Ai Editorial: Are indirect channels gearing up for “offer”-based selling?

First Published on 15th November, 2018

Ai Editorial: As much as carriers are gearing up to do their bit to capitalize on a passenger’s willingness to pay via offer optimization, they are also keenly following developments pertaining to IATA’s New Distribution Capability (NDC) to sharpen their overall distribution strategy, writes Ai’s Ritesh Gupta

 

Airlines’ quest of being a top-notch retailer has two dimensions.

The first one is about how they end up crafting an offer and sell it via their direct channel. This can be under their control provided airlines are willing to challenge the status quo, especially if they believe they are being held back by systems and technology that has been around for a long time.   

The second dimension, which is about ensuring consistency in travel shopping via 3rd party channels, isn’t under their control.

As much as carriers are gearing up to do their bit to capitalize on a passenger’s willingness to pay, they are also keenly following developments pertaining to IATA’s New Distribution Capability (NDC) to sharpen their overall distribution strategy.

“What really matters to our customers-- and to us as an airline-- is the total offer. The fare and the combination of flight-related options that each customer values,” says Mike Robinson, Head of Ancillary Revenue, Frontier Airlines. “As a low fare carrier, those flight-related options are a core component of our total offer. So it’s really essential to us that our customers be able to understand and make the best choices possible for their trip.” While Frontier can manage the offer on the airline’s own website, presenting flight related options to customers booking elsewhere can be a challenge. “Without NDC, it is essentially impossible to present such offers through intermediated channels.”

For a carrier like Frontier, 42.4% of its total revenue was accounted by ancillary revenue last year, according to a recent study released by IdeaWorks Company.  Ancillary revenue per passenger was $48.33. This figure was led by Spirit ($50.97). Frontier has worked upon a la carte offering, featuring both unbundled and bundled service options. For instance, the Works and the Perks bundles. Certain options are only available via Frontier’s own channels. The carrier underlines that when low fares come along with choice (paying for what one opts to avail) and there is transparency regarding the same, then customers can buy with confidence. For instance, the Works option includes carry-on bag, checked bag, selection of seat, priority boarding, refundability and change flights option.

“The airline might have designed a compelling offer, but it’s also necessary that customers fully understand the offer and their choices before they make a commitment,” mentioned Robinson, highlighting the significance of managing the experience crafted for airline-owned channels on indirect channels.

It is clear that NDC is a new messaging standard and airlines have to look at factors such as organizational investment and focus on the efficacy of their technology to support their retailing plan. In the distribution world, the complexity primarily comes from the fact that in the indirect channel, the industry is attempting to utilize systems, fare filing etc. not designed to manage product bundles or ancillaries in general. What airlines have been finding attractive with NDC is doing away with filing of fares, and all priced offers to be created by the airline’s Offer Management System. “In the future, when we refer to pricing, we’re going to be considering the total offer price. That includes airfares, bundled offers, a-la-carte ancillaries…all inter-related to one another. We’ve made a lot of progress in our customer-centric offer management. And we’ve been making progress to extend offers for customers who book on OTAs and through agents, but the limitations of traditional distribution means that those customers really must come to Frontier – to our website or mobile app – to benefit,” said Robinson, who indicated that progress is being made in this area by citing the example of Skyscanner and the sort of association the meta-search engine has had with Scoot and Finnair for NDC-enabled bookings. 

As for the interface and overall UX on meta-search engines, OTAs etc., Robinson feels the industry is going to evolve from base fare-oriented search results. He expects these players being able to pull in more information from their visitors about what all they are looking for when they travel and accordingly come up with ranking of offers not just fares in the search results.

Challenge for indirect channels  

Even as airlines have done fairly well in modifying merchandising flows in their own channels, a big question is how indirect channels can improve on the same. Conglomerates such as Amadeus and Sabre have indicated that they have been working with IATA as well as running projects for industrialization of NDC. They are looking at securing full booking flow automation including post-booking services and efforts to develop the scalability of the technology. Scalability in retail (OTA) shopping really needs some important changes for NDC to gain wider adoption. Response times are considered too slow and volumes in that area present challenges. That’s one of the reasons that TMCs have been among the first to adopt NDC; they don’t have all the shopping requirements that a retail environment does. Also, as an executive associated with one of these conglomerates pointed out, comparing all offers from various airlines on mobile plus enabling mobile users to take a decision accordingly would call for massive transformation on the part of various stakeholders in the indirect distribution value chain – be it for preparing for NDC content or improvising on the technology that powers search or the functionality/ UI of digital intermediaries.

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Ai Editorial: Selling in an open travel ecosystem – is it must for survival?

First Published on 6th November, 2018

Ai Editorial: It is important how airlines end up being part of what is being envisaged as an open travel ecosystem. Why running a two-sided marketplace, opening up APIs without losing control and sharpening data processing capabilities is becoming increasingly attractive, probes Ai’s Ritesh Gupta

 

Growth marketing is fascinating. The discussion around the significance of distribution in the digital realm is enticing. Attaining robust reach for a growth marketer is must, especially as they scale up. It isn’t a surprise when they place distribution over even the core strength of the product!

