Ai Editorial: How Cathay Pacific and Thomas Cook are looking at virtual reality?

First Published on 24th July, 2017

Ai Editorial: Travel e-commerce brands are exploring virtual reality or VR to offer travellers a feeling of ‘being’ in a place be it for an aircraft or a hotel. This is being enhanced with an element of interactivity, user-generated content etc., writes Ai’s Ritesh Gupta

 

Being in a virtual space as if you’re actually there and indulging in something that lures you, excites you is a worthy experience.

For travellers, there are plenty of novel experiences that are emerging in the realm of virtually reality (VR).

For instance, a family having fun in an interactive virtual environment where each member is using their Facebook photos to customize their respective appearances. Or they can even explore a hotel or the experience of flying business class with an airline, where guests or passengers find themselves in a real-life situation and any query can be answered without leaving the virtual environment. Plus, the idea of completing a transaction, too, is a possibility.

New initiatives in travel

·          Cathay Pacific has launched their first interactive 360º video advertisement, enabling viewers to have a look at the airline’s first class cabin and interact with the setting. Robecta Ma, Vice-President Marketing, Americas at Cathay Pacific Airways, says this particular initiative was “borne out of the necessity to highlight our ground and in-flight experience to those who have not had access to our products”. She said, “We have been experiencing a lot of success with VR in large-scale events and conventions, where people can interact with our brand in a captive environment.”

 

·          Travel agency Ving (Thomas Cook Northern Europe) recently unveiled a new initiative featuring a virtual world Facebook Spaces (beta version launched in April this year). A place where users can meet friends and socialize, show 360-images etc. in a virtual world for guided tours. Movies have been produced to show some of Ving’s destinations and hotels, among them the ever popular Alcudia on Mallorca, as well as the Greek island of Lefkas. To visit Ving in Facebook Spaces, users need a Facebook profile and a particular VR-headset; Oculus Rift. “We want to be at the forefront of testing new technical solutions that will help take customer experience to the next level. Previously, a VR experience has been more ‘individualistic’ but now, through Facebook Spaces, we can bring a whole collective of people together in the virtual world. Recently, Facebook Spaces also launched live 360-degree video,” said Karin Eriksson, Social Media Manager, Ving Sverig. For Ving, the objective isn’t only to show content in an inspiring way, but also to enable interaction between more people in the VR world. “360-degree video will develop and become much more immersive as stereoscopic / volumetric video develops. Then we’ll get a real feeling of ‘being’ in a place,” she said.

 

 

Early days for VR marketing

VR headsets, which fit under mobile or tethered categories, have evolved. Specialists recommend standalone virtual reality apps, embedding VR content in a custom-built website, maximising the reach of such content etc. but all of this is still in its infancy. In one of its recent reports, Worldpay, referring to the readiness of virtual commerce, highlighted the discrepancy across markets. In a majority of developed economies, consumers aren’t ready for it. For instance, only 23% of Dutch consumers believe VR devices are secure for making payments. Whereas the figure shoots up to 59% in case of Chinese shoppers. The study also underlined that pricing of advanced headsets from Oculus and Vive, available for over $700, can be a deterrent for initiating any marketing campaign. Plus, the gap between VR manufacturers’ understanding of consumers vis-à-vis the sort of experiences that marketers intend to deliver also needs to be looked at.

“Even though the travel industry does embrace the benefits of VR as a means of enhancing a customer’s brand experience, the technology is still in its inchoate phase. Hence, most brands are still approaching this in a cautious manner. In our case, we want to make the Cathay Pacific lounge and flight experience accessible to everyone via the usage of VR, especially to those who have not had a chance to fly on our airline,” shared Ma. She added, “While there have been some really great destination focused videos, we haven’t seen as many brands in the travel space fully embrace VR’s potential. It remains to be an area of experimentation yet comes with limitless creativity.”

Eriksson also acknowledged that VR is in its nascent stages. “Consumer VR has only been around for a year, so some may be a bit skeptical about trying out new technical solutions and prefer until someone else has trialed it. That’s a big mistake I think. We prefer to test for ourselves. First on a small scale and then scaling up if the results are positive,” she said. As generally is the case with finalising a budget for marketing, companies generally follow the “70/20/10 Rule” or even “90/9/1” (with majority going to what’s been done over the past few years; next focus on something that has just gone mainstream and last part for testing new concepts/ technology and don’t expect a major RoI). So it is interesting where travel brands fit in VR in their plans as of now.

Eriksson also mentioned that Ving sees this as an investment for improving the tour operator’s business. “We already have Customer Service available through Facebook.  Through the use of Facebook Spaces we can now provide an extra service that will help assist our customers during the Search and Inspiration phase of their customer journey,” she said.

Points to consider

·          Be clear with the objective:  Ma also added that some marketers tend to focus on current trends and focus on executing something just to stay trendy. “It’s important to think through why we want to execute something new and be clear about what goals we want to accomplish,” she said. “It’s important to clarify the purpose of creating VR content, crystallize the storyline for the video, ensure the content be enticing enough for the audience and strategize ways of promoting the video effectively. For example, in our case via events, advertising etc.”  

·          Keep it simple: Ma highlighted that ease of consumption and simplicity are key. “Embracing new technology is already a daunting task hence we want to make sure our audiences/ customers can consume our content easily. The VR ads we are using for our current Hong Kong campaign can be easily viewed on mobile and desktop environments,” she said. As for the sort of preparation that went in for this new initiative, Ma said, “In the beginning stages, we spent a lot of time working on creative concepts and storyboarding for the video to ensure we have a compelling story to tell. While we are excited about what VR can do to enhance our content, it’s important for us that the video should not be presented as an ad but rather an authentic story about two travellers flying on Cathay Pacific from San Francisco to Hong Kong.”

