First published on 16th December, 2016
Ai Editorial: If airlines are seeking a greater share of the customer’s wallet then they actually have to care about a passenger’s journey, writes Ai’s Ritesh Gupta
Airlines are digging deep to ascertain what passengers love about them, and striving to become an integral part of their journey. So for a family it could be about making the most of togetherness on the day of travel, whereas a business traveller would prefer flexibility on ticket changes, and for their part, airlines are trying to entwine their merchandising around this.
Constant effort is being made to ensure unbundling or re-bundling matches with what a brand stands for and at the same time make benefits apparent.
Merchandising continues to evolve, a fact exemplified by the constant introduction of new offerings from airlines across the globe. So be it for Ryanair’s tailored bundle of discounted travel extras or American Airlines opting to extend availability of Preferred and Main Cabin Extra Seats to travel agents, there is plenty of action in this arena. Unbundling, branded fares, service bundles, fare families and subscription are all being played around with, and airlines are refining these all the time.
This level of product differentiation is must as the game of merchandising and ancillaries is bigger than ever. According to IdeaWorksCompany, airline ancillary revenue generation is projected to reach $67.4 billion this year. The report mentioned that optional services, such as onboard sales of food and beverages, checked baggage, premium seat assignments, and early boarding benefits, is expected to generate $44.9 billion of the total figure.
Being part of a journey
Every airline has unique values that appeal to different people, for one it might be a particular seat pitch, for another carrier it might be the food served or the airport experience or the on-time performance, says Mark Lenahan, co-founder, CJ Ingition. He says this varies by customers also. “Maybe there’s a UX (user experience) for the hundreds of different things I might want to filter flight results on, but I think the answer is not to just keep adding more data to the booking engine shop window,” says Lenahan. He says the vast majority of passengers are not first-time passengers, most of them are familiar with most of the airlines competing for their business on a given route. So a traveller might know a special feature, say a seat pitch, is worth $10-$20 more for a better experience. “What airlines need to work towards is improving the experience in the whole journey not just onboard their flights but including interline partners, ground transport, destination and airports. If you want a greater share of the customer's wallet then you actually have to care about their problems. The alternative - equally legitimate - strategy is to be the cheapest and most efficient transport provider you can be, but drop any pretence about being a retailer,” explained Lenahan.
Also, airlines need to look beyond cost, revenue, margin, etc., and rather assess retail metrics like revenue per visitor, average basket size, and attach rate - which can apply to all ancillaries or down to individual products, says Lenahan. He says analytics tools need to be across all channels and fine grained - reporting views, clicks, purchases down to the individual product. “I think the two most significant KPIs are cost of acquisition and lifetime value. The industry has significant issues minimising the former (e.g. paying for the same customer over and over) and understanding the later (strong tendency to ignore the earning potential of all but the top tier). If the customer experience in the whole journey (airport, on board, at destination) isn’t competitive then lifetime value will decline, even while the attach rate on the app or website improves in the short term. Airlines have to think of the long-term impact of everything they do.”
Value should stand out
Do you get peeved when you have to pay for a seat?
The fundamental idea behind charging for a particular seat is not the opportunity cost, but the benefit of choosing where to sit and removing the uncertainty of where you will finally sit, says Maria Cardenal, head of product development at Vueling Airlines. She says Vueling passengers will have a seat assigned for free if they choose so or will be able to choose it themselves if either they pay for Optima fare or pay for Basic fare and then the seat they prefer. Either in an unbundled way or in a bundled way, there is value behind the possibility to choose. It’s the same simple principle for which you have different prices depending where you want to sit at the theater or the Opera or a football match. You will have to pay extra if you want to sit in a privileged zone.
Sell what makes you special
Fare and product attributes need to be presented in a way that is easy to understand, digest, compare and personalise. There are several areas where airlines can improve.
When I spoke to Robert Albert, CEO, Routehappy, (a company that helps airlines to deliver their product attributes wherever flights are sold) same time last year, he indicated airlines are between 5-15% of their differentiation potential in their own channels overall, and closer to 0-5% in indirect channels. More recently, during one of our conferences in Kuala Lumpur, he urged airlines to take concrete steps. “Airlines everywhere are investing to transform their products. When will we merchandise these innovations in flight shopping? When will we showcase product in up-sell, ancillary and other offers?”probed Albert, who said the hotel industry has differentiated “well”, and get their “customers excited to buy their products”.
Irony is that content exists, but the industry struggles to show the same in the transaction flow. Albert asserted that one needs to “sell what makes you special”. For instance, ANA can count on their 34” seat pitch in economy, Singapore Airlines on their champagnes etc. and this needs to be integrated into product offers. Also, avoid overly generic or inconsistent presentation of product attributes. Don’t opt for “too general” a way of showing content which can’t be truly useful to a consumer's decision process. Information shouldn’t presented inconsistently so it doesn't reinforce usefulness, importance, comparability, or accuracy of the product attributes.
As for technology and e-commerce, airlines need to seamlessly integrate all ancillary products and services into their own payment and booking processes. As Datalex points out, airlines require significant investment in re-platforming their digital commerce suites to enhance their ability to dynamically price, promote and reward customers across all channels and devices. The industry may not be equipped to assess the booking flow in real-time, say what to display after the first click or the third click, but retailing is evolving all the time. So watch out for IoT commerce or new checkout experiences, and strengthen commerce initiatives.
