Can there be one single system that will transform flight shopping?
The travel industry is reinventing flight shopping, and that’s a major data, technology and user experience challenge. Ai’s Ritesh Gupta interviews Routehappy’s CEO Robert Albert about flight shopping
You are searching for a flight, and there are amenities that you are specific looking for, say Wi-Fi. You also intend to make comparison of in-seat in-flight entertainment. You have also heard about the possibility of a virtual tour of the aircraft. How easily can you do all this? Airlines, OTAs and meta-search engines are trying to find ways to facilitate all this and more in our flight search. There are ample signs that we are now moving beyond price differentiation, which by its very definition is a commoditized way of comparing flights.
If we talk of airlines, there are certain aspects that need to be taken care of. For instance, a consistent fleet type can only strengthen their brand positioning as there would be uniformity in amenities offered.
As an established OTA, Expedia is focused on ensuring its visitors know what exactly is included in certain flight prices at the time of purchase, and allowing them to opt for a ticket with the specific attributes and on-board services. Exploring premium seating options via the online seat map is an example.
Then there are other bigwigs like Google collaborating with airlines to pave way for a real insight into what an aircraft looks like. For example, one can count on the blend of Google Maps and search to check “Virgin America, LAX” for virtual tour of its aircraft.
Level of differentiation
The term differentiation gets tossed around a lot in the travel sector. So how are various entities going about flight search?
“Differentiation is the theme in flight shopping. Airlines have differentiated their products comprehensively, including fare types, hard product, and services. Flight shopping channels (direct and indirect) are catching up to display the differentiators,” says Robert Albert, CEO, Routehappy, a company that helps airlines to deliver their product attributes wherever flights are sold. The company has been in news for signing a spate of agreements this year, latest being the one with Kayak.
So is there any barometer for product differentiation?
Albert says airlines are at something like “5-15% of their differentiation potential in their own channels” overall, and closer to “0-5% in indirect channels”.
He referred to Delta, Air Berlin and Lufthansa as worthy examples of major airline direct channels that are increasingly differentiating products in their own channels. “Expedia, Google and Travelport are leading the pack in indirect at the moment, with everyone else (GDS, OTA, meta, OBT) working on their differentiation strategies. Fare and product attributes need to be presented in a way that is easy to understand, digest, compare and personalize. Our industry is reinventing flight shopping, and that’s a major data, technology and UX (user experience) challenge,” explained Albert.
Knowing about amenities that I am looking for
Keeping aside standard amenities or something can be chosen from options on a site, there is a possibility that one would want to know about certain aspect of a flight. Let’s say, I am fond of chocolate mousse and tennis. I am flying from London to New York and if I were to search for “chocolate mousse tennis London New York flight” – how quickly one would be able to find relevant info on an airline.com site?
Albert says the first question to ask is when you can consistently search for the basics: flights with Wi-Fi, power ports, seatback entertainment, fresh food, lie flat seats, specific aircraft, baggage, upgradeability, lounge access, etc. He says it’s a combination of providing better information when consumers are searching for flights in general, but also helping airlines and consumers understand product attributes in up-sell offerings.
“Once we achieve that, then airlines and distributors can focus on more nuanced personalization like what kind of food or entertainment offerings are available. As an industry, we need to build our new foundation first. The next few years will be focused on basics of a richer shopping experience. After that you might be able to find flights that serve chocolate mousse and show tennis matches on the seatback,” shared Albert.
Continuing with the above example, when I searched for “chocolate mousse tennis London New York flight” on Google UK, there was an old media review of Thomson’s Dreamliner long-haul flight from the UK and featured a comment about chocolate mousse too. It was ranked eighth, but was closest to relevancy. So would search engines/ meta-search sites be the best options?
“We believe the industry needs a standard, trusted, fair, and transparent scoring system based on facts first, which can then be personalized,” said Albert. His team built the Routehappy Scores & Amenities API to accomplish this goal — a baseline scoring system by flight and cabin that rates the most important aspects of the experience: aircraft, seat, amenities, and duration compared to the fastest option on any route. Once airlines and consumers no longer have to wade through 100s of flight options and instead can focus on the best options for their trip, airlines and distributors can then provide more information to help flyers pick the best possible product for themselves.
Avoid being generic, inconsistent
It is important to assess whether airlines are overlooking mistakes they are committing when it comes to overshadowing their own product attributes on their brand websites. Albert says it needs to be understood that this is a very hard problem to solve. “…so I commend all airlines that are enriching the flight shopping experience with differentiation content. Everyone needs to learn what works best for their own website, customer base, airline products, etc.” He added, “Having said that, the major issues I see on airline websites is overly generic or inconsistent presentation of product attributes. By generic, I mean information is presented in too general of a way to be truly useful to a consumer’s decision process or it’s not presented in the decision flow. By inconsistent, I mean information is presented inconsistently so it doesn’t reinforce usefulness, importance, comparability, or accuracy of the product attributes.”
