Ai Editorial: Lufthansa-Hopper pact exemplifies airlines’ focus on agility and AI

First Published on 21st January, 2019

Ai Editorial: Such initiatives underline the changing approach – be it for swiftly responding to the emerging technology or aligning the entire organization and yielding results for various stakeholders, writes Ai’s Ritesh Gupta  

 

Lufthansa Group’s decision to go ahead with an artificial intelligence (AI) partnership with Hopper exemplifies the fact that airlines, as an industry, are increasingly finding ways to get associated with technology companies/ start-ups plus counting on AI in areas of pricing - demand forecasting, price sensitivity and willingness-to-pay at the O&D market level.

As shared by Lufthansa, this collaborative research project with Montreal, Canada-based Hopper is about predictive analytics models and flight-demand forecasting. The plan is count on AI to gain an insight into customers’ preferences to come up with personalized recommendations about additional services or upgrades. Plus, Hopper will work closely with the Lufthansa Innovation Hub to expand into the European market. The foray is slated to commence in mid-2019. Hopper states that it predicts prices with 95% accuracy up to one-year in advance.

Being part of the digital space 

Such a move is indicative of the fact that airlines are increasingly breaking the shackles of running a legacy business. One of the highlights of going for an agile transformation is to involve executives from the parent organization from early on. For example, in case of Hopper, the team counts on machine learning and AI to precisely forecast flight and hotel prices and offers its users personalized recommendations at the optimal booking time, as well as alternative travel offers. For this project, Lufthansa Innovation Hub is going to facilitate the collaboration with the Lufthansa Group’s revenue management and distribution specialists. This is indicative of the fact that respective experts from the core organization are involved very early on. The practice of handing over completed works from one silo to another is being avoided.

In fact, by setting up an investment arm, innovation unit etc. and letting these independent teams to invest, incubate new, stand-alone digital ventures or finalize any other strategic alliance, airlines are earnestly assessing and commercializing business opportunities in the digital space. Internally, it is vital to work out the apt blend of people, technology, data and analytics to be ready for digital commerce. Without doubt, the route taken to agility is an integral part of the overall transformation that also paves way for selling in today’s digital world.

As highlighted in one of the recent articles, an integral part of agile transformation is finalizing people with the right skillset, then nurturing creative, cultural and processual freedom to prosper. In case of Lufthansa Innovation Unit (LIH), more than 90% of its team is from the start-up ecosystem.

Airlines are gradually joining the bandwagon of a corporate investing in start-ups.

“Over half of all US billion-dollar startups are backed by a corporate VC,” Christina Heggie, Investment Principal, JetBlue Technology Ventures shared during Ai’s MegaEvent, held in Long Beach, California late last year.

According to Heggie, the plan of action of the organization is as follows:

·          Scan world-wide startup ecosystem for innovations impacting the travel industry

·          Incubate and invest in emerging startups

·          Bring new technologies to JetBlue

Investment focus

There are multiple areas where these organizations are currently investing in.

One of them is AI.

Be it for evaluating what motivates travellers to search and book a particular journey to targeting new revenue opportunities, AI is influencing decisions.

Companies like Amadeus are looking at ways to predict travellers’ choices, and also testing methods to assess real interactions with a website in real-time and act upon it. For instance, search inputs are congregated by resemblance, and that is worked upon with supervised learning, which indicates the probability of a search result to be booked.

Even for revenue generation, airlines are working on a data-driven approach for incremental revenue.

SAS exemplified the same recently via their context-based pricing approach for 14.5% raise in ancillary revenue for advanced seat reservations in the European market.

Working in conjunction with Amadeus, the initiative featured clustering and data analysis. They were applied to the airline’s European route network. AI was chosen to spot appropriate variables that affect the traveller buying pattern. By banking on machine-learning algorithms, SAS managed to focus on purchasing probability based on a given context. From this, the team worked out both pricing recommendations and the predicted impact on the sale of seat reservations. After a three-month long effort, 11 new pricing policies were finalized to offer the best price for a given context, according to Amadeus.