Lastly, what is being promised needs to be delivered as well. So, for an example, if an airline identifies that a flyer tends to buy certain items on-board, let’s say a mango pudding, then the catering and crew needs to be informed about the same.
Ai is set to conduct the 11th edition of Ancillary Merchandising Conference in Spain next year.
Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain
For more info, click here
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First Published on 1st December, 2016
Ai Editorial: With the surge of interest in NDC, the industry has to think about the transition period. Ai’s Ritesh Gupta takes a look how change is coming along.
“Don’t forget change doesn’t come easy (to airlines). We are talking about being customer-centric, but most airlines are largely driven by processes. How many airlines are evolving – 30, 40…right?”
This comment from a senior industry executive during our recent conference in Toronto summed up the current situation when we talk of digitalisation today. Ryanair, Lufthansa, JetBlue, AirAsia, British Airways…how many airlines you can think of when you talk of digital transformation?
Talking of distribution, especially via indirect channels, the progress that is being made with NDC and the adoption of this XML-based data transmission standard is being closely followed. As IATA states, the introduction of NDC based services “will represent an evolution, with tomorrow’s situation being a hybrid of today’s service provision, service utilizing NDC and other services aimed to support both”. As we highlighted in one of our recent articles, the “existing” IT infrastructure can’t be replaced at one go. And with NDC continuing to evolve (there have been questions about the overall viability of NDC, too), how various stakeholders are finding a way out for a standardized, scalable decision-making is vital.
Status quo – is it changing?
Considering the way the likes of Amadeus and Sabre are associated with airlines, right from IT solutions, including PSS, to distribution via GDS, how airlines are picking and choosing the available options available?
Is the status quo being really challenged? Are best of breed specialists finding their way into pilots or new contracts?
The answer lies in how an arrangement can help in bringing down integration costs and also curtail the time needed to deploy new offerings. It all comes down to the value proposition that can be created between airline and intermediary, and at the same time how airlines can be in control of their inventory, distribution and sales, improve their financial performance and also serve their customers better. NDC is only a catalyst to enable a value proposition. If the airline can send new and relevant content via an intermediary that can display and transact on this content better than another intermediary, then competitive pressure gets created which is beneficial for the entire travel supply chain.
Airlines can evaluate how such initiatives are coming along, especially the control that is being desired. They can also explore issues, say, which is the fastest way to bring a product to the market. Does the traditional approach relying on ATPCo filing is still the way to go? Also, opt for connectivity that makes the most sense to a business, constantly re-evaluating the cost-benefit ratio of changing connectivity.
In case of Lufthansa, as shared by the group recently, a NDC pilot was fully integrated into its existing distribution and production processes and so involved actual ticket sales. In conjunction with TUI group’s tour operator l’tur, Lufthansa featured unique product bundles exclusively via lturfly.com. Highlights include: offers were crafted for certain routes on the European network of the group; these included bundled ancillaries, such as free checked baggage and free lounge access, set up in airline’s merchandising engine and worked around a flexible and rule-based product compilation; featured product descriptions, icons, and images etc. The focus was on AirShoppingRQ and AirShoppingRS messaging to evaluate offer management.
There are several interesting aspects when we talk of how all of this is being implemented, especially in the context of how much airlines are ready to drift away from the legacy environment (do they believe their existing partners are too slow to respond) and rather go with the best of breed offerings. Entities like Sabre and Amadeus assert they are evolving, too. Amadeus recently shared that as an IT provider to airlines, the team has been delivering NDC XML-specific enhancements, and is already using NDC XML in its solutions using NDC XML AirShopping verb, the NDC XML FlightPrice/ServiceList verbs, the NDC XML FileRetrieve verb etc.
In case of Lufthansa, their direct connect IT platform is being used in new initiatives. If we look at new arrangement with Siemens and Volkswagen, it was about Amadeus Cytric bypassing Amadeus GDS to hook into Amadeus Altea!
“Till the point all the inventory is being controlled by Amadeus or Sabre, the industry can’t witness a major change,” stated a source.
Don’t expect pilots to run smoothly in every instance.
In case of Lufthansa’s pilot with l’tur, the airline acknowledged that banking on NDC to have a real-time, transaction-based offer process “did not easily link to the cache-based solutions that are widely used in the European tour operator business”. So an NDC converter was developed to feed NDC offers into l’tur’s cache-based production environment, shared the group. Lufthansa’s pilot achieved IATA NDC Level 2 certification (focuses on offer management) and used NDC schema 1.1.3, an early version that was current at the time of the project’s inception.
With NDC, there are schemas for shopping and, order management, and the end result is the creation of Offer ID and Order ID, featuring order creation, ticketing, issuance, payment authorization and BSP reporting.
Airlines need to evaluate what is needed to support NDC – be it for profile (mainly rules to determine which shopping requests should be sent), offer and order management, as well as content.
Basic requirement is astute merchandising system to create offering dynamically, and work on the most relevant offer at any given time, through any point of sale, any channel, direct or indirect and through any device. Gear up for delivery of enhanced airline content at the point of sale, whether in the direct or indirect channel. And plan integration of systems with PSS for an end-to-end traveller journey across key touch points such as servicing, delivery, disruption management plus ticketing and fulfilment.
