Ai Editorial: Off-PSS for retailing, how many airlines are ready for it?

First Published on 6th December, 2017

Ai Editorial: 2017 witnessed a key tussle around whether airlines are going to do away with the packaged PSS deal or not. Options related to deconstructing some of the key components within the PSS are being assessed to refine retailing capabilities, writes Ai’s Ritesh Gupta  

 

Dynamic pricing, personalised offers, targeting the “second wallet”… all of this and more encompasses retailing in the travel sector today and airlines, too, are open to embracing the same.

So what needs to be done for the same, say adjusting pricing as per the shift in supply and demand, a practice that is an integral part of retailing today?

Of course, with certain travel technology specialists urging airlines to evolve in order to be in control of what and how they sell, the option of going “off-PSS” is being explored. No denying that as long as the majority of all the inventory is controlled the way it is being done now, there will only be change to a certain degree.

So is it time to move main components - merchandising, pricing, scheduling and availability – out of the PSS in order to create an offer that is under the control of the airline? Are more and more airlines looking at adjusting their IT set up, thereby separating operational and commercial aspects of their business? Or have the likes of Amadeus and Sabre managed to catch up and set to retain their contracts signed over the years?

The legacy IT assembly has had applications, using TPF. An experienced airline IT executive emphasised that the mainframe can still be persisted for its message processing capability. “Use the data which is there on the mainframe, but do that analysis offline,” he said. “The “legacy” systems are the core backend. Ancillary functionality e.g. to charge for seating, supplying nice user-friendly photos of seats and 3D views inside the aircraft must be done off the PSS. But the query to see if seat 40C or 54F is still available and the actual booking must be done via the core PSS. Technically, moving from EDIFACT onto XML is the way forward. IATA have started that with the AIDM – Airline Information Data Model, but it’s a long way to go.” As for the demand for an omnichannel retailing forcing airlines to re-think their entire PSS strategy, he said “offering car and hotel products can be done on the website as bolt-ons.”   

A senior industry executive, currently associated with a traditional travel B2B conglomerate, acknowledged that  the new offerings are interoperable, scalable and flexible, unlike proprietary applications used in the past. “So there is provision (with open-ended systems) to grow as when the need arises. But older players are moving, too, increasingly using open source applications (it is being highlighted that Amadeus turned off their last TPF-based application this year). Certainly the legacy systems need to be updated, so that airlines gets the maximum value. If the IT provider isn’t doing it, then it certainly calls for action on part of the airlines.”

We assess two scenarios of continuing with one vendor for the entire IT suite and using specialists for certain engines/ systems and going off-PSS in this case:

-       Level of risk and integration work post off-PSS

A couple of issues are being highlighted that can’t be overlooked while drifting away from the existing IT set up in-lieu of working out an offer dynamically via addition of offerings from a 3rd party vendor.

“Anything that has been done for a long period of time can be termed as legacy. So new players can find certain niche elements, and break it-off for improvement. That is how they will grow. But the original airline needs to remember – every system that is in place has a certain role to play, it is there for a reason. It is designed to work in totality with the entire product IT suite,” mentioned the executive. “Several systems talk to each other, and it works like a well-oiled machine. If you start breaking a part of it, on the narrow it looks great. At the same time, do assess what perspective you are losing.” So let’s say, there are options as far as merchandising is concerned, and a seat assignment can be handled, EMD can be issued, record a sale through the right channel etc. and a sale happened. In case, an irregular incident takes place – the plane gets delayed or flights are cancelled. Now the passenger needs to be protected on to the next flight, but is that information going to get translated into the DCS record of the passenger. So if it’s a 3rd party product, is it integrated to handle such cases or only integrated in the res system? Is the backward integration streamlined? If the airline needs to take care of the passenger manually (go into the record, what services paid for etc.) and make the adjustment, then it is an issue. “It (integration) is additional cost, and the work has to be done in case of different vendors becoming part of a suite. Do the new vendors have that level of expertise?” Considering all these factors, certain airlines are understandably averse to embracing change. For an industry that tends to prioritize safety and operations over anything else, change doesn’t come easy.

Amadeus, in an interview with Ai in August this year, acknowledged that even if an airline’s IT strategy features relevant/best of breed components from a range of suppliers they are ready to support it.

Overall, be it for organizational hurdles or reliance on business processes that are still based on the paper-based workflows or setting up the retail layer on top of the legacy systems, such issues can hamper the progress. So even as one talks of adjusting pricing as per the shift in supply and demand, such desired move might not be an instant possibility.  

-       Targeting cost reduction and incremental revenue by going off-PSS

There is no one process for shopping today. A request could come from any of the avenues – airline.com, meta-search, OTA, an offline travel agent…so an airline’s offer needs to be ready. The offer has to be correct, consistent - otherwise the passenger might not choose you.