Such initiatives underline the changing approach – be it for swiftly responding to the emerging technology or aligning the entire organization and yielding results for various stakeholders.

Hear from experts about the role of AI and how it is playing its part in user experience optimization at this year’s Ancillary Merchandising Conference, scheduled to take place in London, UK (9-11 April, 2019).

For more info about Ancillary Merchandising Conference, click here

Follow Ai on Twitter: @Ai_Connects_Us

 

Ai Editorial: Adaptive enterprises play infinite game – are airlines ready for it?

First Published on 31st December, 2018

Ai Editorial: Airlines are finding ways to innovate and validate at speed. Ai’s Ritesh Gupta highlights what’s bringing about this change and why 2019 looks promising for the sector.

 

Are airlines evolving to serve their passengers the way they want to be served? Not just loyal flyers, but also other infrequent or even leisure travellers, who possibly could be boarding the aircraft for the first time. Are airlines set to break the shackles, drifting away from the approach of being process-centric?

It isn’t easy for carriers to evolve - for instance a top airline in the U. S. tends to have over 100,000 employees and not a straightforward task to embark on the journey of agile transformation, work out a data-driven culture or amend their indirect distribution and IT set up. Expectedly the total number of airlines coming up with exemplary moves might not be too attractive at this juncture, but considering the ongoing journey of Lufthansa, American Airlines, Air New Zealand, JetStar, Etihad etc., it is clear that the last year or so has brought about a positive change.

Refreshing approach

“Our team is playing an infinite game. We are focused on making decisions and building the long haul,” this is what an executive from American Airlines told me in an interview in the second half of 2018. “Adaptive enterprises survive and thrive to play the infinite game – adapt to the changing IT practices which ultimately results in code and execution quality responsiveness to market changes.”

When such organizations refer to cloud computing for scalability and high availability, software delivery changes (for example, a minimum viable product or test driven development), Dev Ops tooling and practices that improve code quality and speed of deployment etc., it means airlines aren’t going to be shackled by traditional ways of running an enterprise.

Transformation is reflecting in areas, where the passenger experience generally has been stifled by old methodologies.

An example of this being American Airlines working out better self-service capabilities in the event of a forced rebooking due to a cancellation or a major delay. This initiative meant refraining from allocating a new flight and seat to travellers in case of a major disruption. The goal was to let travellers be in control. Rather than travellers moving around and looking for a touchpoint to sort this out, shifting legacy customer-facing applications to the cloud ensured that travellers are now being offered a choice of replacement flights through the channel of their choice. Travellers can check and update their flight selection via the website, mobile app or at a self-service kiosk. This project involved the concept of a minimum viable product, use of microservices, test-driven development etc.

Adding new skill sets

An integral part of agile transformation is finalizing people with the right skillset, then nurturing creative, cultural and processual freedom to prosper.

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

Also, airlines are focusing on recruiting staff related to the areas of engineering, growth, data science, and product. Then teams operate together as much as possible. They deliver very fast results, ensure teams are never afraid of trying new things and are offered ownership and independence in their functioning.  

Being ready as an organization

Managing infrastructure and domain-specific IT systems for retailing, real-time data intelligence, running a digital asset on purpose-built, multi-cloud set up, payment optimization etc. are among the initiatives that airlines are undertaking to keep pace with their customers in digital economy. But all of this wouldn’t really deliver till internal alignment is sorted.

Airlines acknowledge that it is extremely tough for an airline highly focused on safety and therefore naturally risk averse to transform immediately to one that has the risk appetite and agility of a startup. There are ways to gear up for the same. In case of Etihad, it is running two tracks simultaneously - one for running the organization as usual and one for innovation. Once a structure is finalized for agility, then the chosen teams make progress by counting on the talent and efficacy of self-organizing cross-functional teams. Agility is considered to be a mindset. Companies like Kiwi.com look for honesty, transparency, openness, ability to quickly adapt to a constantly changing environment, passion for travel, efficiency, willingness to fail fast and improve in their employees. Such approach can pave way for data shaping up critical decisions (Read more: Understanding the data journey of Jet Privilege).