If we talk of airlines and APIs, they must learn how to build, deploy, manage and upgrade them so that connected parties, too, can benefit. But there are cases where airlines that already have API XML connectivity have it in a proprietary way. This needs to be avoided. The technology behind the API is generally related to the functions one wants to deliver through the API. In the airline world its things like flight search, flight price, PNR create, ticketing, etc. When it comes to a distribution approach to an airline’s selling channels, the delivery methodology would be quite clear, i.e., a centralized and standardized API that would be consumed by all channels – web site, kiosk, GDSs, mobile, etc.
As for GDSs, it means accepting the fact that the airline’s systems will be responsible for processing all distribution-related transactions, not their distribution system anymore. It doesn’t change the intrinsic value of GDS, i.e. the unmatched reach they deliver. The biggest issues are in understanding the various workflows that have been established by a GDS or OTA and understanding how the schema from the airline will impact the established workflow.
Travel agents obviously prefer to consume content that does not disrupt their processes, in particular when it comes to comparative shopping, mid- and back-office integration and customer servicing and this has a major impact on the success factor of any strategy involving the channel.
Also, messages may change and improve with new versions thanks to the addition of new elements (e.g., sending video images) or enhancements to existing elements (e.g., split PNR improvement). Plus, while deploying an NDC API between airline and intermediaries there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc.
Of course, standardization in this case isn’t easy, since we are talking about big, heavy systems that need adjustments.
There are valid concerns around the cost to support implementation, employee training to use NDC-enabled processes and ongoing product and technology support.
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First Published on 22nd November, 2016
How mobile, cloud, social media, big data and analytics, and artificial intelligence are driving the future of flight search?
San Francisco-based Gillian, CEO & Founder of mobile app Hitlist, a personalized mobile travel agent, underlined that new business ideas have a certain gestation period before they go mass. “Disruption doesn’t come out of the blue. It’s a process, where trends develop over a long time before they hit the mainstream,” Gillian said.
She noted that “millenials” and “mobile” are two trends that are tipped to signal a new era in the flight search category.
Referring to emerging trends in the flight search space, she mentioned that this segment is witnessing several approaches. These include assisted (FlightFox, TRVL, Lola, Slingshot), inspirational, proactive alerts (Hopper, Hitlist), customer-first (Skiplagged) and socially integrated, shared Gillian, who took an unusual career path, marked by her journey of staying in different countries and opting for different assignments in around 10 countries. She eventually ended up a venture-backed start-up. As for Gillian’s company, Hitlist proactively finds best itineraries for users, helps them to make the most of data in their social graph to provide them with relevant destinations and deals.
“Millenials buy in a different way,” she said. It is being estimated that 40% of overall travel spending is going to be contributed by this segment by next year, as the level of spending from this age-group is set to go up. This group embraces mobile offerings faster than “older” generations, and it is time for travel companies to engage millenials on their terms, offer a range of payment methods.
As for mobile distribution, Gillian mentioned that the industry is yet to see the real shift the way travel is marketed and distributed. “(Mobile) is a personalised, super-computer in your pocket, present all the time,” she said.
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First published on 21st November, 2016
Ai Editorial: Organizations that aren’t start-ups, and are executing a proven business model, have a lot to learn from growth hacking, writes Ai’s Ritesh Gupta.
When one reflects upon the story of Airbnb, it is inevitable that their Craigslist integration and the so-called growth hack strategy would surface in the discussion. Could a marketer have ever achieved that? Or was it the sheer brilliance of an engineer to script such a legendary story?
Stories such as these have set a new benchmark in the arena of growth hacking. What can trigger “virality” of a campaign? How to master the art of A/B testing and landing pages? How to deliver personalised content? These posers aren’t really new, but cracking them isn’t a solution that has stayed the same for years. And if any marketing initiative/ campaign proves to be a successful and that too at relatively “lower” cost, then it’s worth an applause.
In today’s digital era where ecosystems such as Google, Facebook, Alibaba, Tencent etc. can be home to massive volume of traffic, optimizing a product or message requires a new skill set. Not too long ago, Pokemon Go became a rage, and there was a rush to make the most of the associated users/ traffic. Here only the blend of content, data, analytics, algorithms etc. can do the magic, and it is clear that lines between marketing, product, and engineering are diminishing.
This is what “growth hackers” have achieved over the years, especially when we talk of scaling businesses. They excel in crafting sensational success stories that have marked success of brands such as Airbnb. They can be described as experts in several disciplines - partly marketing, partly product development, partly engineering.
Airbnb rallied on their strong Craigslist integration. Dropbox quadrupled its users in 15 months by redefining an old door-to-door salesman trick of recommending an unsuspecting neighbour who might be interested in the product. In complete transparency, Dropbox incentivised referrals so both the referral and the referee were rewarded. Amongst users it became a race to see who could refer their entire network first.
“There is plenty of opportunity for airlines to take a similar approach by reimagining strategy around the traveller’s needs,” says Matt Walker, Chief Storyteller, LikeWhere.com.