Data + content + tools
Airlines need to capitalize on data, and content, and make use of tools to stand out with a differentiated offering.
“We built Routehappy Hub to help airlines and distributors do exactly this — a standard platform for airlines to create, manage and deliver their rich product attribute content in any channel they sell or display flights. At the core is our rich content standard, UPA (Universal Product Attribute),” said Albert. This standard combines descriptive and visual content targeted by aircraft, cabin, flight, airport, fare, segment, channel and other criteria, for display in any channel. “Think UPC or SKU but for air travel. We currently have a dozen major airlines creating their UPAs in Routehappy Hub and sharing it for previews, testing and live pilots with major OTAs, metas, GDSs and their own channels,” shared Albert.
So how to innovate flight shopping with differentiated, personalized content?
Solving this very large problem requires three things:
Airlines are creating their standard UPA content and sharing it with major distributors and tech platforms for integration.
A cohesive approach is needed from the industry to pave way for differentiation.
As Albert mentioned, common platforms and standards are critical for the industry to de-commoditize.
He also stated that organizations like Farelogix, Sojern, Adara, Travelport, Amadeus, Sabre, ATPCO, IATA etc. are all addressing different aspects of the differentiation merchandising opportunity, each with a healthy respect for common platform and standards.
As a rich product attribute content platform, Routehappy Hub is for delivery in any device or touch point.
“Our platform can easily be integrated with other platforms that are responsible for other aspects of merchandising innovation — such as revenue management systems and dynamic merchandising offers. That means that amenity and product data can be integrated into other tools airlines use to inform prices and offers — and then that same product information can be integrated for display to consumers. Each platform needs to do what it does best. There’s no single system that will transform flight shopping itself. It’s a cooperative, worldwide business and technology undertaking,” he says.
Finding the best ways to integrate differentiation content will be a theme in flight shopping for years to come.
Airlines, distributors, and technology partners need to come together to adopt common platforms and standards to make airline merchandising as good as it is in other industries — and it’s happening.
In-flight analytics - can I have my favorite chocolate mousse on-board?
This case study is about overcoming the disconnect between what travellers expect and the effort behind data, analytics and personalisation. Ai’s Ritesh Gupta explores the same with his recent flying experience
I love chocolate mousse. In the recent years, as an economy class passenger, when I have travelled to the U. S, be it for via Air France KLM or British Airways, I have had mousse as part of the in-flight meal. Taking two or even three back-to-back flights over a period of 24-30 hours is no fun. But whenever I had mousse it did refresh me, helping me remaining afloat for few hours at least. The hiccup here is that I am not too sure on which sector I would be served my favourite dessert.
And the worst part– the airline crew having it and not knowing I want it.
Moment of magic @ in-flight: I recently flew four long-haul flights in one trip via British Airways.
Outward: New Delhi to London to Fort Worth.
Inward: San Diego to London to New Delhi.
The chocolate mousse was served as part of my in-flight meal on the following sectors: London To Forth Worth and London to New Delhi sectors. The brand was same. On my last flight, I asked the air-hostess about the brand of the particular chocolate mousse. She didn’t know it, but she served me one more. It delighted me no end.
One way to feel happy when you are flying two back-to-back nine-hour flights.
So before we hear from experts about what can pave way for this not just being a co-incidence, let me share relevant details:
Trip planning, booking and journey
Booking was done by my company, Ai, via BA website. As for indications that I wanted chocolate mousse, I searched for all the sectors on Google and typed “Chocolate Mousse on BA flights”. This was done via my PC at home and my iPhone. This was done over a period of 2 weeks before my first flight. Other touch-points: I used web check-in for all flights via my PC at home and laptop while on the road, and I also reserved my seat (aisle). I also accessed my in-flight email (Gmail), scanned check-in image via my iPhone for all the trips.
Profile: I am a laid-back traveller, and I don’t think of accruing points/ miles for any loyalty program. As for BA, I travelled after eight years (email id was same).
Points to consider:
The context may be derived from external factors - such as looking for sunny destinations in Spain when it’s raining in Dublin, or internal factors - such as searching is generally done on a large screen when time to concentrate is available but firm decisions are made concrete with family members in the evening in a casual manner perhaps sitting on a couch with a mobile tablet device!
These are all things that can be correlated from analytics and understanding the internal and external factors that drive behaviour makes irrational behaviour predictable.
Rachel Besant, marketing manager, 15below (the company focuses on data sources which the airline subscribes to - i.e. the FFP, reservations systems, other third party providers including merchandising etc.) says if BA has a system which logs the food options available on their flights, then it is possible to integrate with this data source (whichever system - third party or internal solution the airline chooses) and offer/ pre-order chocolate mousse, should BA intend to offer this service. Airlines will be asking if this is a significant enough differentiator for the additional logistical complexity this adds.