Eriksson shared that a major challenge lies in “creating content that looks and feels as ‘realistic’ as possible, especially with the added constraint of no ‘off the shelf’ technology being available yet that can handle this in a satisfactory enough manner.” But in a few years, it will be possible, she expects.

·          Being open to experimentation: Eriksson shared that the team, led by IT engineer and internal VR guru Jonas Carlson Almqvist, has been experimenting and producing 360-degree videos for years, with all available to view on Google Streetview. “We’re still exploring ways on how to now make the next step in 360-degree video as there is great potential here to display travel content in a truly inspiring way,” she said. “It would have been a much more challenging and expensive test to run without this (approach towards continuous testing helped),” she said.

·          Measurement: A way to measure is expand the reach, assess coverage in media etc. “We made press releases in different languages, recorded video material (both long and short videos) and then we posted the posts in our social media channels. You can also register on a Guided Tour in Ving’s VR World via a form. Through these activities we can measure, for example, involvement in social media, film views, how many articles are written about us, etc.,” shared Eriksson.

It is important to keep an eye on improvement. “Technology is constantly evolving and the way we experience 360-degree content today will not be the same way we experience VR media in the future,” concluded Eriksson. 

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Ai Editorial: Taking NDC forward – stabilize the schema for all

First Published on 19th July, 2017

Ai Editorial: NDC data standard is not only an airline topic. It also affects the travel industry across the board. Considering that there was “too much flexibility in the initial versions of schema and implementations weren’t the same”, the industry is hoping for stabilization in the near future, writes Ai's Ritesh Gupta

 

If one were to offer a fair assessment of the adoption of IATA’s NDC XML standard after five years or so, then “slow” is an apt way to describe the same.

This industry is riddled with complexities so such progress is understandable to an extent.

In fact, as one of the senior industry executives mentioned, “If Amazon had to deal with intricacies of air travel, then it might not have taken off (as a retailer)!”

NDC is primarily about working out the criterion and workflow of the airline delivering the offer. A key aspect of this plan is to work out a schema that paves for carriers to create and deliver their respective offers to any distribution channel or 3rd party. A standardized schema makes it a scalable, repeatable, and over time economically beneficial process. So in case of any process modification, more so in a sector which has relied on legacy technology, the initial evolution of process, workflow, and featured technology calls for major investment from existing organizations and new entrants.    

Common protocol lets two systems understand and interact with each other. So definition of seats, baggage fare etc. becomes clear. So if there is a query from a system - how many seats of this class, category are available at this point of time, when this based on a pre-defined protocol, then the other system would be able to respond.

 

Significance of standardization

According to IATA, since NDC is a standard it will make such connections more cost effective and faster to deploy. If the partners involved (airlines or agents) see value in the presence of an intermediary, the standard can cater for that – and this is where aggregators come into play. They can be incumbents say, GDSs, or new players who are encouraged to offer their services “because the connectivity is fulfilled via an Internet-based standard which makes the marketplace much more open to competition”.

But, as an executive from a meta-search, points out, “For a meta-search, there are many different sources of content - via GDSs, airline-direct, OTA-direct etc. There is a network of connectivity and the objective is to aggregate as much as possible.  But we need to standardize as well. We do focus on it, so when entities converge on that, it would be beneficial for us, too. It is still a work in progress, as others are moving, too. And everyone has their own agenda, and time scale.”

An executive from GDS mentioned that having a set of standard messages is necessary but not sufficient. The executive stated that connecting systems with these standardised messages is the easier part. “Most vendors underestimate the complexity of the integration part.”

What has happened so far?

So there have been a couple of issues with versions and resulting implementations.  

The first official industry standard was launched in September 2015 as PADIS version 15.2. Further versions of the schemas are 16.1 and 16.2 while previous versions (1.1.1 and similar) are candidate releases. The evolution of the standard is captured within the different versions, with each new version incorporating improved functions reflecting the feedback from pilots and users.

“Probably because of the complexities (associated with the functioning of airlines and stakeholders), there was too much flexibility in the initial versions of schema and implementations weren’t the same. This is quite unfortunate for an initiative that is “targeting to be a standard”. Today even some of the basic NDC messages are being re-factored. Is the complexity rising at the moment or at least for next 2-3 years?”

Another executive, associated with a travel technology company, agreed and mentioned that “implementers” could interpret schemas in different ways. “The big problem came when the players like KAYAK and SkyScanner, and NDC consuming parties tried to build a one-time NDC connection in order to connect to multiple airlines with the least amount of effort considering that a standard was being planned. But the reality is that because of the varying level of interpretation, connections had to be modified somewhat. So with implementers providing their feedback to the IATA, the industry body has worked out a data modelling exercise. So they are redefining and tightening relationships in the NDC schema to ensure that the flexibility and looseness of the interpretation will go away. The new 17.1 scheme are going to be partly generated from the new airline data model and later on 17.2, the full schema set would be generated from the IATA data model. So when that’s done, there should be standardization in projects and implementations.”

As of now, it seems like over the past few years, there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc.   

So considering that airlines have developed their API based on a particular XML standard (NDC or even other), it would result in different interpretation of these standards. So for an intermediary, say a marketplace, working on multiple airline APIs calls for normalisation into a single version. It has be to ensured that this move brings down the overall bearing on the content and functionality as worked out by airlines through their APIs.