Overlap between marketing and growth hacking
The background of growth hackers makes for an interesting read on the web. There is plenty to learn from growth hackers, even though what marketers set out to achieve is different (trying to find a balance between awareness, reach and conversion). Growth hackers stand out for their ability to reap results from repeated testing, and proficient at being precise with return on investment. In a recent article on rockboost.com, it was highlighted that with apt blend of user testing, data mining etc., growth hackers focus on crafting a product or refine it to attain product/market fit or PMF. It also stated when at least 40% of your users have strong affiliation with a product/ service (about using it), PMF has been achieved. So the growth hacker’s goal is to create a product their customers cannot live without.
A marketer in a bigger sense has to create an aura around a brand. It just goes beyond virality or finding a PMF.
“It certainly (growth hacker becoming a VP marketing) could fit the bill, but there are other factors to consider industry by industry. Making a growth hacker VP could entrench your marketing efforts in that approach alone,” says an executive. “I wonder does a VP need a broader, more nuanced approach - of which growth hacking could play a considerable role.”
Unearthing something new
What about the need for growth hacking in a mature industry like air travel?
“I do think airlines could take a growth hacking approach to long tail inventory: new and underperforming routes. Currently, cutting prices has been the predominant solution, and limited at best. Hacking is about identifying or creating opportunities. Increasing the perceived value of lesser known and underperforming routes through context and story is a fresh strategy, and one that is proven in other industries,” pointed out Walker.
Being disruptive as a non start-up
A mature sector such as air travel needs to embrace change, and be more agile.
· First, specialists point out that for relatively mature companies to make the most of capabilities of growth hackers there is a need to re-look at the goal of a marketer. Go beyond awareness and acquisition. Departments operating in silos doesn’t work today, and there is a need to evaluate the whole funnel in a holistic manner. So evaluate activation tactics and metrics such as customer segmentation/ behavioural analysis, cohort analysis etc.
· Second, problem doesn’t lie in understanding innovation, rather it’s about how to pave way for innovation and embrace in an organization’s culture. So look at the design. Dig about innovation KPI’s, policies, processes and incentives. So JetBlue Technology Ventures comes across as a visionary move. The entity is focusing on investing, incubating and partnerning with early stage start-ups at the intersection of technology, travel and hospitality. Objectives include customer experience and operational efficiency.
· Third, look at data and platforms. Even as we talk about owning the entire customer lifecycle – from awareness and engagement to conversion and loyalty, one can’t ignore the fact that the landscape is fragmented. “We are sort of locked in a data ecosystem, which is not transferable. So what we call is a “walled garden” – you can’t get data out of it,” says a marketer, referring to Tencent and Alibaba ecosystems. Find ways to have a unified view, and do away with data silos that can create inaccurate customer profiles and duplicate information.
· Fourth, focus on what can go viral or facilitate virality. For instance, gamification is spoken highly of in terms of experience and engagement; freemium - offering simple and basic services for free for the user to try and more advanced or additional features at a premium, and this can be used for expanding social media base; target low-hanging opportunity such as page load time, focus on link building and spread your content; memes are considered to be very attractive.
Establishing a huge user base, quick publicity, massive sharing of your post, etc… this is what growth hacking is all about. It is exciting. When all of it happens at virtually no expenditure or at best “low-cost”, it’s like winning over a battle without even letting your opponent know when it started and got over!
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First Published on 21st November, 2016
What would it take for airlines to become passenger-centric organizations? Can IT lead transformation and be a source of competitive advantage?
Airlines are facing a barrage of questions, being challenged to drift away from their process-centric way of functioning. There is a call for digitalisation and the move to ‘digital-first’ delivery methods. Airlines need to scale their digital business processes and enterprise models to align with the digital ecosystem.
Experienced airline executive Dean Dacko acknowledges that airlines across the world are keenly looking at a passenger-centric evolutionary process but are having difficulties in moving in that direction and implementing that kind of capability.
Most airline environments consist of a mix of technology vendors, but some of that technology is old, inflexible. As one executive points out, most airlines “are at the mercy of their PSS or CRS provider”. And this hampers the aspiration of being customer-centric, since airlines tend not to own their own data and rather incur expenditure for accessing their own data. 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. Be it for crafting an offer (dynamic merchandising, pricing, availability, and schedule building) or distribution of content, airlines need to evolve in order to be in control.
But change isn’t easy in this industry considering so many tightly integrated processes.
“The main challenges lie in leveraging the legacy environment, that database environment through the PSS, that has for most part handcuffed majority of airlines for many years. It is being envisioned that customers need to be at the forefront when it comes to all the way they engage, they communicate and market them relevant offers/ services,” Dacko says.
“Airlines need to take the quantum leap into the future, to recognize that time has come to continue to work on capabilities, build on technology that doesn’t necessary build on an existing PSS. One needs to gear up for digital first, customer first business environment,” said Dacko.
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First published on 7th November, 2016
An efficient API strategy paves way for pervasive adoption of applications, enabling an airline to greatly expand its presence across related applications.
Airlines need to act swiftly and make the most of APIs in a connected world.
This is imperative as systems move to the cloud, mobile devices become ubiquitous, and the Internet of Things unleashes novel ways of connecting with passengers.
As Kevin O’Shaughnessy, CEO and co-founder, Indigo.gt, recommends, “Be your own API”.