 

For Ai’s 2019 Events, check - www.aieventdates.com

Follow Ai on Twitter: @Ai_Connects_Us

 

Ai Editorial: Understanding a traveller’s emotion – what to expect in 2019?

First Published on 24th December, 2018

Ai Editorial: Capturing emotions-related data resulting from face-to-face human interactions has still some way to go. This means that the profile of a traveller, even as airlines move towards analytics-driven personalization, won’t be complete, writes Ai’s Ritesh Gupta

 

How a traveller feels about a brand, post shopping for a trip and the actual travel journey? Travel e-commerce players strengthened several initiatives in 2018 to excel in this arena – running an enterprise-wide data platform, garnering data in real time or at regular intervals, counting on data science skills and data visualization tools etc.

But is all of this enough to know how a traveller felt after a particular interaction or experience?

The industry is far from it at this juncture.

On the positive side, ongoing focus on sentiment analysis or evaluating the scope of smart sensors (that allow users to track data such as heart rate, skin temperature, and activity levels on connected devices) were important developments. As we highlighted in one of our articles earlier this year, the blend of artificial intelligence, cognitive computing and emotional data could well lend a new dimension to ascertaining how a traveller “feels” and accordingly delivering the best possible customer service or an ad or a digital experience.

Some areas such as progress in technology is opening new avenues. Facial coding or voice analytics are expected to help in understanding how travellers feel or what their intent is. But looking at in a pragmatic way a massive gap in the whole exercise can be attributed to lack of all of the data.

Lack of data

Even as travel companies can gain consent from users on their digital asset and avail bio-analytics technology (e. g. understanding an emotion as one is browsing travel packages on a website via heart rate variability), a major hurdle that is seemingly slowing down is the lack of emotional data from the offline world.

It can be described as the next frontier. Technology is constantly improving, but companies aren’t yet clear with data privacy-related issues. For example, in case of airlines, the day of travel or the airport experience is where the consumption of the product commences in a tangible manner. There is interaction with the staff at the airport. This is where a passenger shares certain experiences or even the expectations of the journey. Now can this be captured? Yes. The technology is in place. There is an opportunity to avail a voice recognition tool to analyze and record a spoken conversation. This can be useful for airlines considering the typical fast-paced environment (marked by limited time period for each passenger) of an airport.

A senior airline marketing executive shared that their organization is “quite far from” capturing emotional-data emanating from an offline environment. “We don’t capture conversations at the airport. Being clear with customers about what data is being collected is important,” the executive said.

Clearly till the time global brands are sure about new data-related regulations, be it for GDPR in Europe or China Cyber Security Law, they can’t get closer to capturing all the interactions and analyze the same. It isn’t as easy as seeking permission for sending email or acceptance of cookies on a website.

Capturing emotions-related data resulting from face-to-face human interactions has still some way to go. This means that the profile of a traveller, even as airlines move towards analytics-driven personalization, won’t be complete. It would be worth knowing how travel brands crack this, considering that an organization has to make the most of every interaction – be it via a digital or offline touchpoint – to serve their customer in an earnest manner.

 

For Ai’s 2019 Events, check - www.aieventdates.com

Follow Ai on Twitter: @Ai_Connects_Us

Ai Editorial: From being NDC-ready to implementing it - how IATA is focusing on it?

First Published on 7th December, 2018

Ai Editorial: IATA has been evaluating the performance of NDC - what is missing to attain 20% sales-target that is going to be powered by NDC by 2020? What is the roadmap of an organization’s NDC IT deployment? Ai’s Ritesh Gupta assesses new initiatives related to the standard.