What can airlines learn from the same?  

Reaching out to brand agnostic customers via 3rd party sites is an old phenomenon in travel e-commerce. But being in control of the same isn’t – showing the product in a desired way, what to sell and to whom etc. 

How different is to work with an ecosystem such as Alibaba’s Fliggy vs. Ctrip in China? How can airlines make the most of a platform like Amazon or avenue like Instagram? 

It is vital for airlines to prepare in an earnest manner in order to support the idea of fragmented distribution. So from digital commerce structural design perspective, a travel e-commerce player today not only needs to prepare for their own digital assets. Rather, how to make the most of external ecosystems such as Amazon, Apple, Tencent, Alibaba etc. is also a critical decision.

“A company that wants to survive in today's extremely competitive environment has to embrace all of the three approaches (commerce-led, experience-led, and API-oriented methodologies): have a competitive product, content, and pricing; offer 24/7 customer service with all the global languages; and push a B2B business line via API to penetrate the market faster and leverage on the economy of scale thanks to high volumes generated by partners,” says Oliver Dlouhý, CEO of OTA Kiwi.com. “For regional/ local companies the experience-led approach is more important than the other two, but on the global scale, the company has to be universal enough to diversify between all the three strategies.”

Being part of open travel system 

It is important how airlines end up being part of what is being envisaged as an open travel ecosystem. One component is enabling a two-sided marketplace, are airlines ready to run a digital platform that would let other retailers, including airlines, to sell via their platform? What airlines can learn from Amazon is how to leverage economies of scale and scope i. e. to expand the basket of retail offerings plus letting other sellers use the same digital retail platform. So why an airline would sell another travel company’s offering? Of course, for revenue generation, but also to bring into action a data-driven learning loop. The way it would work is – a visitor on an airline’s two-sided marketplace might end up buying a flight from a rival, but in bargain the owner of the platform would end up gaining from behavorial data resulting from such facilitation. Another possibility would be cross-selling to the same passenger.

During the recently MegaEvent in Long Beach, California, Kevin O’Shaughnessy, CEO and co-founder, CityHook/ Indigo.gt, referred to the significance of APIs.

Airlines are becoming comfortable with open APIs, opening in all dimensions except the booking capability.

“Earlier there used to be concerns pertaining to unintentional impact of opening up APIs. The danger of losing out on owning the customer experience,” said an airline source.

But as, O’Shaughnessy, pointed out an API should be about clear boundaries and ease of reuse. APIs should be easy for developers to comprehend. This means designing them with clear uniform resource identifiers and non-complex data structure. At the end of the day, airlines can overcome limited number of coders within their setup and can leverage the prowess of APIs in engaging with 3rd party sites at their discretion. Also, in this context, IATA’s distribution capability, NDC, is being billed as a catalyst that would help airlines in showcasing their product better. If the airline can send new and relevant content via an intermediary that can display and transact on this content better than another intermediary, then competitive pressure gets created which is good for the entire travel supply chain.

As for those airlines trying to support distribution via their own APIs, they indicate that one shouldn’t underestimate what it takes to adopt and execute on a strategy of NDC API distribution.

By opening up requests for offers, airlines also need to look at the cost component. Plus, they need to sharpen their data processing capabilities, says Triometric’s SVP for Business Development, Jonathan Boffey. “Airlines need to collect and process the recent search data across all their channels.  They also need to have appropriate skills to analyse this data by market segment, formulate offers, set pricing and then adjust booking engine rules to deliver this at point of search.  This has to be a continuous process of set the rules, analyse the outcome and adjust.  In a NDC world this becomes dynamic.”

Specialists point out that opening up for offering trip essentials and even non-travel products (even letting 3rd parties to sell via one’s own platform) and sharpening APIs for external partners and even data processing for understanding the demand of traffic is must.

“In the digital space there are no enemies and friends any more. It all depends on a business model which is changing all the time. The flexibility of airlines to switch channels fast will prove to be very important as we go forward. Airlines will need to work with the big digital platforms and vice-versa. However, each should also make sure that they get their fair share of the value,” summed up Marko Javornik, VP/ GM Mobility and Travel, Comtrade Digital Services.

 

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Executive Profile: JetStar's Catriona Larritt on carrier's ancillary revenue prowess

First Published on 31st October, 2018

The culture of taking continuous feedback from passengers, testing what passengers would possibly like, preparing staff for the same and communicating it has made it work for JetStar.

 

Keeping it simple enough for passengers to understand what they are paying for, the value of it and what to experience while flying tends to be missing. And this can annoy passengers as they book and opt to fly with an airline.

In this context, JetStar's meticulous approach - about being simple, fair and transparent about its low-cost choice model - has stood out. This has also resulted in substantial ancillary revenue generation prowess. According to a recent report by IdeaWorksCompany, Jetstar's ancillary revenue as % of the total revenue is over 23%, and ancillary revenue per passenger is $26.92. The culture of taking continuous feedback from passengers, testing what they would possibly like, preparing staff for the same and communicating it has made it work.