“The problem of different version would exist as different airlines would implement different versions of schemas. And when it comes to aggregators, they would need to deal with such disparity as for dealing with airlines. So the need for interoperability will exist.”

NDC is not only an airline topic as it affects the travel industry across the board.

For their part, IATA has clarified that NDC standard is not locked into XML. There have been plans to release a JSON profile as well.

IATA’s Industry Data Model initiative is focused on refining messaging standards development capability and enhancing interoperability of systems.  

As of now (even when questions have been raised whether NDC is truly an open standard or not), the industry is hoping that the NDC version 17.2 would result in stabilization.

 

Hear from experts at the upcoming Controlling Your Offer Symposium, featuring live demonstrations that take NDC, dynamic pricing, revenue management and merchandising to the next level.

For more click here

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Ai Video: Using APIs to monetize trip experience beyond flights

First Published on 17th July, 2017

Travel e-commerce players, including airlines, hotels, intermediaries etc. are finding ways to connect and access inventory and sales systems via application programming interfaces (APIs). Increasing the average order value or targeting a traveller’s wallet via ancillary offerings is one area that is resulting in interesting initiatives. 

OTAs and even hotels and airlines etc. among suppliers, have access to a substantial base of travellers. Importantly they are the ones with an intent to travel. So how can these organisations scale up their revenues, propelled by APIs?

“There is an opportunity for airlines to personalise the trip based on valuable information they already have about passengers (age, destination, leisure or business etc.), especially related to their respective trips,” says travel technology provider BeMyGuest’s CEO Clement Wong. Referring to the company’s expertise in  excursions, activities and day tours, he said that each and every product is on meta-tag, whether it’s suitable for a small family or a romantic getaway or an adventurous trip etc. “We are able to provide of all this information within the API,” he said. “We help airlines and hotels monetize the post flight booking or post hotel booking phase/ customers.

In terms of efficiency that APIs bring in, Wong mentioned that hotels and airlines aren’t keen on integrating with multiple APIs. “That’s the last thing they want to do. Travel suppliers can integrate, but that’s not the most efficient use of their time,” he said. “What they are good at is selling to customers, the base they have, so why not focus on offering them the best flight experience, better hotel stay or local excursions. Our role is to streamline connectivity, rather than suppliers working on 10-20 connections for the content related to excursions, activities and day tours.”

Explore how airlines, intermediaries and B2B specialists are going about distribution at the upcoming Bold Strategies for Growth Markets - 4th Mega Event Asia-Pacific (Loyalty & Co-Brand/Ancillary Conferences)

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Ai Editorial: 4 key considerations for stepping up average order value

First Published on 13th July, 2017

Ai Editorial: Stepping up the average order value or targeting incremental revenue per passenger has been identified as one area for airlines to improve upon their financial performance.  

 

Revenue from optional services, such as onboard sales of food and beverages, checked baggage, premium seat assignments, and early boarding benefits, hovered around the $45 billion-mark last year, according to IdeaWorksCompany. But if on one hand, a group of carriers led by Ryanair can garner as much as 25% in ancillary revenue as a percentage of operating revenue, the “traditional” category has a fair bit to catch on.  

Ai’s Ritesh Gupta spoke to Joacim Berntsson, Strategic Business Development Manager - Airline Market, Paxport about the gaps that are impeding the average order value, dealing with the current distribution and technology status quo etc. Areas that need to be focused upon:

1.     Why apt blend of content, data and technology isn’t enough?: For Berntsson, in order to make more money per passenger, airlines need to put more pieces of a puzzle and these are - choice, content, reach, pricing, flexibility, time-to-market, data, relevance and timing.

Explaining his viewpoint, he said consumers are ready to pay, especially the “Millennials”, and this category can’t be ignored. According to Boston Consulting Group, every third person in the world is a millennial. Berntsson said, “In five years, they will be the core customer group of airlines, the Millennials are very likely to pay extra for both flight- and non-flight related services. They are spoiled with choice and have a strong wish to pick and choose from a la carte menus. So the foundation is there, consumers are ready to pay and airlines have started to unbundle their product – actually, the most profitable airlines in the world are the ones where the biggest share of the revenues comes from ancillary services, and they are mainly low cost carriers. So one might ask oneself, why don’t we see a higher growth with more “traditional” airlines?”

Berntsson further explained that a major reason could be the comparison of the shopping experience that passengers have with airlines vis-à-vis retailers, such as Amazon. “Airlines have a hard time replicating these experiences. People want choice, full descriptions of what they buy, pictures, recommendations etc. One of the main issues is that the distribution systems used in the industry where built 30-40 years ago, and they were built for fares distribution through travel agencies – not merchandising. So in real airlines only reach one third of their customers with their full service offering as the rest buys their fares through travel resellers.” He adds, “And the offering is quite limited, with a wider choice you might achieve somewhat of personalisation without big data, it’s as simple as the more I can chose from the more likely it is that I find something I like – but today’s systems don’t support it. That of course have an effect on average order value but it also a question of pricing, or should we say the optimal pricing for an optimal conversion on sales.”

Referring to the significance of value, he said, “People are prepared to pay, but only for value – to me, charging $15 for a standard seat on a one and a half hour flight isn’t apt, they are not converting me – I can’t see the value. And I think many others feel the same way, just as an example – having a 30% conversion on $8 seats gives 60% more revenue than 10% on $15. So it is not only about technology, it’s also about having merchandising smartness and the possibility to follow up on sales and being able to correct the pricing instantly!”

“It is also a question about relevance and timing, when am I prepared to buy what – it is not until a few days before I travel that I start thinking about if I need a parking slot or need a transfer.”