How would it work?
15below, for example as a notifications and workflow provider, could directly hook into this data source and proactively send notification to traveller with option to pre-order their meal. They would then record this action back into the PNR (and other system such as CRM, depending on how BA want this to work). The tailored workflows would continue to record and extract traveller preferences in order to send very targeted, personalised and timely offers.
The actual decision to charge or to provide as complimentary should be based on a couple of items bubbling up from the analytics - loyalty status and potential lifetime value to the brand, what’s your recency frequency metric, your average order value, your service recovery score (have the airline messed up with you previously – e. g lost bag, cancelled flight, spilt coffee) , and your social influence score (how likely you are to tweet (or write an article) about the experience?
“So the analytics should be able to predict you want a mousse on the next flight - the decision or option to charge you based on your profile - inform the flight attendant that you are important to the brand and not to charge you for the pleasure,” shared O Brien.
Another executive told me: Realistically it probably wouldn’t be feasible to do any of this without pre-booking your meal (beyond just selecting ‘VGML’, for example). In-flight staff don’t have the ability to record what meal you selected, the source mentioned.
There are airlines that allow one to add chocolates / champagne for any wedding couples on their honeymoon as a pre-order component, to get a fillet steak in economy on transatlantic flights. Also, as per the feedback that I gathered, say if you’re sitting in economy but you’d like a First Class meal, you can now order this (at a cost). A specialist then arranges all the logistics and supply of these meals ready for the flight take-off. This is just one way for airlines to offer a more personalised service whilst making some additional revenues.
The key restriction right now is:
The future of in-flight analytics should be able to offer you the rest of the movie you watched (and didn’t finish) on the last flight - recommendations of movies based on what I have watched - this could be applied to food, drink, duty free products, gifts and home delivery products.
This is the same outside the cabin - offer me a specific coffee as I am entering the airport to have it available in lounge - (Air NZ are already doing this with a Barista type service), baggage location, transfers if I like it with an understanding of my destination (such as office or home locations).
As O Brien says, analytics will re-define the shopping and travel experience over the coming years and make it frictionless to offer and consume preferred products.
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Dealing with schemas to give shape to IATA’s NDC initiative
Ai Editorial: Standard development is the core to the entire NDC initiative. Ritesh Gupta assesses how changes continue to take place in “end-to-end” schemas to combat issues
Is the concept of ticketing on its way out? As we move into the era of XML based concept of travelling, it looks like the industry is drifting away from ticketing and associated “multiple coupons”.
So how are changes in coding or schemas set to drive it?
This fascinating aspect lured me into finding out how executives representing different entities, including ones from airlines, are currently working on it. Working out a new technology communication standard for the distribution of air travel is riddled with challenges.
The first version of “end-to-end” schemas has already been published, but the work is being done on an ongoing basis.
Changing a schema
Issues are being discussed on an ongoing basis by a relevant IATA working group related to the management of schemas. For instance, one of the recent ones was related to a business rule document titled “Interline Flight Shopping and Order Management”.
Before we delve deeper into the details, it needs to be understood that the NDC Shopping schemas would allow airlines to distribute their full product offers and to merchandize their seats, baggage etc. And the NDC Order Management schemas are responsible for managing NDC-driven orders, from booking to fulfilment. As for the offers, they can be crafted as per the current status of a supplier’s inventory, instead of those based upon previously filed products (i.e. dynamic and personalized offers become possible). It also paves way for airlines to directly manage other aspects of the indirect distribution process.
As for the concerned group, the business and technical requirements are being met by the Distribution Data Exchange Working Group (DDXWG). It has been set up by the Passenger Distribution Group (PDG).
The main objective of this group is to document detailed business requirements and develop implementation guidance for data exchange standards in the area of airline distribution, and maintain such documentation on an on-going basis to ensure that the data exchange standards continue to reflect the industry’s business requirements.
“The group acts within the scope set by the PDG, acting as the authoritative source of the industry’s business requirements in the area of airline distribution, and under the methodological guidance of the PADIS Board responsible for the maintenance of all IATA XML and EDIFACT data exchange standards in the passenger services area,” shared a source.
“We can’t specify the number of issues (to be sorted out at this juncture), but yes the core objective is to streamline the process for all the stakeholders. From the moment a request comes in from an agency to the point the offer is tailored as per the request, it has to be ensured that the offer not only matches the intent of the buyer, but also meets the interests of the parties,” explained the source.
“We need to assess the business requirement, and ensure technical changes don’t affect any other part of the standard – technically or from standard rules perspective,” shared the source.
