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

Follow Ai on Twitter: @Ai_Connects_Us

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,, 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, is now looking beyond accommodation. The team is always evaluating new ideas, like the new chat interface 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 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),, (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 “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

Follow Ai on Twitter: @Ai_Connects_Us





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, 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 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.

Follow Ai on Twitter: @Ai_Connects_Us

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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Ai Video – Is NDC disrupting tightly integrated processes?

First Published on 15th June, 2017

Is NDC starting to disrupt tightly integrated processes? Yes, there have been mixed reviews around the progress made by IATA’s standard, for instance, it is being pointed out that there was too much flexibility in the initial versions of schema and implementations weren’t the same. Today even some of the basic NDC messages are being re-factored. But then this industry has always been riddled with complexity, and now airlines are starting to look at the bigger picture – being in control of what they intend to offer, creation of that offer and serve the passenger at any stage of the journey via any touchpoint they desire to choose.

In fact, as much as technology is being re-assessed, it is also being acknowledged that being “siloed” doesn’t help and adopting a retail mindset is not just for the e-commerce people. As Mark Egan, VP, Business Development at Farelogix, various departments are coming together, and airlines are moving forward in an earnest manner.

What’s happening at this juncture is typical of innovation and technical evolution – blending the old with the new until the old becomes archaic. That’s how certain airlines are moving ahead with their airline distribution and merchandising technology - emerging platforms and messaging protocols are being bolted onto legacy airline systems. This paves way for capabilities such as personalisation, merchandising and dynamic offers.

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: Opening up to API-led distribution


Airlines are exploring how to make the most of API-led distribution. There is lack of standardization as of now, what it means API are based on different versions of NDC or are not NDC-based. This means not only there is room for aggregation of APIs, but there are specialists who can 'normalise' these APIs into the latest version of the standard (as envisioned by IATA). And in doing so, there would be minimal impact on the content and functionality made available by airlines through their APIs.

As Jorge Diaz, CEO, AirGateway, says, there is a difference in “theoretical NDC” and “practical NDC”. Diaz’s start-up is working on an offering based around NDC aggregation technology. It would enable full-NDC (from provider to consumer) real-time aggregation. NDC aggregators would collate content, and travellers will search, shop, book, pay and get their tickets directly from airlines.


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Ai Editorial: Inherent complexities – biggest impediment in embracing retailing

First Published on 12th June, 2017

Ai Editorial: Airlines need to deal with several intrinsic hurdles, be it for being averse to openness such as the API culture or legacy IT systems, to embrace retailing, writes Ai’s Ritesh Gupta


“The benchmark for digital retailing might be “Amazon”, but is it being astutely assessed from airlines’ perspective? If Amazon had to deal with intricacies of air travel, then it might not have taken off (as a retailer)! Not to say Amazon doesn’t have interesting twists on how to be a customer-centric retailer. But it isn’t as simple as that.” This observation from a senior IT airline industry executive sums up the quandary that airlines find themselves in. The gap between where airlines stand today and where a passenger demands them to be – as digital retailers, as customer-centric organization that can serve passengers the way they prefer – needs to be bridged.

But getting rid of complexities associated with selling of air travel is one transition that isn’t a smooth one.

It can’t be denied that travel isn’t purchased the way it was done before. Even as airlines are poised to make investment decisions, which can be excruciatingly slow in this sector, are they right in being cautious against going overboard with it?

“Even NDC hasn’t shaped up the way it was supposed to. Various iterations had to take into account those complexities. It isn’t a negative feedback, but at the end of the day, when expenditure is going to be incurred by various stakeholders, the idea of a standard needed to be uniform. Probably because of the complexities, there was too much flexibility in the initial versions of schema and implementations weren’t the same. 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?” questioned the same executive.   


Complexities that are impeding transformation

How to figure out the core IT set up going forward? Are airlines opting to control their own merchandising, e-commerce and API technologies, using platforms that enable airline control, faster speed to market, and flexibility? Are they ready to move away from solutions that are hard-coded or community-model based, or tied to a particular PSS or channel? It seems PSS capabilities, which are essential to running any airline, are being separated from technology that can pave way for differentiation of travel offerings.

“Technology isn’t an issue, but full-service carriers have to deal with their current legacy IT set up. Yes, new airline-specific IT offerings, engines that are data-driven are emerging but old hasn’t become obsolete yet,” acknowledged a source. “So if we talk of “next round of negotiations or contracts”, then PSS probably isn’t going anywhere but a key point is discussion around PNR data and how to serve passengers throughout the travel journey.”

A point of contention with current PSSs tends to be components based on mainframes running the transaction processing facility operating system. The debate is about efficacy vs. cost, flexibility etc. It is interesting to assess how NDC and One Order initiatives are initiating change, and how architecture-related roadmap is being devised for the core functionalities that are being performed by the current crop of PSSs. Do expect from new IT specialists “solutions that extensively use data-driven workflows, cognitive analytics and even self-learning capabilities to enhance offer and order management,” stated a whitepaper from consulting firm travel in motion, distributed during Ai’s Ancillary Merchandising Conference in Spain recently.  

“The core PSS is not the place to analyse that data,” this is what an IT executive told me last year. Offload as much data as possible.  But keep the mainframe for its phenomenal message processing capability. Use the data which is there on the mainframe, but do that analysis offline.”

Another executive says, “If there is a full reliance on those legacy systems for back-office processes such as revenue accounting, revenue management, interline ticketing, and pricing, among many other functions, there will be limitations to the capabilities possible through digital transformation.”

So how systems that handle core functionalities related to running an airline evolve is one area that is worth watching out for. Is it right to say PSS will not be agile enough to evolve as fast as NDC? Are we going to see PSS as part of Offer and Order Management systems? If this is a possibility, then what sort of IT architecture would result in this?

What’s happening at this juncture is typical of innovation and technical evolution – blending the old with the new until the old becomes archaic. That’s how certain airlines are moving ahead with their airline distribution and merchandising technology - emerging platforms and messaging protocols are being bolted onto legacy airline systems. This paves way for capabilities such as personalisation, merchandising and dynamic offers.

Another area that airlines need to focus on is to make the most of data in real-time to create personalised offers as well as serve the passenger at any stage of the journey via any touchpoint they desire to choose.

This is important as in today’s “connected” era, where a traveller might restrict themselves to a 3rd party ecosystem – say Tencent’s WeChat or Google or Facebook - for their travel-related requirements, selling shouldn’t be the core objective. For instance, a traveller is on Facebook - reads a review about a meal or seats, posts a query on the  business page of the same airline, interacts with a chatbot on Facebook Messenger etc. This means the journey-related experience is on a digital channel not owned by the airline. So the focus needs go beyond selling.

Here the complexity is: the airline industry is, by its competitive nature, very adverse to openness. “We are also, by our safety-conscious nature, very resistant to change,” said a source.

Beyond systems and processes, another area is personnel.

travel in motion also highlighted that a carrier’s business units tend to be organized according to the traditional airline model. Being “siloed” doesn’t help as ecommerce is alienated, and adopting a retail mindset is not just for the e-commerce people, rather for the whole organisation. As we highlighted in one of our recent articles, executives on the board need to come from retailing background to drive this change, otherwise it will not work.


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

Follow Ai on Twitter: @Ai_Connects_Us