As for data, Berntsson also referred to the need to look beyond big data and bank on small data as well. This is an issue at large with other suppliers, too. For instance, hotel companies are recommended to overcome analytical limitations of individual “silos” of market and channel segment data and rather improve upon their demand segmentation and also net contribution of each segment. Citing an example, Berntsson mentioned, “If I travel from Stockholm to Rhodes it is possible to be more predictive that will convert more – it is possible to pre-package a parking or transfer offer in relation to my flight times, it is likely I need a transfer in Rhodes around the time I arrive? The airline know what aircraft I am on so proposing me seats and meals should be easy, also post-booking – when it is likely I am prepared to share more of my wallet, but very few do.”

2.     Be open to change: Airlines tends to be operationally, process and cost-focused, and at large aren’t savvy enough to embrace the requisite organizational change needed to become a retailer. As highlighted in one of our recent articles, airlines can start small, in a smart way and capitalize on opportunities. For instance, Paxport referred to the “pre-order” service in Scandinavia. “Airlines experience a  ‎€70 average order buying, very often with a 15% conversion. Customers can choose their duty-free in advance. Technology isn’t an issue rather the drive or willingness to do it is the biggest hurdle. Look for right KPIs and return on investment with whatever is being done.  Airlines should look at the 15% conversion rate rather than worrying about .5% fulfillment error!

3.     Changing the status quo: Berntsson points out that airlines are quite stuck in their internal - sometimes operational processes, with risk management and that’s understandable. “But there are ways to work around that, but you will need to look at the whole picture – if I change my distribution how will that work with my current payment and settlement set-up? It’s about daring to invite a new 3rd party company to help, will that increase the cost base of the airline? Not necessarily – there is “new money” to share with those companies, and in my opinion that money is the only way to break up an old business model that is costing the airlines a lot of money. But for a period of time it will have to be a mix of old technology/ business model and new technology/ business model, if you can manage the transition smart enough you will come out at the other end of the tunnel a much “happier” airline.”

The number of airlines opting to alter their respective commercial strategies have only been few till date.

4.     Evaluate connectivity for differentiated content and offers: Airlines can refine their API connectivity and are trying to work on an exclusive basis or in a tailored manner for their offerings with intermediaries. For instance, flight offers and bundled ancillaries for certain routes for a specific agency or a tour operator. Changes are being made in the merchandising engine, rules are being defined, content is being delivered etc. So this doesn’t involve any traditional means of distribution.

Also, when we talk of distribution of content via an API, airlines need to be wary of the initiative. NDC is essentially defining the model and workflow of the airline creating and delivering the offer. The very nature of the NDC initiative is to create a robust schema that enables any airline to create and deliver its offers to any distribution channel or third party entity.  As we highlighted in this article, there are airlines which have implemented NDC APIs, but have no real strategy on how to improve their distribution-related KPIs. Just implementing some NDC APIs will not drive revenue, nor improve customer service.  

Berntsson agrees and says NDC will not make airlines better retailers, but it will make it easier from a technological stand point. NDC and One Order are fine, but “it is about a lot of different things; to become merchandisers, to know your customers better etc. – some are getting there slowly but surely,” he says. 

As for a challenge with NDC, while deploying an NDC API between airline and intermediaries there have been evolving versions of the schema. This meant the likes of meta-search engines have had to improvise their implementation for different airlines. Doesn’t this increase complexity around a standard that is supposed to be uniform? Yes, it does,” said Berntsson, “Not only that, but even if being a standard from a communication perspective, doing the same calls etc., the offer of the airlines, their product structure, business rules, ancillaries can all differ from airline to airline making it more complex. One way of getting around that would be to use a 3rd party technology provider handling versions and differences between airlines.”

So be it for what, when and how to offer to a passenger, drifting away from the status quo, embracing change as an organization or making the most of NDC standard, airlines need to be swift to step up the average order value.

 

Hear from senior travel industry executives about digitization, differentiation and NDC at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).

For more, click here

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Ai Video: Data and return on investment

First Published on 10th July, 2017

Airlines have been contemplating initiatives about personalisation and big data.

Now is the time to act on something small (and build on it), says Boxever’s Enterprise Sales Director, Liam Ryan. “If you start small, one can in effect prove one simple use case. Build on it, two use cases, three and more, and not within a span of one year or months, rather in a matter of weeks, $ or dollar return and value for your customers can be shown to the airline,” recommends Ryan.   

Ryan says the likes of airlines and OTAs find it tough to deal with various sources, both homogenous and heterogeneous, data sources. And then the hurdle is how to put it together. “Once an organization can put it together, then they have the ability to figure out what they want to do with it,” he says. He goes on to explain how airlines can be precise with what they intend to, and then build on the same to craft a “personalised, special moment just for passengers, and a result airlines ends up offering value to them”.

Data-driven organizations ensure their customer data collection fits in with constantly evolving behavior based on their context. So if an airline doesn’t end up connecting the dots and act on the context of a situation, then it would end up missing out on optimizing the experience.

Further, Boxever asserts that in order to attain personalisation at scale, it is vital for any organization to being able to merge all of their data, to personalize with the help of artificial intelligence (involving data science and decision making algorithms to handle increased complexity) and finally to engage across every channel – in essence to be available where a consumer is, not where you’d like them to be. If anything is disconnected, it won’t work. 

 

Ai Editorial: Digitization and selling a differentiated product, what’s there for airlines to assess?

First Published on 6th July, 2017

In the context of airlines, one area that is being evaluated is how digitization can impact the way what is being sold and does it depict differentiation, writes Ai’s Ritesh Gupta

 

Digitization is a core focus of enterprises today, one that results in relevant response to every customer interaction, data-driven decision-making across the entity, ability to differentiate the product, quick introduction of products etc.