So coming back to the scope of the change in schema related to “Interline Flight Shopping and Order Management”, it emerged that when an order features Offer Responsible Airline (ORA) and Product Offering Airline (POA), then there should be a place holder to contain OrderID and OrderItemID of both ORA and POA. And this called for a new structure.
As to what called for a change in coding, we need to understand that theoretically, the number of suppliers in an offer and eventually an order could be numerous. But there is no need to highlight the arrangement between the parties whenever an agency is receives an offer (So if two airlines or any two suppliers come together to respond to a request, it doesn’t call for detailing the commercial dealing of the parties involved). And the current structure didn’t reflect this, it called for a change in coding.
Issue: The OrderItemID should only go to the offer responsible airline, but not back to the travel agency or the corporate agency. There is no need to show the commercial agreement or the details (mainly pricing) of each item within the OfferItemID to the buyer. So these are the sort of the issues that are being addressed.
And the work is being done by the group on an ongoing basis.
Guest Editorial by Ritesh Gupta for Triometric: How close are airlines to identifying their customers and making those unbundled offers that sell?
There are encouraging signs that this ambition is not just a pipe dream but inching closer to a real and achievable vision. Industry execs around the globe seem to be in agreement that levelling the playing field between the direct and the indirect channel and creating an infrastructure capable of handling content rich ancillary merchandising is the only way forward. Pilots are in progress and there is burgeoning interest across the globe. But these are still early days as the industry cranks up its dynamic merchandising engines and data-driven decision-making. This means letting go of a flight-centric and transaction focused mentality (and systems) in favour of a customer-centric approach with the customer journey experience at the core of what an airline retails.
What’s happening in the data world?
If we look at how the world of data analytics is shaping up, especially as the industry embraces the NDC standards based on XML, the ability to know the customer better and the context in which he is making the buying decision is quite promising. It’s like several pieces of a big puzzle getting sorted out. If the emphasis is on identifying the customer using factors of probability on the one hand or segmenting them into “look-alike” clusters on the other, then there is a great opportunity to make the most of search behaviour and match it with buying intent. This is where being able to capture and analyse the detail in the data stream between requests and offers comes in.
Analysis to determine customer insights then becomes an ongoing exercise – learning about the behaviour and relating it to the merchandising strategy, paves the way for constant refining of what to offer each time a consumer searches for his next trip.
It should be noted that the product lines of travel retailers is expanding. Competitive differences being expressed through ancillaries and bundles. Carriers are getting more creative but hampered by their existing infrastructure in the way they personalise, package, and deliver their offers via the third party channel. This is why the ability to use search insights just at the time when a potential booker is looking for something would complement the whole omni-channel shopping landscape.
“As airlines attempt to respond to a request from the agency channel, as being envisioned with the adoption of the NDC standard, it’s imperative to leverage search and booking data to deliver products and services that customers most value,” says Jonathan Boffey, SVP- Business Development at Triometric, who attended Ai’s Mega Event, held recently in San Diego.
As a specialist in the arena of travel analytics, Triometric highlights that NDC is based on XML and XML data analysis offers deep intelligence into customer shopping intent and buying behaviour.
The industry is already looking at making NDC shopping data more accessible.
For its part, Triometric has just launched an optional analytics service for airline clients that monitors the XML data stream passing through Farelogix’s NDC-Xpress platform, an offering that is equipped to deliver airline-controlled merchandising, pricing and API distribution in a SaaS model. The analytics component will enable carriers to make the most of intelligence embedded in the rich NDC-schema compliant XML message streams. The company can also deliver equivalent reporting to other NDC booking environments.
“Understanding how travellers search and book for travel is increasingly vital for airlines as they embrace NDC standards,” says Boffey. “It a big part of the NDC opportunity and it can be applied anywhere along the B2B supply chain. Whether transacted by the end consumer directly or through an agent, if the traveller data is rich enough then there is ample scope to use the available insight in the tailoring and pricing of offers,” says Boffey.
Cracking that relevant offer
“There is a big realisation (among carriers) about the potential of leveraging data sets, but as of now the use is quite limited,” says Boffey.
On the positive side, there are airlines that work with a set of rules that helps them to independently manage their own product propositions (inventory, availability, price, product biasing etc.). For example, one can work out channel-specific merchandising rules, and this would pave the way for control of what can be sold.
Bringing the element of analytics into it, by delving deeper into search requests, offers and bookings every day, one would gain an insight into customers’ travel intentions and preferences. As Triometric asserts, this would help in tailoring better offers for conversions based on customer context and market demand.
This of course depends on large data volume processing capabilities and real-time analytics, delivered via visual dashboards and key indicator alerts that give airlines visibility into shopping intent on which these more accurate and timely personalised offers depend.
So critically what would happen at the point of search?