Processing these shopping requests has to be cost-effective, too. The look-to-book ratio has sky-rocketed over the years, and it is one component that can’t be ignored by airlines. This issue has been addressed by certain players, transforming the economics of pricing and search (supported by live-transaction and pre-computed shopping model paving for shopping accuracy, sub-second speed etc.).  

Also, even as airlines are being “shopped” from an increasingly number of channels and the key is to increase the percentage of that look-to-book by marginal amounts. How to achieve the same? Airlines have to be dynamic – being able to generate offers on the spot every time there is a request.

“There are bunch of attributes that can go into an offer – loyalty data, O&D, predictive purchase analysis etc. The goal is to increase the conversion rate, post a shopping request. This won’t be possible, if airlines aren’t going to craft their own offers. By closely evaluating and studying dynamic pricing, airlines are increasing their take rates, be it for working with OTAs or any other 3rd party channel”, explained a source. So how does it offer flexibility? “So one may take any ATPCO filed fare or market price, and apply discounts or premium to that and create a price. And how about adding premium bundling on top of pricing? That’s the kind of control that is being targeted today, by working on tools that can result in incremental revenue.”

The attempt is to respond in the best possible manner to every inquiry coming into an airline’s system. So the plan should be to blend booking data and offer data.

Engines - merchandising, pricing, scheduling and availability –position airlines to maximize the opportunity as they are rules driven plus they also leverage predictive analytics. So it would be rules-based schedule building and off-PSS availability calculation, for example. In this context, the industry is witnessing certain players recommending PSS-agnostic connectivity with full offer and order management, and the NDC API fuelling all channels.  Are airlines going to do away with their respective packaged PSS deals, deconstructing some of the key components? “Technically, anything can be de-coupled, commercial considerations or even the desire to do it can be a question mark (in case of airlines)!,” said a source.

Every airline’s journey toward retailing is unique, but one question that continues to crop up is the agility of PSS. If the progress of an integrated IT suite isn’t up to the mark, then separation of operational and commercial aspects is imminent.

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Ai Editorial: Assessing building blocks for becoming a platform-enabled retailer

First Published on 14th November, 2017

It is imperative for airlines to be in as many winning digitally connected ecosystems as possible, while protecting their value add. Either you will be part of the new digital API ecosystem, or you will be fighting for survival in a small niche, writes Ai’s Ritesh Gupta

 

Making the most of every digital trail for a favourable business outcome is what digital enterprises are after.

But connecting the dots pertaining to a fragmented shopping journey isn’t just restricted to one organisation’s data. Of course, capitalising on the 1st party data, working out a core data asset around own transactional systems is an integral part of a connected data architecture. But what about leveraging “open innovation and open algorithms” as part of the platform strategy?

For instance, a traveller is allergic to a particular food ingredient or loves a particular cuisine as per the shopping preferences logged with one retailer or within one ecosystem. Can the same traveller be served food or rather be delighted with what he loves as part of onboard flight services? If seen this way, every click or tap is an opportunity as there is data that is resulting from every interaction and experience.

Of course, issues such as security, privacy, ownership of data are key considerations, but with policing and governance, entities are looking at transforming their capabilities via an astute platform strategy. The connectivity facilitated by such plug-and-play business model is paving for interactivity among the stakeholders, and resulting in exchange of “value”.  Airlines, like any other business striving to embrace digital transformation, are gearing up for an API-managed environment, microservices architecture and artificial intelligence.

Digital economy works through a platform economy model

Reflecting upon how how a travel e-commerce player needs to prepare for a platform strategy, Marko Javornik, VP/GM Mobility & Travel, Comtrade Digital Services, says, “Digital technology is all around us and has a major impact on all industries. It also has impact on virtually all aspects of our business. However, this impact is largely different when we talk about operational aspect versus revenue generation aspects.”

Citing an example, Javornik mentioned that airlines are using PSS platforms for decades to optimize the operational aspects of handling passengers. “However, only in very recent years airlines are recognizing that their core business in the future will be digital platform business and that the top level structure will change. This has enormous impact on airline organization as a whole. This is a truly deep change that deserves to be characterized as “transformational”. We are talking about airlines becoming digital technology companies where handling planes is now becoming just a supporting business (even though undoubtedly very important one).”

Javornik underlined that airlines need to finalise their respective digital strategies to survive the commoditization of their core market.