Of course, IT and systems need to support digitization. Internally airlines have to gear up for apt IT infrastructure and refine their merchandising, e-commerce capabilities. So, if an airline intends to work with a tour operator, how quickly rules can be defined in the merchandising engine to offer tailored bundles via standarized connectivity that results in control? Another area that needs to be assessed is streamlining of the overall functioning of the industry, for instance, the reliance on business processes that are still based on the paper-based workflows. If the combined impact of complexity in both technology and distribution leads to inconsistency for the passenger, then there would always be a gap in the passenger experience.

If an airline is gearing for the digital world along with the interfaces, passenger-facing systems, data collection, and data processing on top of the legacy systems, then is it the right approach? As a section of the industry asserts, don’t overlook the limitations of legacy systems as they can’t deliver in certain areas because they were never designed to. 

Ai’s Ritesh Gupta spoke to Travel in Motion’s Daniel Friedli about a couple of issues, right from introducing new products, to being in control of the offer:

If we talk of agility, why do airlines tend to miss out on creating the offer themselves? What should they offer in real-time? Why aren’t they showing the product despite investing in the same, be it for aircraft, meals etc.? Do complexities like interlining hamper the direct creation of offer?

Friedli says there are several reasons why airlines may not be as agile as the consumers expect, and as consumer retailers or other industries may be.

One of the major drawbacks for those airlines that chose to use ticketless systems has always been interline and codeshare distribution with most carriers that do have the traditional ticket-based systems.   

“One (challenge) certainly is interlining, although that is not the main driver,” he said. (This is understandable as it is an industry transition phase and interline partners will likely still require the legacy connectivity to be maintained and you will still need the legacy systems to distribute through traditional GDS channels until a critical mass is built in the NDC Aggregator channel to replace it).” Others are the complexity to distribute any product through any channel very quickly and easily,” Friedli says. According to Friedli, it often takes 9-12 months to get a product live in all channels, and that makes for a very expensive launch. Another reason is the lack of ability to ‘test and learn’ – meaning the ability to try a new product quickly and easily, with little investment, and to test this across various markets – ceasing sales if the product is not successful. “That means, each implementation is a large risk because considerable effort is required for an implementation. Should the product fail, it could end up being an expensive investment,” explained Friedli. So airlines need to automate every aspect of test and deployment, and release fast. Architecture is one critical aspect of digitization, and it is all about agility and speed-to-market.

Also, airlines need to reach outside their own sales infrastructure with the same capabilities that they can do internally, such as through their e-commerce site. Standardization of the IATA NDC XML schemas is playing its part here - a communications structure to support dynamically-created messages that contain varying and targeted offers, potentially specific to each customer. As for offers, airlines need to work out a mechanism that can take all the data points, checks business rules and availability, bundles the offer items, calculates the pricing, and deliver it along with branding and rich media to the passenger.

Airlines have been separating core functioning of a PSS that are needed to run operations, and opting to control their own merchandising, e-commerce and API technologies for differentiation.

“It is foreseeable that more and more of the offer creation process will be done by individual systems. Some may be within the PSS, others may not. That isn’t relevant. It is about combining the revenue management with the product variety and price determination. Mixing that with segmentation or personalisation, and understanding the context of a request – that is where airlines are moving to. Currently, systems are being developed to enable this, and NDC and “API-zation” in general is enabling the airlines to then push these intelligent, contextual offers out to the customers,” mentioned Friedli.

As for supporting ATPCO-based fares as well as non-ATPCO fares, Friedli indicated that ATPCO and non-ATPCO pricing will exist hand-in-hand in the short-term. “The majority of mainline, traditional airlines will continue to use ATPCO pricing for the foreseeable future for pricing to many channels. But I think we’ll see ATPCO pricing increase in the level of flexibility. Not so much in terms of the interpretation of the fares, but rather the outcome of the price where the discounting of the prices will be discounted by any given percentage,” he said. “At the same time, we’ll see non-ATPCO pricing increase for many of the newer channels, such as NDC connections or other direct connects. This is basically the premise of the LCC pricing and traditional airlines are moving, into that direction.”

 

Hear from senior travel industry executives about digitization, differentiation and NDC at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).

For more, click here

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: Targeting traveller’s wallet? Don’t miss out on meeting mobility needs!

First Published on 4th July, 2017

Bookings for ground transportation and mobility at large haven’t been streamlined yet. They aren’t booked as some of the other trip essentials, say hotels, car rental or flights, are shopped for. Ai’s Ritesh Gupta spoke to Rentalcars Connect’s MD Fraser Ellacott about how this lucrative pie is shaping up.

 

What can simplify travel shopping?

If one scrutinizes overall trip planning and booking process, then the time spent on taking a decision, buying trip essentials from various merchants, completing a transaction without any hiccup etc. are some of the major hurdles that can hamper the experience.

Travel suppliers and e-commerce intermediaries are assiduously looking at the blend of content, technology and data to figure out the intent and come up with a relevant offering as per the stage of the journey. The key here to be a part of those, as Google says, “micro-moments”. These moments can be scattered across various ecosystems, such as Facebook or Google, airline.com, OTAs, meta-search engines etc.  

Consumers do find a way out, and there are plenty of examples of how the blend of devices, technology, interfaces, one-touch payment etc is resulting in new experiences:

·          Seeking details from a chatbot and eventually completing a transaction.

·          Interacting with a family member over a messaging platform, deciding on a restaurant and ordering a cab together from respective locations.