“So on the basis of the segmentation and the defined rules that set the scene for the chosen product mix, offers are shaped up. Now an airline might have a set of 50 offers. Which ones would be most apt and match more closely to the buying intent needs to be analysed on an ongoing basis. The success of these needs to be measured – “closing the loop”. Then over a period of time the system would prioritise accordingly. This means that in responding to a search, the airline would be in a position to come up with not just a relevant offer, but one that had been tried and tested. The fact that the basket of ancillary products is increasing, makes this issue more complex. So airlines need to be spot on with their work at the backend, and gear up for the changes,” explained Boffey.
While the business information is critical, different product searches will place different demands on the booking systems and these differences need to be understood. The team at Triometric has ensured that its latest platform also gives the IT department an insight into critical operational performance, and one would be able to slice and dice data according to key metrics. These include - performance (errors, response time etc.), product availability (no offer, how many offers were given, did the offer match the search request), price sensitivity and margin (look-to-book ratios, what sort of mix is working out well – core product plus third party products etc.) and relevance/ personalization.
So what’s the timetable?
Online travel is a fast paced and highly competitive environment where systems must be monitored and maintained to run optimally at all times to avoid any degradation of service to the user or loss of revenue opportunities.
“The NDC program is gathering pace”, says Boffey, “Many carriers have been through IATA’s familiarization program and are conducting pilots. Very soon, NDC compliance will no longer be optional for all the major and most of middle tier carriers”. IATA the driving force behind NDC is already intent on taking NDC to the next level with the One Order industry-led programme aimed at modernising the multiple and rigid booking, ticketing, delivery and accounting methods with a single, flexible order management process. The ultimate goal is a single customer order record holding all data elements required for order fulfilment across the travel cycle. That’s were analytics and the intelligence it can provide is also headed.
Ai Editorial: Airlines need to address basic issues to make the most of search traffic and tapping it for ancillary revenue generation. Ai’s Ritesh Gupta studies 5 issues
Is search entirely about intent? Why it is important to assess what the user did to get to an airline’s website or a particular page? Is it time to consider Google to be an OTA?
These are some pertinent questions that airlines need to address as one tries to capitalize on traffic emanating from search. With OTAs and meta-search engines excelling in making deft use of search marketing, it is not an easy task for travel suppliers to compete.
But as a specialist in this arena, Seth Cassel, president, EveryMundo, believes airlines can forge ahead with sustainable strategies instead of trying to do SEO “transactionally”, as in “a dollar in, a dollar out.”
One of the interesting developments has been the emergence of the “Book On Google” option.
“We are not convinced that Google wants to become an OTA,” says Cassel. He adds, “Regardless, what we see right now is that organic search still drives the plurality of traffic from search engines, and that paid search is still capturing more clicks than Google Flights. That could change, but so far it has not created a fundamentally different search landscape. If anything it underscores the importance of having performance website infrastructure that can be leveraged for SEO and other direct channel marketing strategies, like paid search and email.”
We will build on this, and here are 5 issues that airlines need to address:
Cassel says not all respective passengers should necessarily have the same experience or be offered the same products as they reach an airline’s website. “Currently, there is a heavy focus on profiling individuals once they have shared information or interacted heavily with an airline, and good technology is also available to leverage the activity and information provided by the user,” he says. “Looking at the source of the traffic to the airline’s website and looking at what the user did to get to the page -- not just what the user does once they arrive at the website – can provide good insights into ancillary opportunities and that customer’s intentions with the airline.”
An airline that flies to only 10 cities, for example, cannot expect to drive millions and millions in revenue from nationwide search because it simply cannot sell that much. There are also limitations based on language, geography, and the quality of the infrastructure an airline presents to its audience. If someone is searching for things to do in Miami, for example, an airline can make an attempt to sell them a flight, but the opportunity might be very slight. Trying to get in front of a user like that is going to be expensive and limited in its ability to return revenue because there are lots of other properties willing to spend more money to get that person’s attention online.
“The flip side of that is for airlines to be aggressive about spending and growth effectiveness. Airlines should be looking at the competitive environment to see what they have to offer. Look at the website infrastructure, functionality, and online tools to drive and enhance performance. Make investments in sustainable strategies instead of trying to do SEO “transactionally”, as in “a dollar in, a dollar out.”,” says Cassel.
Ai Editorial: The onus is on airline IT companies to deliver as airlines say PSS providers are too slow in “reinventing” their PSS systems. So how to go about NDC? Ritesh Gupta finds out
The discussion around how airlines are going about embracing the new NDC standard and what’s the sort of change that is resulting in their internal system architecture is an interesting one.
