Ai Editorial: Airline retailing needs NDC, but that's not the only thing

10th April, 2019

By Ai's Ritesh Gupta in London

Airlines are gearing up to answer relatively complex questions as they try to match up passengers’ expectations as retailers.

The plan is to focus on real-time offers, personalization, rich content and ancillary sales. All of this is fine, but as the UK-based senior travel industry executive Ian Tunnacliffe points out, one needs to be pragmatic about the role of NDC, IT systems etc. It is imperative to ascertain the difference between modern retailing and NDC, and be realistic. "NDC is a communication protocol. If you want to gear up for retailing, NDC is just a part of it. Not the full answer," stated Tunnacliffe, during his presentation, titled NDC Update, held as a part of the NDC Workshop in London this week.

All of this holds significance as airlines are looking beyond selling a seat and air ancillaries. The industry is targeting the second wallet by offering other trip essentials - accommodation, rail, mobility, insurance etc.

Importantly, the responsibility doesn’t end here. Airlines have to ensure they can manage the process through day of travel and beyond. And whenever an interaction takes place during the course of the journey – whether at any offline or a digital touchpoint – airlines are diligently looking at ways to recognize the traveller (not only a frequent flyer but could be an infrequent flyer, too), act on the sum of interactions that have had taken in the past, and act accordingly for a superlative customer experience. This in essence sums up the passenger-facing side of the business.

As for what it takes to attain such level of excellence in CX, and also ensuring the product (not only the aircraft but also digital assets including mobile app, website etc.) is ready and is continuously refined in a "test-learn-test” environment, airlines are also looking at means to sharpen their capabilities accordingly. Areas include:

  1. Data-driven decision-making: From how to run the core business (e. g. what sort of schedules and travel offering should be worked out for a particular airport) to precise targeting (automate and segment communications) to personalization (from rule-based segmentation to analytics-driven or algorithmic personalization) to fraud prevention and other areas, a lot is dependent on data. As for indirect distribution and NDC, airlines trying to support distribution via their own APIs, they shouldn’t underestimate what it takes to adopt and execute on a strategy of NDC API distribution. They need to sharpen their data processing capabilities in order to process in real-time the potentially huge volumes of valuable search data from NDC APIs.  
  1. IT and systems: As many as 60-70 distinct systems are involved in operating an airline and specialists stress it is must to set up an integrated system where knowledge and data can easily be shared across the busi­ness. Also, with new standard and initiatives such as NDC and ONE Order, they are looking at their core systems to be based on mod­ern technology and open industry standards. The efficacy of an airline-specific operations or commercial system needs to ensure CX isn’t compromised. In this context, the ONE Order system is expected to deliver. ONE Order would have information about the passenger’s journey. And order would be created based on the passenger information that the airline has. When you go into modifying the order, the process would require a new offer. And that offer is always created considering passenger details and personalization.
  1. People and culture: Embracing a digital culture and agile approach towards running a business demands deep introspection - what is the goal (competitive advantage, engage customers and new data-driven business models), prioritize people, adopt the fail fast attitude etc. Who is going to lead the transformation - chief executive, CIO, CDO, CTO, CMO or anyone else?  Who is going to facilitate change? As Pieter Elbers, President and CEO, KLM  recently mentioned (in an interview with IATA), "...the difficulty is you have to keep the shop open even while you are rebuilding the shop. That is the challenge with implementing new processes." He also mentioned that scalability is another challenge.  
  1. Fraud prevention:  Travellers are reaping the benefit of new digital processes. But simple customer experiences can complicate fraud prevention. As companies allow travellers to create accounts and avail them for their seamless experiences, it is proving to be a fertile avenue for fraudsters. For instance, the threat of account takeover fraud is on the rise. Also, travel e-commerce companies need to dig deep and understand the implications of the mobile channel when it comes to fraud.  A new mobile commerce-related fraud technique that has emerged is the use of app cloners and machine learning techniques to create synthetic device identities.

Being a modern retailer isn't just about NDC. There are several areas that need to be focused upon. Airlines need an ongoing approach that infuses digital literacy throughout employee training and professional development initiatives. Continuous digital learning is critical to embedding digital into an entity. All of this eventually needs to translate into a stage where an airline can thrive in today's digital era, led by a transformation leader who paves way for agility, data-driven decision making within an organization, and eventually a superlative CX for passengers.


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