“Airlines that will focus only on core business will not be able to survive outside of niche markets. Core business has become commodity and yields no profit. However, if airlines can leverage core business and build a digital platform on top, they have a great opportunity to claim a large piece of the pie in the new emerging digital travel ecosystem (s). Airlines do have some unique unfair advantages over all other digital players and today they are simply not using this appropriately to their benefits,” said Javornik. “Here it’s important to note that digital economy works through a platform economy model. If airlines will not deeply understand this and will not adopt this business concept and mind-set, they will not be successful. Digital API economy will not make an exception for airlines. Either you will be part of the new digital API ecosystem, or you will be fighting for survival in a small niche.”

Digital transformation requires action on several fronts – embracing cloud native architecture for managing and running digital assets, APIs etc. So where does a platform model fits in for digital businesses in order to embrace innovation and agility? 

According to Javornik, the first thing to understand is that digital transformation goes really deep.

“One can go and visit few champions of digital economy and observations should be obvious and immediate. It's certainly not about assets, it's not even about processes and methodologies. It's about culture. The digital world brings significantly different complexity and speed as we are used to in the classical economy,” Javornik said. He added that embracing this natively means to fundamentally change the management approach that we have been taught in management schools even just few years ago. The basic management control processes which enabled success yesterday is today the biggest inhibitor of embracing the new culture that is needed for digital companies to be successful. “In this respect, start-ups have a huge advantage. They don't need to think about how to transform the existing business. They don't need to think how to deal with thousands of employees that are executing outdated processes, don't have appropriate skills and don't have the right culture. They just jump into a new market opportunity and build the needed culture from scratch. Nevertheless, the easy simple mobile app business is now taken by new players and also digital economy is now understood much better. Therefore, also bigger organizations have a good chance now to succeed in this second wave of innovation in the digital API economy.”

Some points to consider

·          In order to be a platform-enabled retailer, the role of microservices is vital. “Whatever you are building today needs to follow this architectural pattern with the clear understanding that you have no idea how microservices will be assembled in the future. However, the more flexibility you have in the architecture, the more successful you will be in fast changes that will inevitably be part of your daily life.”

·          Leveraging transactional systems: This (extracting and managing data out of the transactional systems) is the core issue of airlines today, said Javornik. “They (airlines) are not a start-up that starts from scratch. They are deeply connected to outdated rigid systems. And it will take years to convert to a new architecture. They need to do it step by step. Here it is important to look at the big picture and find layers that are critical and therefore first priority versus other parts that can be changed at a later stage.”

·          Differentiation via sharing of data and APIs: “Software does not have a physical form. In the decades of development on the market it turned out that the most efficient model to benefit from digital technology is to position it in a form of a platform that enables so called two-sided marketplace (or multi-sided marketplace). This means that you eliminate all non-IT middlemen and start customer journey with a digital system on top,” said Javornik.  “In a form of a platform that connects end users to other systems that provide them important services. It is fundamentally important to understand that this is the prevailing business model that is winning today on the market. Not being fully integrated in this new ecosystem is a very dangerous strategy in my opinion. Not understanding difference in complexity and speed of this new ecosystem is a danger as well. There are no friends and enemies in this new ecosystem. Almost every other microservice in the ecosystem will be both at the same time or so called “frenemy”. Companies that will be better connected and will have ability to change business models faster, will win,” concluded Javornik.

So, as Javornik, also asserts there won’t be any single customer journey. It is imperative for airlines will need to be in as many winning digitally connected ecosystems as possible, while protecting their value add on the other hand.

 

What is the significance of being a platform-enabled retailer? Here from experts at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

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Ai Video: Is being process-centric really a hindrance to being a retailer?

First Published on 7th November, 2017

 

Operations and safety have always been high on the agenda of those running an airline. In this context, if airlines have rather been slow to being customer-centric and embracing data-driven retailing, it doesn’t come as a surprise. As the industry digs deeper, some pertinent questions are cropping up: how to go about organisational structure? How to combat silos and align various disciplines to serve the customers in the best possible manner? Is airline-specific technology that is used to run operations a hindrance to being a digital enterprise?

Ai’s Ritesh Gupta spoke to Kevin O’Shaughnessy, CEO and co-founder, Indigo.gt about the same. Excerpts from a recent interaction between the two that took place in Bali, Indonesia.   

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Ai Video: Monetising in-destination spend

First Published on 1st November, 2017

Where do travellers spend money for in-destination activities – OTA, airline.com, Airbnb, 3rd party emerging booking platforms, offline stores/ counters etc.?   

Monetising web or mobile traffic by selling tours, transfers, local experiences, tickets for events etc. along with dining and shopping is on the agenda of travel e-commerce players. Stepping up the average order value by capitalising on in-destination spend isn’t a random move anymore.

