to-city transfers, says if every journey for business or leisure was considered a door-to-door journey from a planning as well as a booking perspective, rather than just directing users to the flight segment, we could show users a complete itinerary and allow them to book the entire thing in one step.
Kevin says overnight, this would change the dynamics of airline web bookings, online travel agencies and meta-search companies.
“This specifically means that instead of thinking of ground transport as an afterthought, it becomes a peer in a shared itinerary with flight content. The core technology to deliver this is here today: how long before the taxi app proposes to “take me home”, and streamline the flight booking as part of the process?”
Airlines are uniquely positioned in the market to profit from delivering a better user experience that comes from the transport utility, stated Kevin.
Opportunity for airlines
For the majority of air passengers, transport to/ from the airport — whether in car rental, chauffeur drive, metro or their own car — is a utility class of product: it is a functional part of the journey.
“If this is true, then the only real room for improvement are the external elements, such as the pickup experience. With the advances in ground transport technology and choice of providers, there is no reason airlines cannot take a lead in the passenger experience, turning a utility product into a positive experience. In doing so, airlines can also capitalize on the revenue opportunities, too,” said Kevin.
It needs to be highlighted that in the last 3 years, the data roaming charges in Europe have gone from extortionate to virtually free (part-driven by regulation), and many early adopters the world over have made the switch to tariffs which allow data on their handsets. Frequent travelers typically have the “roaming” switch set to “on” and there’s a good crossover between this behavior and use of taxi apps in a foreign destination. “The next major shift in transport innovation could well be driven by more widespread trends in passenger behavior when it comes to that roaming setting. If everybody could use data anywhere tomorrow, and since local taxi apps are commonplace, the biggest winners in the space — from a travel industry perspective — will be those apps. Airlines have therefore a very short runway indeed to capture — and profit from — this latent behavior common to the majority of their passengers,” explained Kevin.
Current gaps
As a traveller, Kevin says he attempts to optimize time and cost, but different passengers have different priorities. As for gaps, he points out:
- Not all the answers are in the online maps: not all the detail is there: not every mode of transport is shown, traffic information is patchy so timing will be off, cost is usually not there.
- There’s an onus on the passenger to “learn the destination”. I think airlines do go a certain distance to promote new routes and to give basic routing information to the city area.
- These different elements in the hands of passengers creates a type of “Travel Math” where they need to calculate the landing time, estimate the waiting time for their chosen transport, calculate the transit time. Then, they can finally propose a meeting at a certain time.
- At the airport, not all services are treated equally. The pick-up for different car services are relegated to car parks, different levels or more convenient exits. The same holds true for coaches: different commercial deals mean that some will be more convenient for passengers than others.
- Sometimes regulation or industry-wide tech adoption means that booking rail on mobile still means that passengers still need to pick up paper tickets, or that local transit tickets are only available to locals. This is slowly changing.
Here one must add that typically, airports profit well from ground transport companies: levies are applied to operating taxis and car services, rail is charged at a premium, bus stands are expensive and pick-up points for shuttles are all billed liberally. Since the revenue is already captured, at least to a certain extent, there’s less of an incentive to “go digital” and, only with a handful of exceptions, airport “ground transport” pages are limited to names of operating companies and basic destination information only. This is improving, very slowly, but airports are falling short of what they can do to improve the passenger journey.
Making it easy
Kevin says every market has its own habits.
“While taxi/ car services are popular across the US — this is not the case in large US metro areas or in Europe. In some markets, rail trips to/ from the airport are as high as 65%. Where high speed rail links exist, the typical take-up rate is about 35% of all passengers to/ from an airport,” said Kevin.
The problem, however, isn’t the product, according to him.
“Ultimately, ground transport — whether taxi or train — is a “local transport” product, which has been built for local residents over the last 50-100 years. This is perhaps why we must think of “transport” and “travel” as not being the same thing,” said Kevin. “Local transport, as a product, is not built for air passengers. Communicating options clearly and openly is key,” he says.
Referring to Europe, Kevin says rail and air behave differently in terms of information systems.
“We see plenty of innovation in train operating companies, but, to date, no credible source which brings all rail content together in a meaningful way for consumers,” he says.
When we “learn” a destination, we capture local knowledge in the right way for us. This is known as “embedded information” and the process of capturing and using this in online systems is difficult. To date, the travel industry hasn’t had a “common language” to apply to the intricate networks of and routes — whether to use them in a useful way for passengers or to monetize them somehow. “There’s no simple way of capturing the basics and communicating them simply. To date, only Google Maps has come close to this, maybe Rome2Rio, but both are missing the ability to transact,” says Kevin. “In some cases, this is hampered by local regulation or alliances. Only with some exceptions in the UK, rail is still mostly paper-ticket based. The trendy mobile apps you use still send you off to a machine to collect a paper ticket: basically reducing the mobile component to “search with a transaction” rather than issuing a fully-electronic ticket. In some cases, large rail operators in Europe intentionally restrict access to inventory, or lay on additional fees, in an effort to maintain consumer exclusivity.”
“Today, a door-to-door journey needs either time and effort on the part of the passenger to line up all the elements or, alternatively, some seriously smart technology, which we still haven’t seen yet,” Kevin.
