eNewsline: Issue 6: Special Conference Edition
Is GDS the most appropriate distribution platform for Middle East’s airlines? Interview with Stéphane Pingaud, head of distribution marketing, Airline Business Group, Amadeus
By Airline Information Correspondent Stéphane Pingaud, head of distribution marketing, Airline Business Group, Amadeus seems to be quite pleased with the way his company’s operations are progressing in the Middle East. Pingaud attributes the recent successes and achievements in travel agency markets to company’s “strong local presence.” “When it comes to our relationships with the Middle-Eastern airlines, we wish to replicate this approach by establishing a strong regional centre for our airline business in the region,” said Pingaud. The company is soon planning to open a centre in Dubai, with a focus during the first phase on the commercial and product account management. “Ultimately, our objective in the region is to have a team of Amadeus employees dedicated exclusively to the needs of the Middle-Eastern airlines,” he says. Assessing the opportunities in the region, Pingaud says the growth and dynamism of a number of commercial airlines in the Middle East has a positive impact on Amadeus’ performance in the region in two main areas: “In the provision of our business management and e-commerce solutions: in order to sustain or increase their global competitiveness, an increasing number of airlines are selecting Amadeus as their technology supplier, for the provision of applications for management of their passenger services,” he says. “In our distribution business: because airlines such as Qatar Airways, Emirates or Etihad, to name a few, are becoming strong players at a global level and because Amadeus is unquestionably the most global GDS of all, our travel agency subscribers are growing sales on these airlines.” “As a result of the above, our business in the region has grown quite significantly during the past two years, above the 30% mark, year on year,” he says. Pingaud, one of the speakers during the Airline Information’s eConference 2006, held in Muscat recently, spoke about company’s achievements, passenger bookings processed by Amadeus e-Travel airline suite and much more. Excerpts from an interview with Airline Information’s Ritesh Gupta.
Ritesh Gupta: What have been main achievements for Amadeus in this region? How are you differentiating your services in this region? Stéphane Pingaud: Recently, our customer management solution (Altéa CMS and related applications) have been selected by two key players in the region, Egyptair and Etihad. Thanks to these newly-established partnerships, Altéa CMS and all our other business management applications are seen by an increasing number of airlines in the Middle-East as a viable option. On the travel agency side, the last two years have also been very beneficial for Amadeus. We have secured our position as the fastest growing GDS in the Middle East. Our overall market share in the region has grown by 1.6% between 2005 and 2004 and an even more impressive 2.5.% year on year for the first half of this year. In Saudi Arabia alone, we have experienced so far this year, a market share growth of 2.7%. We have also noted similar successes in markets like Kuwait or UAE.
The above achievements are without a doubt a result of two factors:
Ritesh Gupta: You recently stated that Amadeus is working on a number of directions to enhance the way we merchandise airline products. Kindly elaborate on the progress? Stéphane Pingaud: Yes, this is correct, Amadeus is working on a couple of developments which are designed to improve the way we market airline products to our agency subscribers. In 2005, we carried out a survey with over 20 airlines around the globe, to identify areas where we could improve our GDS product proposition to airlines; 73% of our customers felt that the GDS will play a stronger role in helping to maximize the yield from each individual sale made by our travel agency subscribers. Out of these, 70% stated that the integration of functionality in our system, which would facilitate up-sell, was the direction to follow. In addition, in Europe where many airlines have invested heavily in their product offering, 52% of our customers highlighted that a higher merchandising power would be welcome. With the outcome of our survey in mind, we initiated two main projects internally, with the objective to better merchandise airline products. (* the two names below are project names) 1. The ‘Air Features’ project, which will bring to our participating airlines the opportunity to attach to their flight details product and promotional features applicable to those flights and/or class of services, hence enabling them to differentiate themselves from the competition on products rather than fares only; 2. The ‘Airlines Up-Sell’ and ‘Products & Attributes’ project, which will result in the deployment of new agency displays, through which the airline product will be presented in similar ways as it is presented in direct channels, i.e. based on bundled or unbundled services, and on the opportunities to up-sell.
Ritesh Gupta: Amadeus had rolled out a new technology solution for LCCs, providing comprehensive access for the first time, to sales through travel agents and corporate customers. What factors contributed to this initiative and how has it been received? Stéphane Pingaud: For quite some time now, low cost carriers have started to look at distribution through the GDS (currently 47 LCCs can be booked via the Amadeus system). The main reason is that they see this as a complimentary sales channel and a good way to reach the business passenger segment or incoming traffic from other regions. On the other hand, LCCs were telling us that the traditional way of working (with processes such as fare filing, using 3rd party systems, EDI fact messages etc) did not fit their needs and created high fixed costs on their side. They asked us to find a solution where we did not “shoe-horn” them into ‘legacy processes’ and where they did not have to change their way of working. At the same time they wanted to be on the same screen as their competitors and in the normal booking flow for the agencies, with the same back-office support to the agencies. That proved quite a challenge, but in the end we came up with a solution called Ticketless Access. The LCCs who have looked at the product are very impressed. What they are telling us is that when they compare Ticketless Access with the other options in the market, it is by far the best solution. We are still in the pilot phase and are fine-tuning the functionality and building the product with the pilot airlines. It is still too early to evaluate the result in terms of bookings, but in terms of response from the LCCs we are very pleased. The interest from the carriers is great. We have 5 carriers committed to the solution and about to start implementation and a number of other carriers have also shown great interest.
