Issue 6: Special Conference Edition Offering an insight into the consumer-centric view of the airline industry |
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By Airline Information Correspondent Interview with Jean Marc Perreaux, PTS senior sales specialist, SITA The consumer-centric view of the airline industry, according to SITA, is the dominant industry trend, which will affect airlines at every level of their business for the next 25 years or more. SITA categorically states that being consumer-centric is not the same as being customer-focused. Customer focus is a component of a consumer-centric business model. And customer relationship management processes are part of the consumer-centric model. Spotting the evolving needs of airlines, which vary in each market, Jean Marc Perreaux, PTS senior sales specialist, SITA, says there are lots of opportunities in the market considering the changing dynamics in the aviation industry on the whole. Specifically about the Middle East market, Perreaux says, “This (the Middle East) market won’t be any different and the airlines are currently re-evaluating their own systems and looking at what to do with them. Many airlines are looking at outsourcing as an option. This varies from going for one particular application or even fully-outsourcing the entire project. With the emergence of so many distribution channels and pricing going down, the consume centricity has direct implications for the distribution strategies, processes and systems of an airline.” Perreaux, one of the speakers during the Airline Information’s eConference 2006, held in Muscat recently, spoke in detail about interline e-ticketing and other relevant issues such as outsourcing of applications with Airline Information’s Ritesh Gupta. Recently, SITA and Malaysia Airlines entered into a 10-year contract with SITA for its Horizon portfolio of passenger management solutions for achieving revenue enhancement and cost savings of more than $27 million yearly as well as the success of the airline’s Business Turnaround Plan. When queried about the deal with Malaysia Airlines, he said, “The deal with Malaysia Airlines will keep it abreast of the best practices and is focused on five core business processes, namely ticketing, fares management, revenue integrity, distribution and departure controls. Rather than going for one application, they are completely outsourcing their requirements.” “The airlines, like Malaysia Airlines, are considering reductions in distribution costs. At the same time, they are also facilitating their dealings with consumers through improved online booking capability,” he said.
Specifically about airlines in the Middle East region, Perreaux acknowledged that the company has been renewing its existing contracts. “Airlines here are using our pricing solutions. Many airlines are actively pursuing improvement of yield management. With increasing competition, entry of low-cost carriers and other external factors, pricing-related decisions have become critical. Even the low-cost carriers are starting long-haul flights for a much lower price. Considering you can’t go ahead with any gimmick like offering a ticket at US$50 and then when customer gets in touch, it is offered for US$80, our tools enables airlines to go for future planning in an optimal manner,” said Perreaux. “We have SITA Airfare, which enables airlines to determine the right ticket price for the right sales channel. It not only increases yields but also radically reduces the cost of fare distribution and pricing. The tool offers airlines control. In terms of increasing yield, technology enables an airline to optimize fares by tracking what the competitors are doing, reduce the time-to-market by key fares,” he added. Considering there is focus on cost reduction, the effective fare management helps an airline to reduce the charges paid for data entry and re-purchase, takes care of manual errors apart from achieving the most efficient direct sales channels. Also, the airlines are looking at simplifying and speeding up the business, in terms of inbuilt diagnostics for pricing and date, automating distribution to the GDS, competitor analysis etc, he says. As far as electronic-ticketing is concerned, by the end of 2007, IATA will stop issuing paper tickets and by the end of 2008, IATA will stop processing paper tickets. According to Perreaux, the majority of the airlines understand the benefits of e-ticketing, which includes reduction in paper ticket related costs, elimination of paper ticket fraud and introduction of new fraud controls, enhancing passenger check-in opportunities, and retaining key interline relationships among others. He further adds that a new plateau of savings may be reached once a carrier achieves 100% e-ticket. And examples include self service available to all passengers and itinerary types and radically improve financial systems (More data faster and automate revenue accounting). Significantly, Perreaux feels among the new issues which need to resolved in today’s context are related to investment cost of the global project and improvement or implementation of Passenger Revenue Accounting system. He also refers to the fact that ground handlers are not fully on-line with the project and there is need to look at airport equipment and interline partners activation schedule. “Interline electronic ticketing is quicker to implement than ever before. It can be as quick as two weeks. Overall, there is an average of two months for an IET (interline electronic ticketing) project. However without proper planning and engagement, a new IET pairing can take many months,” he says. On preparation for an IET project, Perreaux referred to making an early contact. For example, services such as IATA Matchmaker drive efficiency and engaging technology provider as soon as possible. Secondly, he said there should focus on route and transaction eligibility. Also, its better to limit customization wherever possible, rationalize your interline partner list and understand costs and choose the connection method that fits.
Results of SITA e-ticketing: 1. In September 2006, SITA PTS processed over one million e-ticket coupons for the first time.
3. 31 customers are currently using e-ticketing. 4. 33 customers are in some phase of e-ticketing implementation. 5. 16 airlines are currently using interline e-ticketing. 6. 27 New interline e-ticketing to come soon (in test). 7. 72 GDS pairings are active. (Shared during Airline Information’s eConference 2006 in Muscat in November 2006).
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