·          Starting a search within in an ecosystem, say Facebook, and with just one more click gaining access to offers from different vendors to book! 

So the onus is on the entire travel e-commerce sector to be a part of this era of seamless, contextual shopping.

Choice and seamlessness

Established organizations like the priceline group are looking at the entire travel booking funnel, and it is clear that they aren’t averse to embracing change and astutely looking at the collaborative route to break through the shackles of complexity.

For instance, booking.com is now looking beyond accommodation. The team is always evaluating new ideas, like the new chat interface Booking.com Assistant, for example.

As for content, bookings aren’t just restricted to conventional or long-established options – be it for accommodation or transportation.

So, another priceline company, B2B car rental specialist Rentalcars Connect, is keen on expanding its “ride” and “drive” offerings.

“We assess the future from two lenses,” says Rentalcars Connect’s MD Fraser Ellacott, referring to B2B partners, including airlines, OTAs etc., and the consumer lens, developing the product for the B2C business. “Transport can be difficult, complex, and fragmented. And it’s only getting more complex as consumers are given more and more choices,” says Ellacott. “As customers we’re faced with a barrage of different suppliers, transport types, ways to buy, ways to pay… it’s confusing, especially when you’re in a place you don’t know. We need to solve the customer problem – make it easy for them to get around and work with our partners to create a frictionless future.”

 

Ground transportation content

The team acknowledges that there is a need to offer integrated solutions for ground transportation to its partners. According to Ellacott, as per one of the recent company surveys of over 3000 partners spanning across all major markets, 83% are considering options beyond car rental, and 78% strongly looking for one partner for seamless integration and offering choice to their customers. “This is a big validation of our strategy (to scale up ground transportation capability) and craft a frictionless experience, easing out hassles associated with bookings (related to this part of travel),” he said. So on the B2C side, there is Rideways offering for bookable taxis, transfers – luxury cars, mini vans, compact cars etc. and further being scaled up to train and shuttle buses over the next six months. “All products are offered to partners as well. We are looking at all forms of transportation, mobility in general.”

“If one considers a trip for a family, it would feature airport experience, then reaching to the accommodation booked for the destination, getting around via various ground transportation options…it’s about offering easy solutions to all of this, and we are looking at content to match the needs of travellers,” shared Ellacott.

Monetization – massive opportunity

Ellacott acknowledged the evolution of booking.com and mentioned that his team is closely aligned and supporting the broader portfolio. He added that in-trip experience and excursion do account for massive share of a customer’s wallet. Overall, the car rental category stands at $60 billion and ground transportation $200 billion.

If we talk of bookings on the excursion side, there is a big gap as of today. As for the opportunity, as per my recent experience to Iceland, it took 5-6 sessions spanning over a week to understand the location and the sort of in-trip experiences that suited my preferences. For a couple and child (kid under-11 is generally free to travel) one can spend around $1500 or so for 4 day-long excursions (two of the most costliest tours and two starting range ones) as per the price list of itineraries being sold by two of the leading bus operators (the most popular transportation other than car rental). If we Google “Reykjavik to Jorkulsarlon, an exotic 700 km return, 12-hour road journey”, there are only few bookable options, although there is plenty of content from review sites, blogs etc. including Lonely Planet, Viator, there was only one vendor and that too at the bottom of the search. Even post booking, there wasn’t any proposition considering the data trail - Google (search, videos, check-in details with Gmail), Booking.com, Airbnb.com (including clicks on the “experiences” section) and Finnair.  

Ellacott asserts that vital steps are being taken in conjunction with airlines. He referred to a widget launched on Finnair’s website, featuring transportation options. “Increasingly we are finding that airlines are looking at broader interest-, experience and ancillary aspect attached to that. Airlines have a wealth of data, who is going, where they are going…such contextual, meaningful data can contribute in personalised offers, and airlines are well placed to do it.”   

 

Partnerships driven by data

When companies open up their respective APIs, as we have experienced, it results in experiences that save consumer’s time and effort. In fact, simple interfaces or the post booking service aspect via timely reminders or notifications, can get customers hooked to book often. But airlines do need to facilitate sharing of data, although the reluctance to do so is also understandable. But, as Ellacott also says, data is key to raising the conversion rate. “We have over 400+ strong team that is involved in testing and iteration to work out best possible options,” he said. Initiatives like A/B testing are done and airlines tend to benefit from best of the results. Ellacott, who has worked with three airlines during his career, said airlines need to step their data sharing capabilities, and tend to opt for white-label solution since it is easier to work out technically. “Ultimately consumer knowledge is power, there is a need to understand how engines behind the product work and accordingly one can personalise the offer. Those airlines that invest in this are well place to capitalize on this,” he said.

Other than airlines, Rentalcars Connect is exploring possibilities with various ecosystems to capitalize on the intent of the travellers. “Social media, review sites etc. are rich in terms of consumer data, and imagine how significant the opportunity would be when one can refine and present with relevant options, be it for a business or leisure traveller,” said Ellacott. Indeed big OTAs are well-placed especially using scale to their advantage, as they are able to address issues with talent, technology and capital, and be part of the emerging trends.

It is clear that established online travel groups are in a position to broaden their partner base, be it for top of the booking funnel and moving down, for instance, partnering with an airline when abandonment happens on their airline.com. “We don’t prioritize investment or show inclination toward any one partner. But do we work closely with airlines to make them understand the significance of intent, not to bombard customers with irrelevant options across various touchpoints, rather streamline the booking flow with vast products to choose from but only presenting refined, best suited options. Also, being sophisticated with retargeting in terms of relevance, frequency, and maximize the attachment rate. If done in an unplanned manner, then retargeting can adversely impact the brand loyalty as customers tend to unsubscribe, get annoyed,” shared Ellacott.

