Comparing Airline Direct vs. Indirect – still a big gap in what’s on offer
The way enriched branded offers and content are displayed and sold via indirect channels isn’t an apt depiction of what airlines have to offer by Ritesh Gupta, Airline Information Correspondent.
What is being done to combat disparity in how carriers distribute their content for channel optimization? The answer to this question depends upon several factors, including the intent of airlines to make the most of indirect distribution. There is immense scope for improvement if airlines intend to avoid commoditized appearance of their branded offerings on indirect channels.
Eric Dumas, CEO, Vayant Travel Technologies, says currently, many airlines offer on their websites ancillary services, branded packages and related content such as attractive images, videos, descriptions etc. However, the distribution of this data to indirect channels is limited, he says.
Citing the example of meta-search engines, he says the decision-making mostly relies on price and schedule.
“Unless the customer shops on the airline website they won’t see the full range of branded offers and content. By sharing more data with channel partners, airlines can ensure their brand benefits are communicated (and eventually gain from stronger revenue generation),” shared Dumas.
Data via industry standards and XML
As of today, the way one can shop on airline-owned channels is quite different from the third party ones. The industry has been keenly following the progress of NDC in this context.
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So we tried to assess how can airlines distribute such data to indirect channels via ATPCO OC, IATA EMD and XML technologies.
The EMD-S is now pretty much available through the GDS channels and has been a part of most PSS systems for a few years now. The big move forward in that arena will be the continued rollout of EMD-A, which allows you to associate a non-flight item to a flight ticket, thus providing more information on the purchasing trends of your passengers.
Ryan M. Harris, e-commerce and ancillary products manager, InselAir and InselAir Aruba says until EMD-A comes to full implementation, any ancillary sales will continue to be recognized as a separate transaction; however, that does not prevent an airline from selling it, it only makes it difficult to associate it to a specific flight activity.
Harris adds, “ATPCO Optional Services does allow most airlines to file and sell products related to the flight through third-party channels, including through GDS and interline partners.” He says the big advantage in transitioning this from the simple ATPCO filings to an API or other XML-based technology is that it allows an airline to better perform revenue management on those products in real time. Even with the frequent updates to and from the ATPCO databases, the pricing remains relatively static and is difficult to personalize. “For that, you really do need that direct connection to the airline’s merchandising system which is only achievable through the direct connection, which is a major goal of the IATA NDC initiative,” says Harris.
There is an option to use a web-based system that manages a set of fares with similar rules and services.
Technology is in place to enable carriers to finalize their own buckets and allot fares and services to each bucket to be offered to shoppers. As Dumas explains, different prices are there for the same flight indicating different fare buckets, and there is flexibility in opting for the same when it comes to outbound and inbound travel. The shown price of the fare bucket features the lowest available fare in that bucket.
So today if an airline opts to work with a specialist like Vayant for its core pricing, shopping and offers distribution to third parties (either pulled, including NDC, or pushed), the use of Vayant Fare Buckets means immediate processing of new, modified, deleted services and bundles. “This complements the ATPCO Branded Fares we use to create real-time bundles for specific needs. With just one click the airline can create a bundled sales offering for a specific channel – and if they want to change it, well that’s just another click,” explains Dumas.
Making partnership effective
Traffic generation is an interesting game.
Continuing with the example of meta-search engines, it needs to be understood that meta-search sites made life difficult for airlines by dramatically increasing the search volumes airline websites normally handle. In consequence mechanisms were built to protect the airline website from the additional transaction costs generated in the GDS or hosting provider.
“Meta-search players moved on to other methods of finding flights, such as the going to the GDS themselves. But this meant they can miss out on offers available on airline websites,” says Dumas.
He adds, “Our approach is different – and it’s about getting airlines and meta-search engines to work together for mutual benefit. We enable airlines from all around the world to give their data to the meta-search players so they can offer the full range of an airline’s offers, including optional and third party services.”
As for control over what airlines want to sell, and how a passenger is being made to feel that the airline is smart enough to offer what he or she actually needs, it largely depends on the sales channel and the type of products. Through the direct channels, such as e-commerce and call centers, as Harris says, airlines are in full control and can easily leverage agreements made with other service providers to the benefit of both the airline and the passenger. Direct channels also provide the airline with merchandizing opportunities for its flight-based products such as flexible fare families, upgraded seat selection and in-flight services through the sales process. He says in case of indirect channels, it becomes “less controllable” as you become reliant on third parties, some of which have their own agreements with service providers, such as car rentals or hotels and most of which tend to be based on lowest price. Through the indirect channels, an airline must rely on the third party to be educated enough in its product mix to be able to adequately sell the services that the passenger either desires or can benefit from.
Also, airlines today are only limited by the data available to them, which is where the indirect channels have some limitations, points out Harris. Citing an example, he says, if a passenger books through a travel agent, more likely than not, the agent will put his or her contact information in the booking as opposed to the passenger. For cases of trip delays or flight changes, this is expected, as the agent becomes the responsible party to contact the passenger and can make alternative arrangements on their behalf. The problem from merchandizing is that the airline now has no direct line of communication to the passenger, so cannot directly market to them. “This is especially true of infrequent travelers who do not have an associated frequent flyer account, as I now have no information that would allow me as the airline to make ancillary offers directly,” says Harris.
Overall, there is a refreshing energy in the industry today, says Dumas. Airlines understand the critical importance of controlling their sales offering, especially the pure flight-only offers which are the very core of their business. “I’m excited by the potential to add flight-related services to core fare pricing - on the proviso that an airline can deal with disconnect between core flight offer generation and add-on services. Gaining control over offer generation, from A to Z, is the key to a successful sales strategy,” says Dumas.