All systems – whether digital or legacy - must work and run on APIs. The likes of Google, Uber, and Alibaba have leveraged technology to unify their end-to-end operations. These organizations are in a position to serve their offerings with outstanding accuracy, maximising their operations while engaging directly with and owning their consumers.
A competent API platform lets interoperate with other enterprise solutions regardless of technology or platform. It facilitates an enterprise model that opens technology to connect people, organizations, and resources in an interactive ecosystem. Airlines can reap several benefits, be it for serving customers during their various stages of their journey as well as working out tool sets for configurability and integration to partner merchants.
It’s time airlines refine their API strategy, which is about working on a proficient interface to an IT application or data source that allows authorized applications or machines to easily access it.
As Kevin points out, do value on focus on first. APIs offer a myriad of value propositions within airlines and travel companies.
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First published on 3rd November, 2016
Ai Editorial: Travel marketers need to consider the prowess of emails featuring item-level ecommerce receipt data. Ai’s Ritesh Gupta explores how such data can help in understanding the traveller and optimize the travel booking funnel.
How can travel brands make the most of data captured from items purchased?
This isn’t a new opportunity as such, but surely is one that is getting sophisticated.
Email data featuring retail transactions is offering visibility into shopping activity, paving way for profound analysis into buying preferences and patterns.
Travel marketers are being enticed to look into such data as details relate to actual transactions made by consumers in “near” real-time.
So is the transactional data market being disrupted?
Yes, says Dwight Sholes, Senior Consultant, Travel and Hospitality, Return Path. The company maintains a panel of over 1.3 million consumers who are active buyers and are receiving email receipts into their inboxes on a regular basis. These consumers have given “permission to have confidential visibility into their email inboxes while strictly protecting their privacy and personal data”, says Sholes. “We capture data at the item level, including product titles, colours, sizes, individual order quantities, pricing information, and more. Analyze the macro and the micro,” he says.
Today, receipts for a very large percentage of consumers’ online and offline transactions are being transmitted via email. When a consumer walks into a brick-and-mortar location and makes a purchase, or when a consumer transacts business online, he or she will receive a detailed receipt via email to her inbox. Receipts are sent via email for all online transactions and, increasingly, for many offline transactions made at both large and small businesses. These email receipts contain detailed information about the purchase, including the specific items purchased, the amount paid, the method of payment, the merchant making the transaction, and so forth.
Rich, detailed data
Armed with rich, detailed data, travel marketers will have the ability to understand where consumers are transacting, when they are buying, what they are buying, and how much they are paying.
Source: Return Path
“And with overlays of demographic and other profiling data from third parties, travel marketers will be able to understand who these customers are in greater detail,” said Sholes.
When asked how such insight can play its part in the travel booking funnel, Sholes says the quality is superior. Credit card companies, for example, typically only provide data at the merchant level and do not provide data down to the individual item level. “We parse nearly 100 pieces of information into a database,” says Sholes. The team at Return Path is in the process of completing development of Consumer Insights for Travel, which will provide detailed receipt data about airline transactions followed, in later releases, with data about accommodations, car rental, cruises, transfers, and other travel products and services. “Initial beta applications of the data have been very promising, shedding light on how different demographic groups buy different types of ancillaries at different rates, and how different carriers have different take rates for ancillaries. Going forward, additional applications include leveraging Consumer Insight data to gain a better understanding of the path to purchase not only for airline ancillaries but other travel products and services as well.”
“In particular, Consumer Insight provides airlines with valuable data about ancillary products and purchases. With Consumer Insight, airlines will be able to develop deeper understanding about the profile of consumers who buy different types of ancillary products and services, both for their own passengers and for competitors’,” shared Sholes.
Gearing up for parsed data
The challenge for airlines (as well as many other businesses, particularly in travel) is creating human processes to make more effective use of data in their business planning. Too often, businesses ignore data that is available to them and continue setting strategy as they always have. In today’s data-driven business environment, it is important to break down silos, to take a customer-centric view, and to make smarter decisions by leveraging data that is available rather than the easier route of ignoring the data in favour of business as usual.
As for what sort of infrastructure or integrations are required to optimize parsed data in an airline, Sholes said this depends on the infrastructure and capabilities of each specific airline. Such data is provided as a data feed to existing non-travel customers, and the amount of integration required is minimal. According to Sholes, any airline that is able to accept a data feed and utilize Consumer Insight data with its current analytics capabilities could start receiving the data relatively quickly.
Expect more in the time to come
Generally a retailer tends to have information about individual purchase histories for regular buyers. In addition to this, one can evaluate certain demographic and payment preference details.
But one can beyond this, too. For instance, what sort of activity or shopping the same set of buyers indulge in outside a brand’s touchpoints. Return Path has underlined that 3rd party consumer data can tell retailers more about how much their average shopper spends at competing stores, which brands they prefer for non-competitive, non-substitute products, and even provide a glimpse into customer psychodynamics. The company also added that the term consumer insights and the underlying art/ science that turns insights into action “are still shaping into something meaningful, but let this be the first step on a journey to understanding what consumer insights really are”.