He asserts that all ground transportation should be as easy to use as a taxi hailing app, and to achieve this, it means that all the inventory, pricing, commercials, payment technology, legal acceptance of terms and conditions by passengers needs to be visible and instantly available (meaning less than a second) for booking.
“This can be brokered through standards, but none has emerged yet. Business and Leisure travel could be transformed completely if the local transport component became an integral part of travel planning,” explained Kevin.
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Ai Editorial: Overcoming gaping holes in data strategy for ascertaining buying journey
First Published on 17th January, 2018
Ai Editorial: Constant refining of a core data asset, plus embracing latest developments in the ad tech arena is must as airlines attempt to understand the planning and buying journey of travellers, writes Ai’s Ritesh Gupta
Be it for managing data from disparate sources or multiple devices and channels or avoiding siloed device-graph data, airlines need to make continuous progress in order to attain a single view of the traveller.
The complexities associated with a travel-related buy are tough to handle, and data can help in understanding a prospective traveller’s interest, intent and conversion behavior across multiple devices.
We assess 4 key areas that demand attention on a regular basis:
1. Look beyond the digital side of the traveller: The importance of cookies, mobile device IDs, email addresses, registrations in apps or on websites etc. can’t be under-estimated, but is it enough? What about interactions with the staff at the airport or at the gate on the day of travel? The data platform needs to pave way for online and offline inputs. Specialists point out that offline data is more likely to be structured and come through batch file transfers. What’s the mechanism for real-time inputs and how the same can be made available for use? The sort of questions that are being scrutinized pertaining to data strategy and the serving platform are going deeper. For instance, how to unite anonymous profiles with personal identifiers that enables the system to append specific features such as age, location, interests, purchase history etc. to manage such profiles better. So let’s say a passenger is an infrequent traveller, who isn’t part of an airline’s loyalty program. What if he made a request for a particular seat on two journeys, but he wasn’t allotted due to unavailability. Can the same be done by identifying this traveller, at the time of his next booking, by connecting trails of data available?
So how ingestion of data (airlines need to act on online sources, offline sources of data, plus structured as well as unstructured data), connecting with external sources for updating profiles or even connecting anonymous visitors with their past record, analytics and extraction for real-time use (includes profiles to be connected in real-time to transactions and to events), visualization etc. is going to transform customer-centricity is an interesting area to watch out for.
2. Don’t be device-centric: A user looking at a trip itinerary from two different devices and being counted as “two different users” only results in a gap in delivery of content, deals and overall experiences. It is said that on an average a consumer moves between devices up to 20-25 times an hour and uses three or more different devices to complete a task.
So what sort of content to show? What time and how many times? To answer these queries, travel marketers need to craft a unified device graph, based on account log-ins plus identification of a pattern via algorithms (through variables such as IP address) that link devices to one user. This blend brings accuracy as well as scale. Adobe recommends that the device graph needs to work with the existing marketing stack to avoid siloed device-graph data and be embedded within existing marketing tools. This when works gives better picture about how a user, rather than his or her devices, is interacting with digital assets, plus also provides valuable information about attribution, how to work on efficiency of ads (frequency capping) etc.
3. Solid enterprise data platform: Airlines need to blend digital and offline consumer identities into an omni-channel identity, and this has to be supported by an astute data platform. This forms the basis for connecting online cookie and profile data with offline customer data into a single identifier. So not only airlines have to be prepared for call centre interactions or at the boarding gate, but they also need to possess a platform that is proficient at cleansing, deduping, refining of omni-channel customer data profiles, and comprehensive inclusiveness of digital and offline data. Retailers are already counting on such offerings for hyper-personalized messaging via linking of mobile ID, email addresses, web cookies etc. to validate customers. Only this can lay a strong foundation for advanced machine learning to facilitate meaningful interactions across the passenger journey. As for analytics and machine learning, both supervised and unsupervised models are increasingly coming to the fore in order to optimizing messaging and offers/ deals to customers. These platforms pave way for unified, identifiable customer data.
4. Keeping pace with advancements in ad tech: Travel marketers can embrace emerging ways to assess how many customers rather than devices visited their digital assets and interacted with their brand. For instance, there is emergence of cross-device audience extension over the last couple of years. The goal is to enlarge any set of audience or segments by going beyond their existing or unique group of identifiers and related them with additional cross-device IDs - cookies and device IDs to the original set. This is imperative considering the ownership and use of multiple devices, and since today’s traveller is always connected, this means it is important to make the most of both deterministic as well as probabilistic matches.
Another area is location extension. According to Drawbridge, this refers to capitalizing on location data with retargeting. This way travel companies can reach travellers based on where they’ve been – not just where they are – and do so on all of their devices.
Gain an insight into the latest trends pertaining to data strategy and travellers’ buying journey at the upcoming Ancillary Merchandising Conference in Edinburg, Scotland (9-11 April, 218).
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Ai Editorial: If tech isn’t inhibiting merchandising, then what ails airlines?
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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Ai Editorial: Prioritising data and IT infrastructure for retailing
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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Ai Editorial: NDC and retailing is about harmonizing IT and ecommerce
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.
Way forward
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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Ai Editorial: Triumphing in the game of ancillary products and personalisation
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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Ai Editorial: Interest in NDC not withering, but still there is little to “see”
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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Ai Editorial: Being flexible and astute with airline merchandising
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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Ai Editorial: Excelling in airline commerce – don’t ignore the essentials
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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