"Each time we communicate with our customers is another opportunity to reinforce our low fares and product choice model," says Catriona Larritt, Chief Customer Officer, JetStar.

 

Citing an example, she says, "...when customers book directly through our website, we show them exactly how much they can save by purchasing bags in the booking flow, as opposed to at the airport."

"During our 15 years of operation, we have been focused on helping customers understand our model; that  we offer customers a seat at the lowest possible price and then provide them a choice of extras depending on their individual needs and preferences," says Larritt.

"Those customers who want to travel with Jetstar but want more, such as meals, in-flight entertainment, extra baggage, additional legroom, flexibility of last-minute flight changes or a choice of other extras are able to do so, for a fee," says Larritt, who is scheduled to speak at the Ai's Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences), being held this week in Long Beach, California.

Showing the way

JetStar's approach stands on a couple of counts:

Readiness of the staff: "Our frontline team members are critical to the success of our low-cost model and they undertake regular training on new products and policies," says Larritt.

Jetstar has a Council made up of frontline team members from across the network who provide direct feedback on products and policies, and explore and experiment with ideas and concepts. "Our co-creation model with our airport, cabin and contact centre team members is also a huge part of what makes our ideas successful, and ensures our frontline teams understand our offerings," shared Larritt.

Acting on feedback: "We listen closely to feedback from our customers and frontline teams about what products and fare/travel bundles are popular. We also undertake regular customer surveys and host research panels to better understand the pain points experienced by our customers and also to learn more about the types of products and services they would like to be able to access. We work to ensure our website and information throughout the customer journey is intuitive and easy to understand," mentioned Larritt.

An example of an initiative that came directly from customers is the revamp of JetStar's booking flow for long haul international meals and in-flight experience.

"The changes we implemented were based on insights and tested experience with our customers, and has resulted in an online booking experience that is easier to navigate and offers more choice," she said. "Jetstar operates to 85 destinations in 18 countries and so we have very different travellers, with different levels of experience with and understanding of LCC model.  We are working hard to ensure the information on our website and across all of our operations are clear, simple and easy for customers to understand."

Testing and learning: On the digital front, there is still a lot that demands attention. One of the areas is optimizing the mobile experience. For instance, relying on contextual signals, push notifications etc. – to ensure people end up buying more via mobile. At the same time one shouldn't forget the mobile commerce peculiarities of a diversified region like the Asia Pacific.

"We test and learn across different regions to understand which products or services should be supported on mobile depending on the mobile take up and travel habits of our customers in different countries.

"Push notifications are great for passengers in transit and allows us to highlight personalised offers that customers want to know about.  In terms of integrating payments to mobile devices, we have done a lot of work on expanding payment capabilities such as Alipay to help more customers pay for their travel, and we expect that to continue across international providers," she said.  

Meeting passenger's needs going forward

There is a lot of talk around using data and also meeting trip essentials by adding non-air ancillaries.

Regarding the same, Larritt mentioned, "A big focus for us at the moment is personalising our offering to be able to offer the right product through the right channel, in the right time, at the right price. Non-air ancillaries certainly represent growth opportunities and we are actively improving the uptake and yield of adjacent travel experiences such as hotel/packages, ground transport (car hire, transfers), travel insurance, activities, financial services (credit card, gift cards) and paid membership (Club Jetstar). Currently we growing and consolidating these to maximise their potential, before we consider launching other non-air ancillaries."

Rather than just focusing on selling, the group has also focused on being an ally during the various phases of the journey.

"Customers today expect airlines to proactively deliver real-time information directly to their device of choice, so when we think of essentials, communicating with them about their journey at key points is key. For example, providing with transparent information during the booking process, flight departure time and gate updates, and information about baggage carousels and public transport upon arrival," mentioned Larritt.

"We’ve created a personalised journey from awareness, to purchasing travel, to experiencing our service and finally, keeping customers engaged when they return. And importantly, we’re re-designing the experience for customers when things don’t go to plan and their flight is cancelled or delayed, to ensure they have all the information as soon as we do, know their options and can action those."

Delving on the utility of data and making the most of it, Larritt shared that JetStar recently chose to combine real-time behavioural and the historical transactional data to provide a view of customers’ past behaviour and predict potential future purchasing intent. "We’re experimenting with these datasets to predict intent to travel to Jetstar destinations and have personalised our marketing and website activities to each individual customer," she said.   

"Our aim in future is to understand the needs and behaviours of all our customers, so we can offer them the best possible experience for the best possible price."

 

By Ritesh Gupta

The Ai Editorial Team

 

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Ai Editorial: How Lufthansa, KLM and Kiwi.com go about agility?

First Published on 29th October

Ai Editorial: Internally, it is vital to work out the apt blend of people, technology, data and analytics to be ready for digital commerce, writes Ai’s Ritesh Gupta

 

Being ready for digital commerce in today’s connected era demands action on various counts.