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First published on 26th October, 2016
Ai Editorial: Airlines need to drift away from their image of being technology or processes-centric. But it doesn’t mean old can be completely replaced, writes Ai’s Ritesh Gupta, who is attending #MegaEvent16 conference in Toronto, Canada
Airlines need to break the shackles in order to gain better control of what they offer, and move on from being technology-centric entities to a passenger-centric one. But while certain areas, especially the issue of legacy technology can be tough to deal with, there are few that demand a certain level of swiftness to move in the right direction.
As it turned out from some of the key discussions that took place during #MegaEvent16 conference in Toronto, Canada, airlines need to blend traditional with modern means, be it for infrastructure, payments or targeted marketing:
IT infrastructure: While the role of the PSS can’t be undermined, airlines need to work around specific areas like fully calculating their own availability, and gaining grasp over schedule building. Yes, as much as carriers would like to embrace retailing platforms that are meant for today’s era, but one needs to be pragmatic when it comes to dealing with 3rd party companies that continue to have a significant say in IT and distribution.
Experienced airline executive Dean Dacko acknowledges that airlines across the world are keenly looking at a passenger-centric evolutionary process but are having difficulties in moving in that direction and implementing that kind of capability. “The main challenges lie in leveraging the legacy environment, that database environment through the PSS, that has for most part handcuffed majority of airlines for many years. It is being envisioned that customers need to be at the forefront when it comes to all the way they engage, they communicate and market them relevant offers/ services.” But legacy technology that dates back to 60’s hinders such aspirations, involves processes and ways that you file fares, package and deliver, and qualify how you can sell and distribute those airlines tickets worldwide, that is not allowing airlines to put customers first. “Airlines need to take the quantum leap into the future, to recognize that time has come to continue to work on capabilities, build on technology that doesn’t necessary build on an existing PSS. One needs to gear up for digital first, customer first business environment,” said Dacko. “Lots of time and resources have gone into this, but in 2016 and moving onto 2017, we are now reaching a stage where lot more tangible steps are being taken to build the requisite technology, requisite capability to shape the desired customer engagement, customer communication and ultimately the kind of customer relationship that will demonstrate all of this in a much more meaningful way.”
So airlines need to continuously refine their merchandising, e-commerce and API capabilities, plus find a mechanism that would result in faster speed to market. Airlines require platforms that offer business model control (rules based) and should feature modular open architecture.
Targeted marketing: Airlines need to look at every possible way of improving digital interaction. Ganesh Iyer, Senior Manager E- commerce, Qatar Airways, referred to personalization and behavioral data during the conference. “Behavorial data rather than static data is key, how do they (customers) react to a certain situation,” he said. Another executive referred to the significance of emerging XML analytics platform. For any carrier that is sending back an offer as per the request from an intermediary or a GDS (essentially this is what NDC is all about), there is also need to work with partners to understand how one can recognize a customer. So, for example, if a meta-search engine gathers information about a user, then what if membership number of a carrier is also collected for a user to benefit, then this piece of information can be read in the XML messaging flow. This way search data can be capitalized upon.
On another note, one also needs to assess how the so-called traditional touchpoints can be strengthened. Do consider competitive intelligence through email content - emails reveal consumer interest and behaviour. “Email is a unique identifier in the travel marketing ecosystem. There is a whole lot you can do with simple email, first name and last name to personalize the travel experience, to create unique micro-moments for your consumers,” said Dwight Sholes, Senior Consultant, Travel and Hospitality, Return Path. You really don’t need to let your customers fill long forms or extensive data analytics to start personalisation. Rather email in itself is a strong weapon. For instance, it is used as a login avenue for many websites. You can go into overlays, plugging in additional information from 3rd party databases for psychographic and demographic information. Email can be a strong foundation for working on targeting marketing.
Payments: Payment specialists also acknowledge that when it comes to rewriting or migrating legacy infrastructure, this isn’t a workable scenario. The best plan is to adopt technology that is modular in nature and can work as a stand-alone solution with scale and scope. It’s imperative for airlines to have a thin but feature-rich and agile payments layer within the enterprise. With that flexible framework in place, airlines can enable easy on-boarding, omni-channel payments, multiple PSP/acquirer connectivity, improved acceptance rates etc. For instance, airlines need to look at Apple Pay and Android Pay. Both are now making it possible to use OS-Pay through a web browser. There is a need to assess whether Apple and Android can improve upon the shopping experience, without really escalating processing fees. It also needs to be highlighted that fraud risk is being combatted when transactions are processed with ‘OS-Pay’ mobile wallets, as they avail biometric fingerprint technology to authorize a transaction.
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First published on 24th October, 2016
Ai Editorial: Digital commerce is one journey, which every airline needs to explore on its own. Yes, mobility, cloud, social media, big data and analytics, and AI are universal for all sectors, but there are distinctive hurdles, too, writes Ai’s Ritesh Gupta
Consumers are starting to expect the gadgets they use, the experiences they indulge in and the brands they choose to understand them and deliver what they are seeking.
IoT or Internet of Things is paving way for an era of personal, contextualized selling opportunities.
Airlines, like any business, need to prepare for an extended ecosystem for consumer IoT to blossom. For instance, if a traveller is waiting at the airport lounge, he or she decides to use personal digital assistant and asks: “Can I have mango pudding during the flight? Is it part of my breakfast or lunch?” Is it possible for technology to answer this question? And can the price be known if the same traveller wishes to buy and can it be bought, say via Apple Pay, via the same device? Is this what is going to define digital commerce?