Airlines are starting to realise the significance of curating relevant choices, right from the destinations a traveller may consider to “what to do” once its chosen, to fall in the consideration set as early as possible in the booking funnel. Website personalisation, profiling of customers etc. is coming into play as part of sophisticated retailing techniques. Be it for refining the booking flow or presenting content and inventory via 3rd party sites, airlines are assessing every possible opportunity to monetise the in-destination spend in a methodical way, rather than losing out to others be it for having a important say in the trip funnel or garnering incremental revenue.  

In this context, emerging entities like GetYourGuide are carving a niche for themselves, a sector which according to Shane Mayer, Strategic Partnerships, GetYourGuide, is evolving rapidly. The company is enabling established carriers to let travellers arrange their entire journey via them. Customers can do this weeks ahead of a trip, or even during the flight, said Mayer. 

Explore how airlines, intermediaries and B2B specialists are going about distribution at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Is IATA’s NDC standard maturing?

First Published on 27th October, 2017

Ai Editorial: What is the real utility of IATA’s NDC standard in “indirect” distribution as of today? Is the XML-based messaging standard maturing? Ai’s Ritesh Gupta examines.

 

Questions around the progress and even the viability of NDC continue to crop up, even though the XML-based standard has been around for years now.

Of course, the number of airlines associated is always under scrutiny, but the IATA asserts that the standard is progressing and “maturing”. In their recent update, the IATA referred to the progress with version PADIS 17.2 (went live last month). It has also been stated that by next year, 55 airlines representing 55% of IATA member passengers boarded are slated to be NDC certified.

“Look at the total revenue generation (featuring NDC),” questioned one senior industry executive, who also questioned the utility of XML. Also, “too much flexibility in the initial versions of schema and continuous releases”, too, haven’t gone well with even some of the proactive players in the industry, as the standard is not only an airline topic, it does have an impact on the entire industry.

What is there to be seen as a progress then?

“It is clear that airlines, especially full service carriers, can’t play the waiting game. The game of retailing isn’t just about selling on direct channels. Of course, data-driven retailing (identifying frequent travellers, infrequent travellers, anonymous travellers etc.) is the focus of airlines for their channels, but airlines are looking beyond that. If NDC XML API connectivity can result in bundling of offers for certain routes in an ecosystem such as Alibaba then they need to prepare for it,” said a source, referring to Lufthansa and Emirates’ deal with Fliggy, a part of the Alibaba ecosystem. “Of course, certain, though only a handful of airlines, have chosen to re-work on their respective commercial strategies (for bookings coming via non-NDC channel/ connections) – and if you see NDC it features prominently among them. Every stakeholder has their commercial interest, if there is a way to disturb certain deals or have new ways of doing business then so be it. If an airline wishes to cut down on “costs” in one channel and pump in more money in another channel that’s their choice. That’s the way business goes.”

So direct connectivity, as exemplified by certain airlines, is driving the quest for being in control. “If an airline has worked on something special for outbound tourists from China, and if they believe the shopping experience on Fliggy could be served best by the NDC XML API or it is relatively a faster route to market, then why not? In fact, if there is a provision for rich content, bundled offers including ancillaries, and bookings are being managed via an airline’s reservation system without any 3rd party involvement, it does sound attractive, even though it needs to be added that working on such connect takes perseverance and investment.”

Too slow for some

In case of certain intermediaries, say a meta-search engine, that aren’t as big as Google in terms of garnering traffic but do understand the significance of showcasing the best possible content/ deal from airlines to make comparison shopping easier, the pace with which NDC has progressed has rather been slow. They expected a lot more, still for them, NDC has failed to deliver to an extent.

As Skyscanner acknowledged in one of our recent interviews, the issue has been flexibility with schemas. There are 2000 partners that Skyscanner works with, and there is plenty to deal with as far as APIs are concerned. “We hope to see more airlines adopt it (NDC),” mentioned Filip Filipov, VP, Product Management at Skyscanner.

Explaining the positive side as well the struggle that shackles airlines’ progress with NDC, Umesh Nair, president NDC and Distribution at travel technology start-up Airlines Technology, says, “Airlines want to go ahead with the NDC standard but have this in mind - when to start? How to start?” So where is the void in the market today and how is Nair’s company ensuring NDC picks up steam? “ The void is firstly (the) cost of implementation for airlines and travel agents, secondly travel agents are concerned about their push back from airline. They should understand an airline doesn’t earn profits from ticketing, in fact, ancillaries are the major revenue source for them. If travel agents sell more ancillaries, which means more revenue resulting to more profit. That is the integral part of NDC – whatever you are able to buy on an airline.com, in future you would be able to buy on a travel agent’s website/ brick and mortar.”

As Nair explains, certain airlines have realized that the game of retailing isn’t just about flight, air ancillaries such as flight boarding or bags, or hotels and car rental. In fact, airlines are being advised to dig deeper and target the “second wallet”, offering meals, insurance, events, transfers, taxi etc. Some of these products can result in attractive margin, for instance, meals with average order value of $15-$20, and net revenue of $9-$12.