Preparation starts internally. In fact, without dwelling on internal factors, one wouldn’t be able to respond in an agile manner.

Internally, it is vital to work out the apt blend of people, technology, data and analytics to be ready for digital commerce. Without doubt, the route taken to agility is an integral part of the overall transformation that also paves way for selling in today’s digital world. And this route needs to focus on people with the right skillset, then nurturing creative, cultural and processual freedom to prosper and eventually bank on the talent and efficacy of self-organizing cross-functional teams.

Airlines are making meaningful progress on this count. Evaluating what the likes of Lufthansa Group and JetBlue have managed, there are lots of positive developments.

In case of Lufthansa Innovation Unit (LIH), more than 90% of its team is from the start-up ecosystem. “This is a huge advantage. We understand that we have to build a lasting footprint and legitimize ourselves in the tech space first, even being a market-leading multinational with more than 60 years of experience,” says Gleb Tritus, Managing Director of LIH.

Lufthansa is ensuring that expertise of various disciplines within its core organization is being leveraged for new initiatives. So how does the group integrate the new concepts or the offering of start-ups or the invested companies within the Lufthansa Group? “Integration in the conventional way is not the goal in most cases as we explicitly emphasize new business models more distant to the core of Lufthansa Group,” said Tritus. “Such innovations need the creative, cultural and processual freedom to prosper – the main reason why the organization is investing into digital labs outside the headquarters. In cases where we develop towards a very specific, Lufthansa-focused solution we are involving the respective experts from the core organization very early on. The goal is to create a mutual feeling of responsibility and ownership as soon as possible instead of handing over completed works from one silo to another.”   

New skillset, new ways of functioning

Airlines today are recruiting the likes of information architect, usability testing specialist, data scientists etc. As these specialists strengthen various disciplines, this forms the first seed of agility. Then these teams typically work on a prototype of a new offering. It is crafted with the least effort possible to be used for validated learning about customers. An agile development team works on such minimum viable product to a subdivision of their users to test a new idea, to garner data and doing so learn from the whole exercise.

In case of Kiwi.com, the team worked on a new functionality in NOMAD that returns the cheapest itinerary possible between cities on the dates that a passenger intends to leave and return. The algorithm finds and organizes flights for the user.

 

In case a project is launched to simplify travel on the OTA site, the UX designer invites several people involved - the product manager, UX, customer service, marketing etc. depending on the project. The team believes that gathering requirements and insights from all of these parties is important to enable the designer to frame the problem that is being solved and understand also what blocks them from executing the project. Once it is clear that what problem is to be solved the designer can start exploring ways to solve the problem - typically through a digital user interface but the solution can be found elsewhere too. Loops of concept tests and user test ensure that Kiwi.com designs the right thing right.

Making the most of investment

Also, the chosen architecture paves way for the development team to deliver rapidly.   

Considering a real example for the same, how would an airline work on a new payment offering? How about facilitating payment via a WeChat chatbot?

As indicated by KLM recently, for this to work, the blend of having an apt payment infrastructure and internal alignment is the key.

“Internally, we started working via structuring or a framework like Scrum (to embrace agility). The number of product teams within the KLM digital is quite big. There are multiple teams working in sync within this agile environment, involving the front-end, back-end API teams, payments team…looking at implementing new projects/ features,” mentioned Maarten Rooijers, Senior Manager Payments, KLM.

 

Hear from experts about agile transformation and retailing at this week's Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

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Ai Editorial: Where do airlines stand today with continuous pricing?

First Published on 25th October, 2018

Ai Editorial: The plan is to lay a solid foundation for continuous pricing as part of the dynamic offer creation process. Offers are going to be relevant for the one who is looking for it, targeting their spending and would feature trip essentials including non-air ancillaries, writes Ai’s Ritesh Gupta

 

All aspects of pricing are being evaluated closely as carriers gear up for offer optimization. Being in control of the offer to the extent that it matches one’s willingness to pay and offers them trip essentials including non-air ancillaries is what is being targeted.

And for this, overcoming the limitation of static rule-based methods and real-time calculation of offers is must. Be it for the way fares are managed, retailing methodologies, acting on data and even what would it take to excel in the arena of ancillary offering pricing is being looked at to optimize pricing as part of offer optimization. All of this would eventually prepare airlines to target the passenger as per their willingness to pay.

Real-time decision-making

Airlines and technology companies have been working on ways to optimize pricing, without being stalled by the limitations posed by filed fares or booking class restrictions. The industry is trying to do away with limitations in terms of the number of price points offered and how to modify the same. Making offers by relying on pre-determined static price points to limited allocations of inventory is outdated. Companies like Farelogix assert that airlines should look for options where they can mark up or discount a starting price – whether that’s an ATPCO-filed fare, market fare, or bid price from an RM system. There is a need to apply pricing logic earlier in the process and without the limitations of booking classes.  

Systems are now emerging to respond in real-time. For instance, one way is to go for real-time fare adjustment to an existing price point by using a dynamic pricing engine.  