So today one needs to assess the prowess of mobility, cloud, social media, big data and analytics and artificial intelligence while gearing up for digital commerce.
When we talk of the travel sector, buying a book is quite different from booking a seat on an airplane, or even adding car rental and a hotel room to an itinerary. The IT set up that supports controlled-merchandising, the fulfillment part or consumption of the service is quite different. Yes, this simple analogy depicts how triumphing in two vastly different sectors - retail and travel - can be a different ball game. Overall, when we talk of digital commerce, no doubt airlines have to chart their own journey. Of course, there are areas that are universal, and all sectors need to look at – say cross-device targeting or content optimization. As Microsoft’s CEO Satya Nadella recently mentioned: business leaders are looking at engaging their digital customers, wherever they are. For their part, airlines definitely to overcome certain sector-specific challenges. We take a look where airlines can improve in the arena of digital commerce ahead of #MegaEvent16 conference to be held here in Toronto, Canada:
1. Content: Today digital commerce thrives on understanding the intent and the profile of the customer. But what’s the point if airlines despite investing in their product are unable to show the same product the way it needs to be shown. Also, the timing of matching intent with content needs to be perfect, too. So say, if I am looking at a flight that departs at 8am, then a sumptuous breakfast rather than a generic picture might do the trick. I just flew from New Delhi to Toronto, Canada for this conference. I wasn’t shown the food menu hours before the flight as I checked in (may be it was there, but not in the check-in flow). But the moment I sat on my seat, the in-flight screen showed me the list for dinner and breakfast. This at least prepared for me what was to be served over a period of 14 hours!
2. Omnichannel experience: How can airlines lay strong foundation for the same? One of the prudent moves is to invest in robust API strategy. This will also ensure consistency in what airlines have to offer. Recommendations are generally based on historical or real-time interactive information. Airlines intend to interact with their customers and prospective customers through a variety of touch points and timeframes. APIs enable efficient connectivity to these various touchpoints and value aggregators can utilize these airline APIs to enhance their value creation to their customers.
3. Technology: The utility of IT infrastructure, especially in legacy carriers, is being questioned. Be it for merchandising or payments, it is often recommended that its time for airlines to change. For example, every payment method has its own underlying technology. Every mobile device has its own operating system. And then airlines’ legacy infrastructure wasn’t set up for alternate payment methods. “As for rewriting or migrating legacy infrastructure, we’ve learned from others in the industry that this is not a workable scenario. The best plan is to adopt technology that is modular in nature and can work as a stand-alone solution with scale and scope,” said a source. As of today, an alternative is to separate the core PSS capabilities, which are essential to running any airline, from technology that is enables true brand and product differentiation. Carries are opting to control their own merchandising, e-commerce and API technologies, using platforms that enable airline control, faster speed to market, and flexibility – and move away from solutions that are hard coded or community-model based, or tied to a particular PSS or channel. Airlines requires platforms that provides extensive business model control (rules based) plus strong product and channel management capabilities. These platforms must have a modular open architecture that fosters a partner eco-system for collaborations.
4. Being flexible to boost conversion: Conversions in digital commerce can take a strong beating if airlines aren’t flexible to let travellers buy the way they want. It generally takes lots of browsing sessions across various devices to complete one travel-related transaction. What if I am ready to share a date before which I wish to buy a particular travel itinerary – airplane seat, hotel, car rental etc.? Can airlines lead the process of offering me everything depending upon what all I searched for, originating from their website or mobile app? Or what about paying via Apple Pay? Have airlines been slow in embracing new payment options? If the customer elects Apple Pay, they wouldn’t have to worry about typing-in all of their cardholder information for each purchase; that data could simply be stored and recalled at will. As a result, customers would be less likely to abandon a transaction. Of course, this could also be a double-edged sword. There is a kind of balance between streamlining the process and encouraging customers to buy without first thinking through a purchase. As a result, this could lead to buyer’s remorse, which could mean returns or even chargebacks at a later date.
5. Digital enterprise: Every business needs to gear up for behaviorally targeted, device-agnostic, user-journey-centric experience. As Oracle points out, this “seems part science-fiction, part psychology, and part technology”! The pursuit of personalisation means gathering data, and collecting it, and then making the most of first party, second party and third party data. Also, there is a need to look at new platforms that allow entities to leverage artificial intelligence, machine learning and advance analytics. All of this also means investment. And this is where the difference also comes in when we talk of airlines vis-à-vis other sectors. While certain operational areas can be digitized, certain can’t be automated with the same pace. With technology becoming more pervasive, airlines need to digitize customer interactions. At the same time, all processes and staff involvement needs to be crafted accordingly.
Even as airlines look at digital commerce, like any business organization, they need to ensure they don’t spoil the customer experience One needs to ensure messages or ads don’t annoy a buyer, say post purchase communication. There is a need to use CRM, marketing automation or campaign management offerings to manage multichannel interactions. It can be a long journey, but a fruitful one too.