But, according to Amadeus, the Level 3 is disruptive for agents, changing workflows and processes. As Cyril Tetaz, Head of Commercial, Asia Pacific, Airlines, Amadeus, explained to us recently, the cost and difficulty of integration remain quite high and may be difficult for some parties to address.  Airlines have been largely focused on Level 3 connectivity (Offer and Order Management) that would allow airline offer creation as well as order creation, retrieval, change and travel document issuance, payment and refund to be done via NDC-XML technology. IATA has also been highly focused on providing standards around this. But this represents a major booking flow redesign and requires travel agents to invest in NDC interface adaptation and costly IT integration, according to Amadeus. As Tetaz said, there are many ways of integrating NDC, and Level 2 connectivity (Airline Offer Management) is one of them. Here, airline offer creation through search and pricing of flights and ancillary services would be done via NDC-XML technology, without impacting the booking, servicing, payment and ticketing steps. However, Level 2 connectivity has not yet been defined by any industry player, he said. Options for integrating NDC are still in the making and being discussed by all players. Within the context of NDC, “our vision is to develop an integrated solution that can be widely adopted by both travel agencies and airlines to deliver sustainable results at a scale that matters. The objective is to ensure easy adoption in the marketplace with minimal disruption and to meet the business objectives of all parties. Collaboration across the industry will be a key factor in driving success for all players,” he said.

On the positive side, even the certification attained by different stakeholders could vary, specialists have found a way out to get the work done. There are offerings that can normalize different schema versions in real time, enabling connections to work between airlines and aggregators. This has helped in the implementation of NDC.  So even if an aggregator could be at different level of certification and an IT player could be at different level, “this is where NDC Adaptors come into play where we make sure that no matter on whichever version they are, we will make sure they are able to talk to each other – backward and forward compatibility,” said Nair.

So progress is being made regardless of schema standard and version.

As of today, different stakeholders have different take on the maturity level of the NDC standard, and expect such mixed response to continue in the time to come.

 

Explore how airlines, intermediaries and B2B specialists are going about distribution at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Solving the conundrum of “no single passenger journey”

First Published on 27th November, 2017

Ai Editorial: A traveller’s journey, right from dreaming to planning to booking to travelling, encompasses several touchpoints. How being a part of a digital economy and industry-specific business processes can help airlines in serving passengers in the best possible manner, explores Ai’s Ritesh Gupta   

 

For an industry that is caught up being process/ operations-focused, being too “siloed”, the task of being a part of a digital economy or embracing new business processes isn’t a straightforward one for airlines.

Traditionally airlines have focused on safety and operations, and this means customer-centricity has largely been way below in the list of preferences.

But with the race to own the customer largely drifting away to those who “own the data”, airlines are rightly looking at evolution to sector-specific processes, systems etc. to serve the passengers in the best possible manner. The consumption pattern and the fulfilment part of taking travellers from one destination to another is unique, quite different from buying a book online, but airlines can’t ignore consumerism that essentially is now about a connected, contextual experience.

Going by what airlines can possibly do to being more customer-centric falls in two categories:

1.     Improving upon on this sector’s underlying processes (every airline’s IT strategy is unique, thus they may decide to take relevant/ best of breed components from a range of suppliers), and

2.     Making the most of datafication and IT trends to be a part of a digital economy.

Both are equally important as there is no single customer journey.

“There will be no single customer journey. In fact, it will be the opposite. We go into the area of hyper-personalization, where each passenger will get a different offering through potentially unique set of channels. Artificial intelligence combined with platform economy allows unprecedented customer flows,” explained Marko Javornik, VP/GM Mobility and Travel, Comtrade Digital Services.

 

 

Here we explore how airlines are finding a way to serve their passengers by being part of a digital economy, and via industry-specific systems and processes (offer management, OneOrder concept, as envisioned by IATA), ahead of this week's 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).   

Platform economy model

Javornik emphasised that digital economy works through a platform economy model.

An interesting aspect of such model, according to Accenture, is the frenemy-like set of vertical industry groups “competing with captive offerings of horizontal platforms (e.g. Spotify on iOS vs. iTunes, Netflix on Prime vs. Amazon) is a characteristic of the platform economy”.  Good news is that the travel industry is starting to count on computing power, data storage, and open-source frameworks. Whether airlines make the most of datasets in their own environment or find a way to act on the activity of a shopper on Facebook or Alibaba (could be via retargeting or a branded storefront), acting on quality, relevant data must.  