“The future is continuous pricing,” says Zachary Wynne, Lead Consultant, ATPCO.

In this model, the airline does not pre-define price points, prices are worked out in real-time based on particulars of a request and guided by data science.

Where does the industry stand today with continuous pricing? “We are getting there. We have the data elements in place,” mentioned Wynne, who also added that ATPCO has been engaging in industry discussions (running a working group for two years or so to set standards and work on system interoperability), featuring GDSs, RM system providers, airlines etc. for taking the same forward. The focus also has been on implementing dynamic pricing alongside existing processes like interlining.

Eventually the plan is to lay a solid foundation for continuous pricing as part of the dynamic offer creation process. Offers are going to be relevant for the one who is looking for it, targeting their spending and featuring trip essentials including non-air ancillaries.

Datalex highlight that airlines need the ability to dynamically work out several bundles, promotions and offers from a single fare; to apply much greater levels of customer segmentation, yet limit the fare management costs. As for NDC, it states this standard along with more scalable technologies means that airlines “will soon be able to leverage an unlimited number of price points that are set in real-time based on data-driven strategies”.

Some of the areas that are being explored at this juncture:

·          How continuous pricing and dynamic offer generation would impact forecasting?

·          How behavioral economics and AI algorithms are shaping up new commerce platforms?

·          How to manage requests from multiple channels as the static processes of schedule, fare and availability would be done away with?

·          How are efforts coming along to count on customer data and segmentation to work out desired offers?

·          Are airlines “organizationally ready” for modern commerce?·           

 

Hear from experts about NDC and retailing at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

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Ai Editorial: Why easyJet’s “Instagram-inspired trip feature” is a super move?

First Published on 19th October, 2018

Ai Editorial: Be it for capturing the essence of travel or having an early say in the booking funnel or strengthening 1st party data, easyJet’s new feature is a welcome move to simplify travel shopping, writes Ai’s Ritesh Gupta

 

A picturesque beach location, a delicious dish, an enamoring festival…these are examples of what can inspire one to travel. But what is the possibility of booking an entire trip around the very reason for travel – air ticket (or train, bus etc.), accommodation, transfers etc. – in few clicks?

 

As has been the case till date, the gap between what and where to book to finally completing a transaction for a trip is rather a prolonged one, fragmented over sessions, devices etc.  

 

In this context, easyJet making it possible to book an Instagram inspired trip is a welcome change.

 

 

This new feature on the airline’s app allows anyone to instantly book flights after they share photographs they come across on Instagram. The tool merges the digital and real world, capturing the spontaneity of easyJet’s customers through an instantaneous image booking system. The feature, Look&Book, uses advanced image recognition technology to identify the location and leverages Microsoft Azure APIs to match the photo to the easyJet destination. Look&Book helps users find out where an Instagram photo was taken and which flights users need to book to get there. According to easyJet, once a user shares photos or download them on the easyJet app, then users are suggested the nearest airport. The carrier pre-populates the booking form with details.

 

Doing away with traditional ways of selling

 

By embracing technology, airlines can benefit in several ways:

 

1.     Capturing the essence of travel: What this move signifies is the willingness of airlines to do away with the “search” functionality – one that typically features filling in information in tabs – from point A to B plus dates. Rather the introduction of easyJet’s feature is a fine example of thinking like a traveller, extending the moment of inspiration and making trip booking seamless from there on.

 

2.     Early in the booking funnel: Destination discovery and associated experiences is one area where airlines haven’t excelled in a big way. But this way, by counting on mobile technology and social media, airlines can play their part in shortening the research phase of leisure travellers. By focusing on pre-booking engagement, airlines also end up targeting travellers early in the booking funnel.

 

3.     Capitalizing on data trail: In case of easyJet, one is using the app of the carrier to share the photo they have liked. This is a vital data point as it does indicate what fascinates the user when it comes to travel. Plus, behavioral data collected from app can be blended further to strengthen the profile of the user. And it can also be used for retargeting or cart abandonment email campaigns.

 

4.     Recommending it right: Since this is 1st party data, airlines can strengthen their own ecosystem to truly understand where and why people are planning to travel. Once you have a user-specific data, you can understand the purchase journey and also what to recommend. Since airlines have been working on a profile of a user, they can better understand travel habits and accordingly recommend something relevant, contextual. When it comes to recommending, a way to build affiliation is by focusing on personalizing destination discovery. Destination and even what a user intends to do there is what easyJet’s new feature is possibly indicating. When it comes to recommending, a way to build affiliation is by focusing on personalizing destination discovery. Here machine learning contributes by letting airlines to match locations with the lifestyle preferences of their customers. The key here is to deliver a nuanced recommendation, to “humanise” the available data.    