In all, Rentalcars Connect is forging data-driven partnerships with various stakeholders.

Gearing up for trends

Ellacott mentioned that in addition to content, data and integration of the offerings, payments in another area of focus. 

Also, it is imperative for the company to keep a tab on how some of the trends are expected to impact the functioning of the car rental industry. So be it for self-driving technology or evolution of the traditional car rental model, Rentalcars Connect’s leadership team is constantly evaluating how mobility is shaping and how in certain markets people are going about car ownership. A case in point is peculiar ways in which China has shaped up over the last 18 months or so. For instance, in first- and second-tier cities in China, car sharing has gained prominence, a trend unsettling what was once a key segment for car ownership. Supply of ride sharing services has resulted in extra convenience for short-distance mobility requirements.

“We are observing trends in China, this market is going to leapfrog compared to any other when it comes to mobility,” said Ellacott, referring to access vs. ownership as well as China-based bike hire company Mobike gearing for operations in Manchester and Salford. The GPS-tracked smart bicycles can be locked anywhere and unlocked using a smartphone app.

 

Hear from senior travel industry executives about latest trends in ancillary revenue generation at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).

For more, click here

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Ai Editorial: Is NDC paving way for airlines to reassess commercial strategy?

First Published on 28th June, 2017

Ai Editorial: Established airlines have been working on the objective of letting sales partners connect to their IT systems directly based on the IATA NDC standard. Is this connectivity approach mature enough to let “big” airlines put a new spin to their commercial strategy, explores Ai’s Ritesh Gupta

 

IATA’s NDC standard is into its 5th year. The pace with which the standard has progressed has been slow and even the implementations haven’t been uniform. Objectives of airlines have been different, too, and from time to time, it has been mentioned that there isn’t any agenda against the “middlemen”.

Nevertheless, the standard has resulted in few peculiar moves from established carriers in the last couple of years.

The number of airlines opting to alter their respective commercial strategies has only been few till date. It is understandable considering the sort of contracts that have been signed over the years as well as the tightly integrated processes on which the whole chain functions. In this context, the recent decision of American Airlines to offer a commission of US$2 per flight segment is interesting as it being described as the “NDC commission”.

 

Moving on from cost differentiation?   

Prior to American’s latest move, there were a couple of components as far as the divergent take on the commercial strategy is concerned. First, cost differentiation. This is what Lufthansa, British Airways etc. have chosen - levying a surcharge for every ticket issued by a booking channel using GDS and the same not being applicable to airline.com, NDC-(IATA’s New Distribution Capability standard) connected channels and self-booking tools connected via NDC etc. Airlines assert that they aren’t complete users of services offered by GDS, and there are others, too, in the value chain that use them.

Second, although ongoing contracts can be inhibiting, airlines have been trying to work on an exclusive basis or in a tailored manner for their offerings with intermediaries. For instance, flight offers and bundled ancillaries for certain routes for a specific agency or a tour operator. There is also scope for integrating content (product descriptions, images etc.) here.

Whether American Airlines’s new move is a prudent for one or not from the perspective of its impact on various stakeholders it is being debated. But it does involve NDC. The airline is offering a commission on what is being termed as “AA NDC Net Tickets”. Yes, it is about commissions and incentives. It features NDC Incentive Program, for agencies. They need to book and ticket American flights through a “qualified NDC channel”.

According to an official statement from American Airlines, agencies will have access to the best published fares made generally available to the public (e.g., through AA.com or a GDS), and all schedule information and seat availability related to such fares.

Plus, they would have the ability to put up for sale particular ancillaries.

So in a way, American has gone forward and is offering a flexible alternative to agencies.

Concerns pertaining to NDC

As for concerns pertaining to what NDC might do, even though it plans to do away with commoditization of air travel, it is being suggested that it will put an end to comparison shopping. But there are industry executives, who are defending this part, too. “It (NDC) does pave way for a like-for-like comparison where the consumer can see exactly what is included in the offer price from one airline versus another airline’s offer,” a source stated. “The current pricing model is bizarre, any airline will tell you the current availability using RBD letters and single digit numbers, every step including ticketing, revenue accounting, reconciliation, interline billing, agency settlement, etc. has added and unnecessary complexity,” an executive told me previously, defending the plan to put an end to pre-filed fares, and putting in a request to the airline to come up with an offer for the indirect partner.

The debate around the utility of NDC, as a standard, has been going on since its inception.

Airlines have been working on the objective of letting sales partners connect to their IT systems directly based on the IATA data standard. Are these new connections, based on the NDC standard, going to trigger new commercial agreements? Are GDS going to amend the contracts and avoid any possible complexity related to interfacing and data flow?

There are still two points that need to be sorted out before NDC as a standard gains further traction and elicits better response from intermediaries: in case of IATA’s NDC XML standard there has been criticism in terms of too many versions, and too much flexibility meaning implementations haven’t been uniform. So with NDC version 17.2, what sort of work has IATA done to bring about stabilization? Also, airlines that already have API XML connectivity tend to have it in a proprietary way. The consequence is that implementations with new partners take time and are costly as they are all unique. For GDS, it can be extremely challenging as not all airlines choose to participate in and utilize the same standards. Also, they need to support standards for all suppliers of content – including hotel, car, rail and cruise content, for example.

