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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