 

Are travel e-commerce thinking like travellers? How are they making the most of technology, data and content to simplify travel shopping? Hear from experts at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

 

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Ai Editorial: Assessing changes with the implementation of NDC and One Order

First Published on 1st October, 2018

 

Ai Editorial: Airlines are looking into embracing Offer and Order Management systems, using NDC as the distribution protocol, and creating the One Order standard. What changes all of this would bring as far as databases or fulfillment is concerned, probes Ai’s Ritesh Gupta

 

 

 

Airlines are keen on extending their reach outside their own sales infrastructure with the same set of capabilities that they can do internally. They are gearing up for an offer management system that can consider all the data points, worked around analysis and business rules, assess availability and applicability, bundle the offer items, compute  pricing, and present it along with branding and rich media to travellers.   

 

Also, a mechanism is being worked out to modify the accepted offers into orders.

 

There is a need to transition into an order management system for fulfillment and accounting. 

 

“(Today) booking information is contained in a PNR. Payment, entitlement and status information are contained in E-Tickets and EMDs. Databases are linked but not the same,” said Ian Tunnacliffe, Owner at IFT Consulting.

 

 

Airlines have different mechanism for tracking the same transaction: the PNR (the order, used for operations and fulfillment) and the electronic ticket (a confirmation of the payment mechanism).

 

One Order combines the PNR data information with the E-ticket and the EMD information into one single record.

 

As envisioned by IATA, One Order will result in the gradual disappearance of multiple reservation records as well as e-ticket/EMD concepts to be replaced by a single reference travel document. A new standardized and expandable reference will become the single access point for customer orders by third parties (interline partners, distribution channels, ground handling agents and airport staff, among others).

 

Tunnacliffe, who is scheduled to speak at the upcoming Mega Event Worldwide, to be held in Long Beach, California, explained: 

  • In the NDC environment, booking information is contained in an Order. Payment, entitlement and status information are still contained in E-Tickets and EMDs. 
  • In the One Order environment, all information is contained in a single order.

 

As we explained in one of our previous articles, in the Order structure, there are no limitations that are present with electronic documents.  For example, looking within the framework of the offer, and thus the order as well, there are not requirements for a RBD, fare basis, issuance code, service category, or even a rule. Those can be populated, which is useful for the transition period where the legacy ticketing and reservations systems need to remain, but they are optional, providing the flexibility within the design of the standard to allow airlines to sell whatever they want to sell. What this means then:

 

  • Revenue management can be truly dynamic by determining an offer price based on business goals, unrestricted by available RBDs or filed fares.  
  • Merchandizing becomes a core role of the airline, not just an ancillary function.  
  • Travel changes and refundability can now be offered as dynamically offered ancillary products and be applied to any journey at a variable price, instead of having to rely on the filled fare rules.

 

 

Hear from senior industry executives about NDC and ONE Order at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

 

 

Ai Video: Evaluating the pace of industrialization of NDC

First Published on 10th September, 2018

NDC schemas supporting a consistent interpretation of the standard, the availability of an implementation guide to support use cases and no major need for one to rework on the processes after implementing the 17.2 version have strengthened the case for going ahead with NDC.

The industry is gradually coming to grips with massive changes. An industry-wide as well as a collaborative effort is being made to ascertain what needs to be done to provide a more robust offer and order structure. The industry today stands at a crucial juncture as far as embracing airline retailing is concerned. Every step in the process is expected to bring in a change. For instance, NDC will continue to create e-tickets. “But once we move to ONE Order there will be no tickets,” mentioned Ian Tunnacliffe, Owner at IFT Consulting, who was recently in Bangkok and Phuket for Ai’s #MegaAPAC and #ATPS conferences, respectively. According to him, the majority of live NDC implementations are point to point. As for what to expect from here on, Tunnacliffe says, “NDC adoption will continue to increase slowly with GDSs driving the most growth. Also, the arrival of ONE Order will boost the take up of NDC but large-scale adoption is likely to be several years away.”

Tunnacliffe spoke to Ai’s Ritesh Gupta about the industrialization and mass adoption of NDC.

 

Hear from senior industry executives about NDC and ONE Order at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

 

 

 

 

 

Ai Editorial: Data – a key starting point in digital transformation

First Published on 3rd September, 2018

Ai Editorial: Data, along with airline-specific systems for both operations and commerce, IT architecture, the talent pool for an agile set up and emerging industry processes such as IATA’s One Order, can propel customer-centricity, writes Ai’s Ritesh Gupta

 

Are full-service airlines in danger of getting disrupted or their hub and spoke model would remain a robust safety net?  Are we doing enough as an industry to efficiently leverage data to manage customer experience and operational efficiency?

These intriguing questions have emerged over the years as various external factors have been impacting airlines, including their overall customer service and offerings for passengers. The industry has responded, even though the pace of change is questioned quite often.

Every aspect of customer-facing facet is under scrutiny.

Data – the starting point 

If today the airline staff finds it challenging to manage customer interaction in case of a delay in a flight’s schedule or fails to have a bigger say in the early stages of the booking funnel, it does indicate that the airline is struggling in today’s connected era. This is simply because passengers’ expectations aren’t the same anymore.  Why aren’t we in a position to provide similar or better experience as Uber?