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Ai Editorial: Gearing up for digital transformation – define your “scope” aptly

First Published on 23rd June, 2017

Ai Editorial: Digital transformation needs to be understood as the project has an enterprise-wide impact. It becomes imperative to comprehend and finalise the “scope” of such initiative aptly, writes Ai’s Ritesh Gupta

 

Enterprises across different sectors are evaluating the scope and journey of digital transformation.

Prioritizing speed is of essence - for employee-enablement that supports lightening fast, data-driven decision making; instant, relevant response to every customer interaction; digitizing existing business models/ quick introduction of new offerings.

Of course, business continuity is one major consideration. Enterprises have to move forward with their day-to-day tactical projects and at the same time gear up for long-term strategic initiatives.  

Starting on right note

Dublin, Ireland-based Datalex, in one of its recent blog posts, underlined that the incorporation of 'digital' into the  transformational concept carries a risk of adding “too much into the scope”. Blair Koch, Datalex CTO and President USA, emphasized that one needs to be pragmatic when it comes to how to involve various business functions. He mentioned that airlines need to abstain from unnecessary inclusion of all departments. This would only end up impeding the pace as well as the overall outcome of the project. Also, Koch adds that it is “clearly table stakes for a digital transformation to deliver an exceptional omni-channel customer experience through digital channels like mobile, traditional web, chat, SMS, airport kiosks and airport signage”. But what else should be looked upon as far as scope of digital transformation is concerned? That’s an independent journey for all entities, and this needs to be ascertained properly. Koch underlined that airlines need to look beyond just a retail platform, rather they must opt for a digital innovation platform for agility and speed-to-market.

Also, before embarking on such a project, airlines can also ascertain complex issues related to what’s expected from IT. This is critical considering the fact if an enterprise is gearing up for self-serve IT process for each line of business users, then apt IT operating model is needed. It would be apt to say that in today’s world of development cycles and new technology advancement, “leapfrogging” is a dying art.

Also, full service carriers can’t avoid this question – is maintaining legacy technologies taking IT’s focus away from transformative initiatives? Overall, IT needs to propel business strategy – to digitize the business, and benefits key stakeholders – employees and customers – in an earnest manner.

Airline-specific issues

There are several areas that are being probed and this is generally same for all enterprises – how to shape up the organizational change, the role of senior management, the sort of IT architecture required etc. But there are airline-specific issues, too.  

If we talk of IT, then there are a couple of key aspects. Do finalise an underlying architecture that is flexible and extensible in order to support new products or services, in addition to leveraging new industry initiatives like NDC. Modern merchandising and pricing engines do not operate independently. Rather they need to integrate data from various sources, including on-boarding data from external sources, therefore “connectability” is critical. Also, each engine needs to support data-driven decision-making and be aligned as per the business model. For instance, airlines are already deploying merchandising rules that control their business model and managing their own product propositions (inventory, availability, price, product biasing etc.) according to market demands and opportunities, whereas before, business model changes often required a change in the code. By the time the changes made their way through the development cycle and reached the production system, the market may have already moved on, leaving their changes much less effective.

Another significant area is managing data and acting on it. Today integration of data needs to managed from numerous sources and of varied structure and format. A key area of such integration is accessibility and another is moving the data from source to target. Also, digital enterprises are going after real-time monitoring of patterns and sequences of events, acting on even high data volumes from multiple input data sources.

So how are preparing for extracting and acting on data?

As we reported in case of flydubai, multiple building blocks is the way to go in order to attain agility and flexibility. The approach is API-led connectivity. The first layer is systems APIs (for accessing underlying systems of record), second is process APIs (provide access to non-central data, designed specifically for processes in an organisation) and experience APIs (optimization of content, paving way for channels to access data in a desired format and accessibility for devices such as wearables, how the information is displayed on any particular device). On this platform the carrier managed to transform the core system (PSS) of the airline that needs to be ready for digital transformation. The team designed the middleware around offer management, order management and customer management. The API gateway exposes all these APIs to business partners. The value of APIs lies in their ability to help in discovering new use of data. 

Travel technology specialists are also working on new platforms where real-time business intelligence can be leveraged for personalisation of offers. Also, the platform, running in parallel to an airline’s PSS, would feature complete PSS booking connectivity and document processing capability.

The journey of airlines, be it for low cost carriers or full service airlines, is going to be different, each can chart their own path. Digital transformation isn’t new anymore, and there are plenty of lessons to learn from. Define the scope appropriately, embrace fast iteration concept approach and definitely avoid expensive product development approach. Keep passengers in the loop - how much change are passengers willing to accept? And act accordingly. 

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Ai Video: Being proactive with data for ancillary revenue

First Published on 20th June, 2017

Selling ancillaries isn’t a new phenomenon for airlines, but counting on data to step up the same for maximizing revenue or even delivering personalized, contextual experiences is a work in progress. So be it for analyzing the available data related to online behavior, coming up with relevant offers or improving upon areas like email retargeting, there is room for better results, says Justin Steele, VP, Product, Switchfly.

It is time airlines move on from mundane moves, such as generic retargeting, and look at advanced retailing or digital marketing tactics to produce better results.

The area of ad targeting is becoming increasingly sophisticated.

In the ad tech space, one can target profiles based on data (non-personally identifiable information such as browser, time of the day, location etc.) and such inputs are being used programmatically to place a bid on ads with a better possibility of a conversion. As for content, one needs to measure how the same is impacting performance online. For instance, if a user is searching for car rental options in a city, how can a marketer make the display ad or a video exciting rather than showing one image post abandonment. Can I be shown an ad that is relevant to my online behavior, including on site browsing? Data is key to all this, and how it drives conversion.

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