For tweets from our conference in Toronto, Canada (Oct 24 – 26, 2016) – follow #MegaEvent16
First Published on 11th October, 2016
Ai Editorial: As NDC moves along there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc., writes Ai’s Ritesh Gupta
IATA’s XML-based data transmission standard continues to be in the limelight.
While a section of the industry, be it for airlines, meta-search engines, GDS companies etc. is marching ahead with pilots and deployments, it is also being questioned whether a set of standard messages are sufficient, why to rely on only one standard in XML, or even can there be any better messaging format.
One way to assess the progress is to look into how various stakeholders are looking at projects using Offer and Order management messages whose schemas are compliant with the standard NDC message schema.
- How are things coming along as far as capability to receive and send NDC messages is concerned?
- How the schema from the airline will impact the established workflow?
It needs to be clarified that IATA certifies the messages, not the underlying architecture and processes or workflows.
· Schemas for shopping and, order management: There are schemas for shopping and, order management, and the end result is creation of Offer ID and Order ID, featuring order creation, ticketing, issuance, payment authorization and BSP reporting. So when we say different airlines have different objectives/ expectations from NDC, does it mean some are only working on schemas for shopping and, some are working on schemas for both shopping and order management? So yes, certain carriers may opt to go end-to-end; others may only end up controlling the offer and wouldn’t execute. Or, the execution on the offer becomes more of a tactical/ economical decision rather that a strategy decision. As per my recent interaction with Farelogix, the company has 20 airline customers that have adopted the NDC schema for the API that the team has built for them. The actual schema version will vary from baseline to 15.2, but all 20 are controlling and creating the offer (Offer Management). These airlines are creating and delivering just over 1.4 billion airline offers annually through their NDC API. (Not all offers are accepted and executed as tickets).
· Capability to receive and send NDC messages: It is vital to know how does the capability to receive and send NDC messages vary as per the version of a particular schema. Messages may change and improve with new versions thanks to the addition of new elements (e.g., sending video images) or enhancements to existing elements (e.g., split PNR improvement). Airlines will adopt new versions based on whether or not the newer versions address a required business need or if they simply want to update their version usage. In today’s world of deploying an NDC API between airline and intermediaries, there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc. So if an airline has deployed NDC schema version 15.2 and a newer version becomes available (15.4), then the airline would need to work with all their intermediaries that deployed version 15.2 in making the upgrade to 15.4.
· Connectivity issues: The biggest issues are in understanding the various workflows that have been established by a GDS or OTA and understanding how the schema from the airline will impact the established workflow. “It is also being prepared to make what we refer to as “implementation accommodations” to how the GDS or OTA want to utilize the specific schema elements. There is also the concept of the end user being able to “interpret” how a particular schema element is utilized. This is why it is very important for either the airline, or it’s developer proxy such as Farelogix, to have the technical resources (people, documentation, etc.) available to support an NDC API implementation,” says Farelogix CEO Jim Davidson.
In one of our recent articles, Amadeus stated that the whole industry and airlines in particular, are coming to the realisation that having a set of standard messages is necessary but not sufficient. “Connecting systems with these standardised messages is the easier part, but it takes a lot of knowledge and industry understanding to turn them into successful distribution tools. Most vendors underestimate the complexity of the integration part,” mentioned Hazem Hussein, Executive Vice President, Airline Group, Amadeus Asia Pacific, Turkey and Eastern Europe.
Dealing with different versions of schema is all about change management.
Airlines must learn how to build, deploy, manage and upgrade APIs in a way that streamlines the task of developers. Proprietary APIs tend to create “one-off” implementations that make repeatability more complex and therefore more expensive. Carriers also need to upgrade their internal systems to be able to support API-based distribution. So as carriers’ set up is gearing up to process all distribution-related transactions, it isn’t going to alter the inherent proposition of GDS, i.e. the reach they deliver to airlines. Rather they need to move on from being a transaction focusing company to a supplier of enterprise-like applications to the agency communities, based on the effective aggregation of hundreds of airline APIs. As for NDC certification, it needs to be mentioned that certifying one NDC message for one single ancillary service as part of the existing, opaque and flight-centric shopping process is easy. Leveraging the full scope of airline APIs to re-think the search and booking process and the experience delivered to users (whether they are agents or the end-consumer) is another story. Lastly, talking of online travel agencies and to a certain extent flight search engines, these organizations also have to consider their ‘flights’ offering. With carriers pushing more ancillary services as stand-alone or as part of fare families, it is imperative for online intermediaries is to evaluate how to make flight search and shopping more transparent.
How are airlines going about distribution of content via API connectivity, considering that different airlines and intermediaries can have different API gateways for exchanging XML messages?
Today there are IT specialists emerging as new aggregators and are also offering NDC adapters.
It comes down to the value proposition that can be created between airline and intermediary. NDC is really only the catalyst to enable this new value proposition. If the airline can send new and relevant content via an intermediary that can display and transact on this content better than another intermediary, then competitive pressure gets created which is beneficial for the entire travel supply chain.
Where is NDC headed in the next 12 months? Hear from senior industry executives at the upcoming 7th Mega Event Worldwide 2016, The Event for Loyalty, Ancillary & Merchandising & Co-Brands, to be held in Toronto, Canada. (25 -26 October, 2016).
Twitter hashtag: #MegaEvent16
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