“Data management is the foundation to managing personalized customer experience and increased revenues”, asserts Vijay Anand, Global Industry Leader for Travel and Transportation at IBM. Given the complexities involved in airline operations, he believes it is not fair to directly compare airlines with Uber although there are best practices that can be adopted from other industries.

When asked about loyalty, Anand said that in his view “loyalty in today’s context is quite different than in the past. For example, the next generation is not worried about tier status and miles/points. They are looking for instant recognition and instant rewards!”

Data key to experience optimization

So where do airlines stand, considering that they have to deal with disparate data sources, organization silos and even outdated processes/ interfaces that the staff at the airport uses to serve passengers? There are cases where passengers are more proactive in gathering updates and information about flights than the airline/airport staff.

“It’s a work in progress. The industry recognizes the importance of integrated data management and several airlines have projects in place to manage big data and analytics more efficiently. We are beginning to see Airlines leveraging data at various tough points throughout the passenger journey. With mobile apps, Airlines are enabling employees with the right information at the right time, which helps in both customer experience management and faster communications internally to ensure efficient operations,” said Anand.

Benefitting from a robust data strategy  

·          Paving way for operationalizing of data: The staff at the check-in desk or at the gate is being equipped with mobile devices to serve passengers based on their travel history, frequent flyer status, the name of their company, past experiences etc.  Airlines can focus on uniting all business rules and decisions, and workout a central hub for business decisions to be made at scale.

·          Personalization at scale: With continuous ingestion of data, airlines can count on artificial intelligence and decision-making algorithms to handle increased complexity. IBM Travel Retail platform uses machine learning as an integral capability for personalization, including shopping, buying and in-journey experiences. The platform learns in real-time on what offers were selected to better optimize price, promotion etc. The system automatically integrates data, learns by itself and reasons what to offer and this includes one’s propensity to buy.

·          Refining data processing for NDC: As airlines sharpen their ability to store and analyze large volumes of disparate data, how are they looking at understanding the search pattern even from their indirect channels especially in the wake of IATA’s NDC standard? Airlines with robust XML data processing capabilities allow multiple data sources such as Kafka log queues or packet level network traffic from an NDC system to be captured and processed for key IT and business data content that can then be fed into corporate BI environment. So by counting on search data, an airline can differentiate their offering – by being aware of the intent and what is of interest to passengers, digital teams can embrace rapid learning cycles and work on tailored offering for different channels. 

To conclude, so be it for personalization, improving customer service at various touchpoints or making the most of IATA’s standard NDC or One Order, it is all about putting things in order to improve the passenger experience. All of this is part of the same puzzle. For example, with profiles of passengers being refined continuously and order management system being the central source of truth, a passenger comes and shares the name at a touchpoint, and that is enough to service in the best possible manner – by being aware of the current flight, current order, servicing needs etc. The last interaction, be it for self-service kiosk or a customer service agent, is clearly documented.   

As for retailing, airlines can differentiate by playing a role, starting from discovering a destination to offering trip essentials. Airlines already have set up a strong partnership ecosystem. The key is to offer the right product in a personalized manner. It is imperative for airlines to fill up seats at a much better yield. Working on a two-sided marketplace would take time. But, yes such model where a traveller or a loyalty program member is offered a relevant product, including ones from the non-travel category, means the airline can benefit from a data-driven learning loop.  More they click and shop, more the airline learns about the customer.

Follow Ai on Twitter: @Ai_Connects_Us

 

Ai Editorial: Why Amadeus believes timing is right for industrialization of NDC?

First Published on 28th August, 2018

NDC schemas supporting a consistent interpretation of the standard, the availability of an implementation guide to support use cases and no need for one to rework on their processes after implementing the 17.2 version have strengthened the case for going ahead with NDC, writes Ai’s Ritesh Gupta

 

Amadeus has been working on plans to industrialize IATA’s New Distribution Capability, an XML-based data transmission standard.

Focusing on the collaborative route to take the standard forward, the group has signed a spate of agreements in the recent past, including ones with American Express GBT, American Airlines, Carlson Wagonlit Travel (CWT),  and BCD Travel in a span of a week. The involved entities are focusing on new use cases for authentic standardization via a test and learn approach.

This route adopted by Amadeus is significant as requisite modern retailing capabilities can only be built on top of the NDC protocol provided it responds to travel providers and sellers’ needs. Amadeus acknowledges that progress made with the version 17.2 in terms of bringing into line the Offer and Order structures in the NDC schemas has set the tone for a dependable understanding of the standard.

“The industry today (when it comes to NDC) is far ahead where things were a year or two ago,” said Gianni Pisanello, VP, NDC-X program, Amadeus.

Laying a solid foundation for various stakeholders

Pisanello underlined progress on three counts.