Before I delve deeper into the issue of NDC implementation, it is clear that for airlines the limitations of legacy systems is turning out to be an investment decision. And it’s just not about distribution of content. For instance, airlines are being recommended to look at the entire payment chain, from gateway to risk, to acquiring, and identify areas in which they can prioritize improvements. But dealing with legacy systems isn’t easy as they have largely been designed to handle credit card transactions only.
So the going hasn’t been smooth for airline IT or e-commerce executives, especially those who are a part of FSCs, in general. There is a need to grow capabilities beyond traditional commerce management.
“The most exciting aspect about my role is to leverage changes in technology available for airline commercial activity. However, the challenge is to integrate it effectively with legacy systems such as reservation where there is no much progress in technology. Unfortunately, it is somehow still the same engine behind the scene like decades ago!” says an airline executive. A candid admission indeed.
PSS and complication interfacing
A pivotal figure when it comes to NDC is the airline PSS system. As proposed, integration of NDC specifics can be done at different levels. The possibilities are – “extend your PSS Box” or “Do it outside your PSS Box”.
An overhaul to core services (reservations, schedule and inventory, ticketing, departure control etc.) and streamlining associated functions (loyalty, revenue management, and business intelligence and revenue integrity) is a humungous task.
So how are airline commercial systems evolving?
“It seems that airline commercial systems are developing in the same direction as in the retail industry; however airline industry is few years behind retail because of the complexity of its business,” says Radoslaw Dutkowski, Director eCommerce and Ancillary Services, LOT Polish Airlines
Dutkowski believes that airlines are becoming more customer focused and are trying to effectively use the customer data which are they already have, but the processing of the data and on-request real time usage is definitely a challenge.
It is especially a problem of data integration from different systems based on completely different philosophy and aggregation methods. “I would find legacy PSS systems as a major obstacle in getting quick and well aggregated customer view as it requires complicated interfacing which may impact data accuracy and reliability,” says Dutkowski.
Fine tuning of PSS just not enough
As it is being pointed out, the fine tuning of legacy PSS wouldn’t be effective as the core of the system still lays in 70’s of the XX century.
“Legacy PSS systems should be actually redeveloped almost from scratch if it brings any major improvement, what is not going to happen in a very near future. That’s why I would rather focus on real time PSS data reliable interfacing to the external contemporary system where the proper data aggregation could be maintained. What (it) means (is) building a mirror of PSS database outside of PSS, which could be used for generation of the accurate offer for individual passengers,” explained an airline executive.
Airlines have invested considerably in several assets and want to protect these or ensure they can be easily integrated in an NDC world. Airlines are likely to have some rich content or CMS systems; however, it is likely these will have to be extended as they likely only cover the direct channel so may need to account for indirect channels also. Pricing and revenue management expertise already exist today and these systems will need to be integrated. Offer management or merchandising will likely need new investment, as the area of retailing will be a new skillset for airlines and new technologies will be required. Similarly, order management requires new investment, in order to support the lifecycle of the order across all channels used by the airline customer. Airline profile will require airlines to file their NDC capabilities so NDC actors can use this information to send NDC traffic to the airline for the end user shopping request; this will also require some investment.
A likely scenario
To mitigate the limitations of PSS systems, full service carriers or FSCs started to implement separate engines and modules such as availability and pricing, customer database, merchandising, NDC interfaces etc. outside of PSS as legacy systems are not effective enough to be used for sharpening their retailing strategy.
“Effectively it means that in the near future PSS may only be used for routine operation such us PNR creation, however the content will be fed from the different modern retailing systems,” explained a source. “ The current PSS providers are too slow in redeveloping/ reinventing their PSS system as it is capital-intensive process, so I wouldn’t expect that the major improvement in this matter in a short term. The only solution is to build the independent modularized system which will help to compete on the market, especially with LCCs as they don’t usually have such problem.”
It could be argued that a PSS vendor who is also a distributor has a conflict of interest when it comes to enabling more direct distribution, thereby putting distribution revenue (GDS segment fees) at risk. That said, NDC is a new technology and that development has to be funded, so additional fee is reasonable.
Points of contention other than technology
There are few other crucial points, as Paul Byrne, SVP Development, OpenJaw Technologies, and Member Board of Directors, Open Travel Alliance points out, that are impeding the adoption:
Ai Editorial: How astutely are you predicting what, when and where to offer a hotel room or car rental as a user is about to book a seat on a plane? Ritesh Gupta finds out
Airlines, just like other travel e-commerce sites, are vulnerable to losing out on a visitor in a matter of few seconds. It is imperative to be spot on with the sort of work that happens the moment a user lands on a site, or even when a traveller opens an email.
Airlines need to ensure they maximize any opportunity to cross-sell in order to step up the average order value. A key here is to embrace a dynamic form of merchandising and marketing, fundamentally based on data-driven decision-making.
There needs to be a mechanism that would predict what a customer is likely to buy.