Being part of such model or ecosystem can help airlines to make the most of where traffic is – it could be Facebook Messenger, WeChat, Fliggy etc. Say, a user ends up having an interaction with a chatbot on an airline’s account on WeChat about a fare from London to Shanghai. How about showing content (things to do in London)/ deal related to Shanghai when the same user visits airline.com? And if the airline knows about the profile of this traveller, how about offering precise options for things to do or a bundled offer? Plus, contextual signals such as like the time of day, weather, location (if you’re at home or traveling) and style (family, adventure etc.) can even refine recommendations further. This is where preparation in terms of having a single view of the customer, rules-driven content architecture, making the most of content on 3rd party ecosystem etc. can end up delivering a differentiated experience.  

Industry-specific systems and processes

Airline are looking at the systems they use or processes they are part of to improve upon several counts. One of them is controlling costs (considering the level of the look-to-book ratio as of today). Another area is improving upon KPIs such as average order value. Airlines have a lot of operational systems, for example, seat load factors by routes. So can such systems be fed into merchandising platforms to make offers that are dynamic, on real-time basis? Yes.    

Also, even though there is a continuous debate around JSON vs. XML featuring in NDC and OneOrder schemas, different stakeholders have gone ahead and allocated resources for the same. This is being done to be in control – making available customized, rich content offers via every sales channel.

It is being highlighted that by building on the Offer and Order Management systems, using NDC as the distribution protocol, and creating the One Order standard, airlines will have a much larger pool of APIs and third-party content providers to offer their customers the right travel offer at the right time, regardless if the customer is coming to the airline. As for the OneOrder offering, it would communicate with an airline's passenger services system through industry standard interfaces. The offering running in parallel to an airline’s PSS, would feature complete PSS booking connectivity and document process capability, converting PRN into “orders”. So PSS would pass on information to the NDC platform, where master record would be stored. The blend of this approach counts on historical details provided by the order management system and this vital, real-time business intelligence is leveraged in personalisation of offers. The fundamental concept of order management system is that it becomes the central source of truth. So the airport display, check-in counter, ground handler, catering…every aspect connects to the order management system. This would again help in serving the customer through the journey in an earnest manner.

Here from experts at this week's 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Personalisation at scale –what’s the journey like?

First Published on 20th October, 2017

Ai Editorial: How an organization that has embarked on a journey to personalise every interaction is going about the same? Ai’s Ritesh Gupta gains an insight from the travel industry, some dos and don’ts for getting closer to personalisation.

 

Personalisation requires clear vision, resources and investment.

From the outset, the roadmap needs to be clear. So how the graph of personalisation is moving along, the entire organisation needs to be aware of.

Here is the journey of one airline that is still in middle of the same, but is actually delivering personalised experiences on certain touchpoints. So if one on hand, a passenger, who is willing to upgrade seat at the boarding gate might not get recognised, but the same passenger when interacts with the in-flight staff can be identified. “We have digital dashboards for crew (on-board), but still lacking digital tools (for the airport environment,” shared an airline executive. “But do remember personalisation is a never ending story, there is a need to start somewhere, and don’t try to include all the touchpoints from the beginning. Even if an airline starts with personalisation, preferably for individuals, they would be be able to generate additional revenue and loyalty.”

Journey

So the journey of this airline, especially on digital touchpoints, for relevant recommendations and messaging, and seamless, unified experience, has been as follows:

Start with segmentation and make steady progress to rules-driven personalisation. This means setting up and further reworking on business rules that are utilised against clusters of visitors, based on information one can garner about users. This stage is generally based on relatively broader categories – for instance, starting with location or gender specific targeting to an advanced phase like one who has travelled to one particular destination possibly would be interested in another location. Next step before an airline moves onto an analytics-driven phase, could be narrowing down of segments. So a digital touchpoint is equipped to show targeted, relevant content but at this stage personalisation is around logic-based rules to decide on images or videos to be shown to the visitor. One might finalise rules based on the IP address, physical location, keywords etc. Another aspect that has been around is variation in what is being shown to customers on a travel e-commerce website based on the behavior of the user (banking on visitor profiles and pattern-card matching to dynamically alter the content). For this also, rules are finalised.

The second major component is progressing toward algorithmic personalisation, where one initiates with a relatively broad set of recommendations to ones that are specifically meant for an individual.    

It is also interesting to assess how some of the start-ups or 3rd party specialists can also play their part in personalisation, possibly without any access to data from the airline. (For instance, usage of machine learning in personalising destination discovery, helping airlines to begin their customer lifecycle earlier in the inspiration phase which positions them for the booking/ancillaries – that’s where the monetization is). Of course, airlines would be much better placed with a diligent data strategy in place which would help them to work better with such 3rd party specialists, and then they can even go for better recommendations on their websites or apps.