  • Pisanello described version 17.2 as a “minimum viable industrializable” standard. “The introduction of this version was a big leap (last year). Most of the functional requirements (required) from both an airline and an agency’s perspective feature in it. This is the version that Amadeus is using to integrate with some of the leading airlines,” added Pisanello. “From version 18 onwards, the newly added features are going to be based on the IATA Airline Industry Data Model. It builds on the 17.2 standard.”
  • Second, Pisanello referred to the role of IATA’s data model and refining of the standard, “Any entity that has worked on implementations on NDC 17.2 wouldn’t need to rework on their respective processes and application logic. Instead the focus will be on re-mapping data elements from version 18 onwards. It is another significant development as the data model cuts down on the manual production of schemas. This is a constructive development as various data element concepts would follow the data model parameters.”  
  • Third, the industry has advanced in terms of standardizing the flow. “There is nothing to gain as an industry with different flows,” said Pisanello. He mentioned the issue of flexibility needed to be sorted. For example, one flow could indicate booking a flight first, paying for it and then seat allocation taking place. The other would allow booking a flight and seat, and paying them together to complete a transaction. “So the outcome is same, but the flow is different. Schemas are a set of words. Their use (as per the user’s discretion) was resulting in different flows within the same standard. Now with the Implementation Guide (features sample instances to showcase actual use cases), there is documentation in place to help a stakeholder move with their NDC project,” explained Pisanello.

With the standardization of the schema and the flow as well, is it a case of curbing innovation?

Disagreeing with the same, Pisanello said, “In fact, it is the reverse. By having a standard in place, the industry can create a lot of flexibility and creativity on top of it.” He referred to the role of 4G on top on which mobile apps such as Whatsapp or WeChat were crafted or the Internet which eventually witnessed the entry of Facebook. “Similarly, once NDC is established, the standard will enable the travel industry to innovate much faster how travel is sold and bought.”

Preparedness

Among the set of objectives, a key aspect of Amadeus’ NDC-X program is to ensure that NDC content is easy to access and compare. Initially, the focus is on a simple flow of “shop, order and pay” using the NDC standard. “Post this, the plan is to include the servicing capabilities that travel agencies need, such as the ability to change tickets, or to add ancillaries,” shared Pisanello.

“Once the schema and the standard are in place, airlines have to implement all the right features for the travel agency to do their job i. e. to fulfill the work and provide services to their travellers. Airlines not only need look at content and product offerings that they offer on their respective digital assets, but also at other areas that agencies need for their association with travellers. So in addition to shopping and booking functionalities, but they also need to incorporate vital features such as re-shopping capability,” explained Pisanello.

He added that another critical aspect of NDC would be the performance of airlines’ systems that can handle search requests coming in from various indirect channels. “A sub-second respond (from an airline) would be critical and if this doesn’t happen in the NDC framework then airlines would lose out (be not being present when an intermediary produces results when a user searches).”  Airlines are looking for systems that are interoperable, scalable and flexible, unlike proprietary applications used in the past. “We can deal with it (performance required from systems). We are operating on open systems. Our systems have developed real-time capability to process every shopping request, for instance, managing availability of seats in a particular fare class at a given point of time,” stated Pisanello.

Optimizing the offering for travel agencies

As for the workflow of the agencies, Pisanello mentioned that Amadeus from the early stage of its involvement in NDC conveyed it to IATA and airlines that if NDC is going to be tough for agencies to adapt then it can’t be industrialized. “(In such case) it won’t prove useful for high-volume transactions environment,” he said. “Now we see a number of airlines being committed to the same – American Airlines, Qantas, British Airways etc.”

“An aggregator continues to bring together suppliers’ content via a platform to agencies. We can deliver reach and sale whosoever the provider is. With NDC, the industry is upgrading capabilities – airlines working on personalization, relevant offers; aggregators can build offerings on top of NDC content and combine it in new ways; and agencies are essentially retailers. Agents would have varied content, along with their layer of personalization they would have strong opportunity in servicing their customers better,” mentioned Pisanello.

He added that it is important to understand the productivity of the agencies. “What sort of content is needed? There is a difference between the B2C and B2B environment. Whom are we servicing? It isn’t about putting the same content, even different agencies need different content. NDC has been created for agencies. Airlines can’t manage 100% of distribution via their .com or apps. The agency channel is a vital player in this mix, and who would facilitate and serve them the best is an area of expertise as well,” stated Pisanello, who added that NDC shouldn’t be clubbed with the commercial strategy of airlines, be it for the introduction of a surcharge or offering NDC commission to agencies. “These would have happened anyway. They are more of a function of certain carriers’ size and operations in a certain market,” pointed out Pisanello.

Pisanello expects existing infrastructure using EDIFACT and the one based on NDC to continue for years.

Amadeus is working on its web services product. It will aggregate NDC and non-NDC content, and this product is scheduled to be in production for piloting by online travel agencies. It will then be industrialized and enhanced with servicing capabilities. Worldwide deployment is being targeted in the first quarter of next year.

Gianni Pisanello, VP, NDC-X program, Amadeus is scheduled to speak at this week's #MegaAPAC (2018 Mega Event Asia-Pacific to be held in Bangkok, 28-30 August). https://lnkd.in/fTPx4xw

 

 

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