“What to offer each individual customer, when, and through which channel is the new merchandising paradigm. What this means is that unique and personalized offers for individual customers based on their attributes,” says Boxever’s VP – Sales, Ultan O'Brien. There is seemingly an extreme polarization – if you get it right, then customers can buy a lot more; if your offer goes wrong, then there is cart abandonment and dismay is what a customer ends up with. “People not only buy more products when offered ones that are more relevant to them, but they are also more loyal to brands that seem to understand them and can accurately predict what products to offer them,” says O Brien.
Trip essentials – how to offer them aptly?
Making the right offer at the right time is a challenge for most, says Justin Steele, Senior Director of Innovation, Switchfly.
Predicting what would click is the key here. Here we explore how it matters:
For most airlines, as Steele says, hotel ancillaries are best sold post purchase, or after the customer has completed his or her airline ticket purchase. One great method is through a simple `pre-trip’ email. Do not just send an email with a link saying `need a hotel?’ asking the user to click a link, enter their specific dates, and conduct a search. Users can do this on their own. Instead, try to predict the top 2-3 hotels that customer is likely to purchase.
Steele further explains: Airlines can use previous customer information such as purchase history (star rating, chain affiliation), demographics, or even member tier status to begin the targeting process. Airlines can also use other factors such as length of stay, days of the week travelling, number of travellers in the party and other factors. The goal is derive the top 2-3 hotels that this customer is most likely to purchase in their destination. Then, display these 2-3 hotels directly in the email with live pricing allowing the customer to see results. Use minimal content to surround the hotel property. Large pictures with hotel name, star rating, and total price are the only 4 required pieces.
Timing is the next key. Airlines need to learn the travel journey and purchase habits of their customers. “Airlines should be able to say, “customers who book their flight 6 months in advance, and that are traveling with a family are most likely to begin their hotel search / booking process 3 months in advance” and airlines can target their email for the exact date the customer is about to think about a hotel purchase,” he says.
As for ensuring the path of booking is not riddled with unnecessary products or content, Steele says the focus should be on well-timed, planned touch points. “A certain subset of ancillaries belong in-path, varying by factors such as airline, route and business model. These ancillaries should be limited to items that a customer requires in order to complete a ticket booking,” he says. An example of this is that many customers will not book a long haul flight unless they can pick their seat. “Other ancillaries need to be sprinkled throughout non-intrusive touch points – we call these casual checkpoints. Some additional casual checkpoints include the confirmation page, confirmation emails, pre-trip emails, check in time and pre-boarding,” he says. “Understanding the relevance of the offer and the timing of the offer in the customers purchased decision process can help airlines determine which products to market, when to market and where to market. Then tweak and test. This is definitely not a ‘set it and forget it process.’ The process needs to continue to be refined by the airline.”
O'Brien says the existing descriptive and diagnostic analytics landscape has traditionally been a very lean-back approach to merchandising ancillaries. A typical example might be to create an email segment from an operational CRM by querying all family bookings who purchased previous (the same time last year), and who added a specific ancillary (also bought a hotel, car or insurance package). “It’s using historical data points to inform a contact strategy with the customer that is delivering increasingly limited success – mainly because it is generally based on stale information and is part of a generic grouped campaign rather than personalized to an individual,” he says.
He adds, “The result is a form of scatter gun marketing communication – with a kind of “throw mud at the wall and see what sticks approach” – which is batched rather than real-time (so tends to be stale and out of date) retrospective in its nature and based on historical information (thus missing any intermediate interactions the customer has with the brand that can indicate an intent to spend, a buying persona, a context and the relevant product(s) of interest).
The New World
By using a data-first merchandising platform - which captures all interactions as well as shopping and buying behaviour across all channels – airlines can commence building a unique contact strategy for each visitor, traveller or customer.
“The use of predictive analytics to drive offers in practical terms means you stop asking the question “What products do I need to sell” and start asking “When will a specific customer next make a purchase?" and "How best can we communicate to them to make it happen?”, says O Brien.
According to him, predictive marketing is really about understanding who the customer is, what products they might be interested in based on their behaviour as well as their transaction history – and then marketing contextual relevant personalized offers in an automated way, orchestrating this across all customer touch points to achieve what is referred to as customer-centric marketing. So, when a customer has not purchased a product it’s then about inspiring them or pre-targeting them with appropriate travel experience. When they are however in the purchasing funnel it’s about offering the optimal assembled product set (or dynamic package) to convert them, and re-targeting them with the next best ancillary to widen their traditional travel basket.
Whatever airlines strive to offer needs to be spot on. Anticipating the next product a customer will want to purchase right before the customer does, then making it available to the customer through the proper channel is a top priority right now.
Passengers see different products, different prices, different offers or bundles. Airlines are trying to overcome such inconsistency.