Ritesh Gupta: Amadeus has shared that in the first half of 2006, airlines' passenger bookings processed by Amadeus e-Travel airline suite increased by 28 percent. What is key to success of such offerings and how are you trying to achieve the same in Middle East? Stéphane Pingaud: Amadeus e-Travel solutions are proven to enhance the overall user experience online and increase e-commerce yield for airlines. Amadeus offers airlines sophisticated and customizable user interfaces that are based on Cascading Style Sheets (CSS) and xHTML advanced technology. Amadeus’ merchandizing solutions also enable online users to quickly decide on their travel requirements based on a set of criteria such as dates, times, fares, and fare conditions. This advanced technology, combined with Amadeus effective retailing and servicing applications, allow airlines to increase both their online conversion and retention rates, which is key to enabling and sustaining online growth. |
Ritesh Gupta: How are you looking at consolidating relationship with OTAs? For example, Amadeus Master Pricer Calendar was introduced in July. Stéphane Pingaud: Amadeus is committed to providing the best technology for online travel agents and consumers. We provide online travel agencies with an API to make bookings on Amadeus and a suite of advanced low-fare search tools. We have made significant additions to this suite this year and will continue to do so into the new year. Within this context, an independent study by SMG in 2005 found that online travel agents were much more likely to find the lowest fares for their customers using Amadeus Master Pricer, one of the world's leading low-fare search tools, than with other tools. Additionally in July, Amadeus announced Amadeus Master Pricer Calendar, the only worldwide calendar display on the market for online travel agencies. This innovative solution allows consumers to easily view a range of international flight and price options from multiple airlines in a calendar format. Our strategy in the online travel agency sector is to develop our success in the European market, where we have over 60% of the market, to the fast-growing Eastern markets. The ultimate proof, of course, is the number of online travel agencies who come to work with us. We have long-term agreements with lastminute.com, ebookers, Opodo, edreams, rumbo.es and this year, we have announced a pan-European agreement with Expedia, a pan-Asian agreement with Hutchison Priceline, as well as viajar.com and Terminal A.
Ritesh Gupta: It is being felt that when it comes to e-ticketing many Middle East carriers are way behind on complying with the IATA deadline for the complete phase-out of paper tickets. How do you foresee the situation evolving? Stéphane Pingaud: Close to 11% of the tickets sold in the region are electronic, while globally, that number is a little over 60%. There are two factors to this comparatively low performance:
In my view, 2007 will however bring some positive developments in this area with:
Ritesh Gupta: It is critical for an agency to have multiple sources of content for comparison so they can satisfy the consumers and book the best option acceptable to their client in an efficient and effective manner. How are you addressing this? Stéphane Pingaud: Clearly, the recent past shows that an increasing number of airlines worldwide – including full service and major global airlines - are investigating new ways to reach travel agencies, using the value of their content to motivate the agents to use selected channels. In my opinion, such a trend is the result of a gap between the GDS players’ offer and what airlines expect. While in the past, our proposition was entirely aligned to airlines’ sales and distribution objectives, in recent years these objectives have changed and the GDS proposition has ended up not fulfilling airlines’ requirements entirely. Amadeus acknowledged this a couple of years ago and we initiated a review of our GDS proposition with the objective to deliver the level of cost effectiveness that airlines expect from the indirect channel. Cost effectiveness will be influenced by our ability to deliver, as part of our GDS proposition, the following benefits: Control: Amadeus will deliver the level of control expected by our customers and which they enjoy with their own channels, for instance in defining the shopping/reservation process, establishing and enforcing the ticketing and payment conditions, implementing their latest commercial and charging policies etc. Brand awareness: Amadeus will facilitate product - rather than fares only - based competition between airlines and help individual airlines to differentiate their product and brand. As some of our customers communicated to us, when their airline has invested significantly in their product – in-flight services, ground services etc, they wish to be able to present this investment to our subscribers in a meaningful manner. Time-to-market: Amadeus will improve on time to market. Here, the main vehicle is a homogenization of product design and related processes, specifically with products based on business rules/data maintained by the airlines. Such approach would improve time to market by raising productivity, reducing manual intervention and training as well as facilitating job rotation with distribution, revenue management, pricing and other related departments. Business consultancy: Amadeus account management will be trained and equipped to deliver much stronger business consultancy, similar to the level of service our customers may experience with other technology suppliers. It implies demonstrating our ability to understand 1) the airline’s organisation and operations; 2) its business environment and finally 3) its competitive and cost challenges, in order to be in a position to recommend the right distribution strategy and solutions. All the projects we have initiated in 2006 are designed to ensure that our GDS proposition delivers those four benefits to our airline customers. If successful, which I have no doubt, then the Amadeus GDS will continue to be the airlines’ preferred distribution and retailing platform to travel agencies worldwide, and content dis-aggregation shall no longer be an issue.
Ritesh Gupta: Comparing the Middle East carriers with those in relatively mature markets, how do you foresee this market shaping up insofar as distribution software solutions and from a consulting services perspective? Stéphane Pingaud: I personally continue to see the GDS as the most appropriate distribution platform for airlines in the Middle East for two reasons:
With the above in mind, it is highly likely that the trends we are observing in North America will not replicate strongly in the Middle East. With regards to airline travel agency portals: while it is still to be seen whether those platforms will be widely adopted by agencies, these rely on large and homogenous local agency markets where the airline brand is strong. If not, then the platform, managed by the airlines, may not be cost-effective.
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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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