Significance of data

All through data needs to collected and acted upon via a central hub for the entire entity to come in unison as the journey allows. Three key points:

·          “For any airline to achieve personalisation at scale – the success lies in being able to unite all of their data,” shared an executive. “At some point, the issue of increased complexity would arise, but that’s where involving data science and decision making algorithms would assist.” As highlighted by Boxever, data-driven organisations ensure their customer data collection fits in with constantly evolving behavior based on their context. So if an airline doesn’t end up connecting the dots and act on the context of a situation, then it would end up missing out on optimizing the experience.

·          Also, move towards “operationalising” actionable data. “It is imperative to interact with passengers across channels from one core hub and having an ability to answer swiftly and aptly in context.”

·          Airlines also need to plan for how to set up rules and decisions for all channels, so even if starting with one channel – so say offer or deal for one channel, how the same can be established for all digital plus say offline channel e. g. boarding gate at the airport.

Other than data (which alone cannot facilitate change), certain areas that require attention from the beginning include:

·          Delivery of content: How would an airline deliver dynamic content, what sort of architecture is needed for the same? Also, what would it take to adopt omni-channel approach to content management? The content ideally needs to be crafted once and the organization should be able to reuse it on multiple digital properties without the need for duplication. Explore the pros and cons of coupled versus decoupled web content management architecture (for instance, in case of coupled architecture while the initial setting up is simple, scaling up is one issue. As for headless CMS can result in freedom while finalizing on a front-end user interface technology say for an app, on the flip side the CX or customer experience ends up being decoupled as well.  This would limit the ability to personalize the overall experience).  

·          “Make sure there is at least something to begin with, to personalize – a certain category of products and content to play with,” shared a source.

·          As highlighted in one of our previous articles featuring Vueling Airlines, do evaluate the 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.

·          Don’t rush to eradicate the problem of silos. Be careful about pushing for a sudden change. People aren’t going to be responsive to “new jobs, new skills, and new people to work with” resulting from drastic steps. Don’t risk the continuity of teams

 

Hear from experts about unique challenges that airlines face as they attempt customer-centricity at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Airlines and customer-centricity - do focus on unique challenges and people

First Published on 6th October, 2017

Aspects like an airline’s business continuity or the organizational structure are often cited as major roadblocks to being data-centric, be it for customer service or retailing, writes Ai’s Ritesh Gupta

 

Every interaction – be it via app/ website, self-service kiosks or staff at the airport, a chatbot etc. – matters today.

Airlines, just like any other e-commerce organisation, are gradually finding ways to work out a single view of the customer.

As it turns out, more than any investment, any data-centric platform, any IT-related move etc., it is the entire organisation that has to come around and ensure that every data trail is being capitalized on.

Aspects like business continuity or the current organizational structure, including unique challenges posed the way a majority of airlines are run, are seemingly the major roadblocks to being data-driven. Of course, extracting data out of transactional systems associated with airlines is one area that can’t be ignored, too. But equally important is the tendency of airlines not to embrace change. It needs to be countered.

Taking “digital” out of shadows

Airlines executives themselves are probing critical areas – is it time for airlines to split digital commerce from operations? Is an ecommerce/ digital business sitting under the same roof as operations curbing customer-centricity and data-driven retailing at airlines?  Airlines need to take the quantum leap into the future, combating organizational/ cultural defiance, limitation of this industry’s legacy technology and operational silos.

Nik Laming, GM - Loyalty Division at Philippines’ carrier Cebu Pacific Air believes that these businesses will more often be physically split into an operating business and more of an Uber- or Airbnb-style business, which is very focused on e-commerce. This would pave way for businesses to be quick enough, innovative enough without the operational concerns to respond to the new market conditions and harness them for profit. “ When there is supposedly an ecommerce/ digital business sitting under the same roof as the operational business it tends to be get slowed down, caught up in procedures and processes that weren’t  designed for nimble and disruptive growth, but were rather designed for operational delivery, regulated delivery where it not about speed, but it’s about accuracy, and quality and safety.”

Being pragmatic

Today the whole talk around digital transformation is being scrutinized minutely. Every airline’s journey is different. But there are some key lessons and recommendations that are emerging from experienced professionals:

·          Any change, right from sharing a mission and goals, needs to be top-down driven, with incisive leadership laying a strong foundation. “The executive leadership needs to buy into and own the undertaking of this magnitude. Then push it through the entire enterprise, break down the barriers for the working group to work,” recommends, Blair Koch, Datalex’s CTO and President USA.

·          Data alone cannot provoke change - rather accessibility, acting on it, customer support, training, incentivizing employees and ending up with the development of a customer-centric culture is key, Barcelona-based RJ Friedlander, CEO of ReviewPro, a specialist in guest intelligence for hotels, told me in an interaction this year.

