Dynamic Packaging and the Importance of a Unified IT Platform Expert commentary by Frank Socha, CEO, Airline Solutions
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Printable version Copyright 2006, Airline Information
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IATA’s “Simplifying the Business” campaign not only pushes industry automation issues such as eTicket, bar code boarding passes, CUSS and RFID, but it has also forced airlines and IT providers to think along the same lines: Is keeping IT in-house still the way into the future? Can airlines afford it? Major airline partners are operating on different platforms, but still need to be linked. At the same time, IT providers are offering new platforms that encompass many more requirements than just simple connections with each other. The goal is to have a single platform that is able to cover all airline requirements, including classic distribution, online sales, powerful IBE applications, and the facility to drive forward an application that airlines today are only starting to realize as a serious means of increasing revenue - Dynamic Packaging. We notice more and more that airlines are starting to sell items along with the flight ticket that in the past were included with the service, such as:
The list is endless. And these requirements are also standardized and automated through distribution tools like those offered by ATPCO. But, is selling an airline ticket plus a couple of add-ons sufficient? The answer is “NO.” Airlines must do their utmost to create up-sell structures for their airfares, sometimes simply based on changes from lower to higher nested RBDs. Other examples stretch to include the right to rebook against a fee versus no rebooking option at all, etc. But what about selling additional products on the airline website, such as car, hotel, ferry, theater tickets, etc.? Besides for at few major airlines, this is only done very rarely! Let us have a quick look at a travel reservation process. The vast majority of online travelers would like to know first, which flights exist to his/her destination. Once this has been satisfactorily evaluated, a car and a hotel are the next logical items to be booked. Why force the customer to leave the airline website where this business could well be done? Certainly, presales planning and management, including contracts with service providers have to be developed, but which airlines bother to do this? Any customer will appreciate one-stop-shopping, rather than switching between sites and having to pay several times with a credit card, if this could be done in a single transaction. To generate this additional revenue is also the appropriate response to lower yields, caused by the fact that the Internet produces more airline passengers, but those passengers tend to pay less.
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What does such an approach require? As with many other new applications, Dynamic Packaging requires a multi-disciplinary action from an airline. Staff from departments such as Sales, Marketing, Revenue Management and Legal must understand what the new web approach implies and must ensure that their input is reflected in the project. Supplier negotiations must also be undertaken. Marketing and branding of the airline website is another key factor. So what does Dynamic Packaging do? For starters, we can say that it computes and displays a single price for the selected package, no matter what the content is, thus avoiding individual prices for the components of the package. You might ask if this requires some new IT and it does. However, here we tackle the simplification question brought up at the beginning of this article. The new IT requirements are for a solution that is able to absorb a higher look-to-book ratio than that required for simple airline IBE applications. Responses to the customer also have to be fast and at considerably lower cost, considering the amount of “clicks for searches”. There are technical solutions available from expert providers. In-house IT simply won’t do the job in the vast majority of cases. Selling additional seats through Dynamic Packaging is another valid approach in light of the advent of the new ultra-large aircraft, such as the A380. It now becomes more and more challenging to sell all available seats on a daily basis. New compartments will be introduced, such as a “Basic Economy”, where just the seat is sold and anything else must be purchased separately. The attraction of such a concept is manifold- if only buying the basic seat, there is money left for a hotel search and purchase of a dynamic package. Prices for additional items such as ASR, food and beverage could be, depending on whether or not the passenger purchases a dynamic package, a clever marketing approach. On the other hand, packaging additional items, such as drinks and reserved seats, would offer the opportunity to “dismantle” a pure air package by showing all separate items at their individual cost. Discounts could be introduced if certain “sub-packages” are sold (seat reservation plus pillow, etc), thereby providing the passenger with a much better feeling of having purchased a “customized” package, according to his specifications. Where does this all start: With the simplification of processes and IT; With a well designed and maintained website; and With constant alignment with market changes. If you have additional questions about how to implement or maximize Dynamic Packaging at your airline, please feel free to contact Frank Socha.
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Senior Publication Staff: Frank Socha - Chief Technical Advisor/Editor Roger Williams - Creative Director/Associate Editor Ritesh Gupta - Senior Correspondent Christopher Staab - Business Development & Advertising |
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