We all avoid irrelevant offers. It could be that the offer isn’t fit for that moment or just isn’t for me at all.
If I receive an offer that is actually invalid, not just uninteresting, it can be quite annoying.
So it could be a product that I could buy but just don’t want. As for the “invalid” part, it could mean there really is a strong reason, based on the data the airline has, that I will never buy that product. For example, I won't buy it because I have already bought it. Another example is that I’m already entitled to that upgrade or lounge access for free because of my tier.
“It is imperative for any airline to having intelligent filters and business rules in place - to do things like remove invalid offers are an essential first step before you can implement recommendations based on data analysis,” says Mark Lenahan, VP of Product Strategy at OpenJaw.
E-commerce entities, including retailers, today assert that customers do not see channels. Whatever is offered, wherever it’s seen - needs to be useful or inspirational for a future buy.
But airlines have some specific challenges.
If we were to talk whether airlines are in control of what they would like to offer or not, Lenahan says there currently isn’t enough control because of both technical and commercial aspects.
“Airlines, in general, feel that their current technology does not provide sufficient control over what they sell. Most airline environments consist of a mix of technology vendors, but some of that technology is very old and inflexible,” he says.
There are also commercial issues with the way airline product is distributed, for example, there is no such thing as a gentle transition from being “full content” (meaning all fares on the GDS) to having channel-specific pricing. The airlines either live with the status quo or start what gets described as a “revolt”, as we’ve seen with some carriers in recent months.
The combined impact of complexity in both technology and distribution leads to inconsistency for the passenger – and their overall experience.
“The passenger sees different products, different prices, different offers or bundles, all depending on which site they are visiting, or what device they are using,” says Lenahan.
“If an airline goes to the effort of sourcing or creating a unique product, whether it’s an on-board experience, destination event or hotel package, the decision on where and how to sell that product should be based on what the passenger wants and commercial needs of the airline, not on what channel (or silo) the passenger happens to be interacting with at that precise moment,” says Lenahan.
Getting better at retailing
So technology and infrastructure is definitely one core aspect of ensuring a flyer is offered something that is likely to click with him or her. But this wouldn’t be possible in case airlines continue to stick to non-integrated pricing and merchandising solution providers (these entities can have competing priorities, too). Airlines need to avoid going for multiple merchandising processes/ systems. Managing it across direct and indirect channels is neither scalable, nor technically, economically, or commercially feasible.
The second aspect is data analytics for keeping a tab on the intent of the customer. “I think it’s still early days,” says Lenahan, referring to the maturity of the same.
Delving deeper, he says “inspiration” (meaning capturing the customer’s attention, getting them to shop, or inspiring them to look at a destination) is a source of data (e.g., click through, impressions) but marketing need data to begin with. Search and other datasets from external sources, i.e., Google, meta-search etc., can help airline marketing teams to better understand what to promote, where to target their content curation and allocate digital marketing budgets.
Referring to the concept of retailing experience, Lenahan says, “(At OpenJaw), we try to help inspirational shopping by aggregating live product data such as compelling content, accurate availability and live pricing from multiple sources, for all product types, into one platform.”
This supports inspiration and “browsing”, selling the outcome, focus on the destination, and better customer acquisition.
Permutations and combinations based on data
Continuing further, Lenahan mentioned that after a customer has narrowed down to a specific destination, data helps and informs about priorities for product biasing, bundling, etc.
In theory if you have 10 ancillary products, you have 45 possible 2-product bundles, or 120 possible 3-product bundles. However, many of these bundles don’t make logical sense and in any case, you still have to let the customer choose any of the 10 products individually. While that’s only partly a data problem, it’s also a user experience and design issue. “There’s no doubt that data analytics and behavioural economics can help. The challenge of recommending the 1st, 2nd, 3rd and so on from 200 hotels is quite different,” explained Lenahan.
For their part, OTAs believe it’s only after a considerable number of years they have reached a stage where they can rely on repository of data to make ensure whatever is offered sustains the booking flow. For instance, as a B2B specialist, RentalCars Connect, relies on the intelligence that its B2C business has its disposal, and ensures the products offered for a certain destination are likely to be bought.
Equally important is being adept at statistical demand forecasting models to predict demand for ancillary products. Also, price optimization is another component that needs to be factored in.
Also, as it turns out, some automated processes aren’t equipped to come up with precise recommendations when it comes to personalisation. Machine learning algorithms are playing their part, by evaluating which offers were most valuable. If an offer didn’t click with a passenger, the algorithm can capitalize on that intelligence and integrate it to work out for relatively more accurate offers.
Overall, travel retailing, with a broad set of products, requires a broad set of tools. Also human curated product management will not go away, even if machine learning is used to automate some aspects of bundling or pricing, asserts Lenahan.
By Ritesh Gupta
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