·          Count on cloud for time to market, agility and cutting down costs. But this doesn’t need to be confused with the actual delivery of customer-centric capabilities required by an airline.

How to be data-driven?

So there is a need to prepare people in an airline.

Learning how a hotel company is doing the same, as explained by the Thailand-based hotel company AMARI, various departments need to take the responsibility of collecting data, and in turn, actionable information is being provided to ensure the experience of a hotel guest improves.  So, for instance, if a guest who has booked via an online travel agency, the hotel front desk staff is being instructed to collect the email id and being trained to get this guest enrolled into a loyalty program. Similarly, if a loyalty program member has turned up, then the screen (yes, there is an additional dashboard on the screen used by the front desk) would reflect relevant information and offer an opportunity to enhance the experience of this guest. So if a guest tends to stay in a certain type of room or prefers a particular location, then the staff can offer the same to them.

So how AMARI is bringing about the change?

“We talk everything in terms of a guest or customer profile,” shared Chetan Patel, ONYX’s Hospitality Group VP Strategic Marketing and E-Commerce. “We are moving towards real-time, 1-to-1, personalised, seamless interactions with our guests. That’s the end goal,” says Patel. The company is working on a new platform.  

As explained by Patel, relevant people in the company are capturing data right from what triggers the search to the next trip, and this entails what people tend to do and what are the opportunities to influence the behavior of the traveller. “The entire journey is being evaluated for our own systems and touchpoints,” mentioned Patel.

There is clarity on the following areas:

·          What data needs to be collected from each touchpoint?

·          What system will be involved at each touchpoint?

·          Where the data will be stored at that touchpoint?

·          Who will be the owner of that data once is collected?

Having an integrated customer profile that combines online and offline data is what AMARI is prioritizing.

Each airline has to chart their own journey. There are common challenges, where one can learn from some of the proactive organizations. Interestingly, in a recent post by Adobe, it was suggested that don’t rush to eradicate the problem of silos. Yes there are organizational silos that block departments from being on the same page working toward one goal, but also be careful about pushing for a sudden change. People aren’t going to be responsive to “new jobs, new skills, and new people to work with” resulting from drastic steps. Don’t risk the continuity of teams, it suggested.

Referring to marketers, it recommended that focus on collaboration (work out a journey map to help address technology and skills gaps), assess goals (cross-team KPIs that align well) and evaluate the transition plans for overall change management.

 

Hear from experts about unique challenges that airlines face as they attempt customer-centricity at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

Follow Ai on Twitter: @Ai_Connects_Us

Ai Video: Targeting anonymous visitors in travel e-commerce

First Published on 3rd October, 2017

Identifying anonymous or repeat cart abandonment visitors, engaging them at the time they are on a website, capturing vital information for remarketing etc. is significant to stepping up the likelihood of a conversion.

Airlines have to make an impact in a matter of few seconds otherwise the chances are that the same visitor can jump on to another airline or OTA site. So even as on-site display of content and messages such as “only 4 seats left” or dynamic countdown such as “10 minutes left to complete a booking” can help in a purchasing decision, certain aspects like sending a personalised content (say after 4th click) or capturing a vital piece of information can help in tapping the customer as per their booking funnel. Also, if the captured information one that is related to user’s activity on a site is mundane, it can also mean that remarketing (done via email, Facebook ads etc.) can be futile.

Zine Voza, Enterprise Sales Manager (APAC), SaleCycle asserts that other than a user logging in, one has to make the most of every input that they make on the site or via on-site messaging. 

 

Hear from experts about on-site personalisation and retargeting at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).

Follow Ai on Twitter: @Ai_Connects_Us

Ai Video: Japan Airlines gears up for retailing and NDC

 

How can airlines that haven’t really adopted a sophisticated approach to retailing and ancillary sales gear up for the same? Is NDC emerging as a viable option to offer legacy airlines the framework, based on XML standards, to match the “LCC” approach to unbundling or ancillary sales?

As a carrier from Asia, Japan Airlines considers NDC to be an opportunity to position itself as a premium carrier that has the capability of delivering a variety of products that suits the needs of the customers. The airline has formed a cross-functional team, says Akira Mitsumasu, VP, Marketing & Strategy, Asia & Oceania Region, Japan Airlines.

“Being a full-service carrier, we just don’t want to unbundle things (for the sake of it) and sell them. It could be a leisure traveller or a business traveller (even a same person travelling on different occasions/ trips), it’s about identifying a need and then presenting with relevant options,” he says.

According to Mitsumasu, as an organization, Japan Airlines is gearing up for retailing and is open to fine-tuning their distribution strategy as well, including being open to the option of direct connectivity and looking beyond traditional means of airline distribution.

 

 

 

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