 

The way IATA’s New Distribution Capability (NDC) standard is shaping up is a keenly followed topic in travel distribution. Be it for the volume of the business that is being facilitated by the NDC standard to focusing on NDC-compliant IT systems to assessing the readiness of airlines, intermediaries, IT specialists etc., it is fascinating to assess progress made by various stakeholders. 

Amidst all the discussion around industrialization of the standard, one of the recent developments has been the addition of new certification levels, planned for early next year.

First, Level 4 will feature Servicing Messages.

Second, organizations having a minimum set of recognized capabilities to drive volumes of NDC transactions towards 2020 are going to be awarded NDC@Scale.  It is based on four main elements that are important to quantify the capacity to scale to volumes of NDC transactions:

•          Technical setup (ability to run an NDC API on Service Level Agreements (SLA) with performance requirements for areas such as response time, availability, available transactions per second, error management, etc.). 

•          Organization setup (work on support needed to connect new partners and to run the operation).

•          Use cases (consider the implementation of standardized messages workflows across the industry).

•          Capabilities (consider the coverage of key features (Shop, Order/Service/Pay) powered by an NDC API and the ability for airlines to replicate some features currently possible through the traditional channels (GDSs) as well as the ability to provide additional content).

New certification for measuring progress

IATA will start recognizing the ability to have servicing messages in place through its NDC certification program with a new level of certification (Level 4) starting next year.

These initiatives are surfacing as IATA has been evaluating the performance of NDC - what is missing to attain 20% sales-target that is going to be powered by an NDC API by 2020? What is the roadmap of an organization’s NDC IT deployment?

Referring to IATA’s certification prior to the inception of Level 4, Ryan Harris, Director at JR Technologies’ Research and Development Centre in Dublin, says, “Under the previous certification method, it didn’t necessarily mean that NDC was being implemented, even though one could be NDC-ready. For NDC messages, entities could use it – issue it or consume it – but the real usage was not truly relevant to the certification level. New certification system helps to make true adoption a  measure – is NDC being executed? The co-relation to the actual adaptation of NDC was lacking in the previous structure.” 

Highlighting the significance of Service Message Requirements, he said these are for cases where there is an order. “Within the NDC certification process, Levels 1, 2 and 3 mean that an entity can create an offer, take the offer and create an order from it. Service Messages come into play when you need to change the order, modify the order, delete the order – do anything to that order after the order is created. It is no longer just about sending or not being to send the message, but is the message being used to do what the message intended to do?  Part of it will come into ONE Order certification, which is expected to commence in January. It will be similar to NDC certification – again, helping to show whether ONE Order is being used or not,” explained Harris.

JR Technologies’ NDC platform has been powering InselAir’s Internet bookings since September this year.

“We also worked on [Curacao-based airline] InselAir’s successful ONE Order pilot – where we created orders and boarded passengers without issuing tickets or creating PNRs -  for our joint public presentation with InselAir, JR Technologies, Airline Choice, and IATA in Athens in early October,” shared Harris.

There have been discussions around the utility of the NDC standard 17.2 vs. 18.2. Harris pointed out that with 18.2, the mapping of messages using the IATA Airline Industry Data Model (AIDM) is complete, as well as the including of ONE Order messages, the latest version is a complete end-to-end standard.  Adoption would be dependent upon the individual use case and the expenditure involved, but it is a question when, not if, the NDC and ONE Order processes will become the operating standard in the industry. 

Targeting “mass” adoption

IATA is proposing to airlines an implementation plan revolving around two key phases. In the first one, airlines would focus on basics of their NDC implementation mainly their API connectivity and their Offer and Order Management system with basic functionalities and product and services. The competences finalized are primarily replicated from the traditional channels (GDSs). During this period IATA suggests that airlines pursue the criteria chosen for NDC@Scale that underline the minimum required capabilities to initiate processing high volumes of NDC transactions.

In the second phase actual benefits surface as airlines start executing supplementary capabilities (such as dynamic pricing, rich content, personalization etc.) that are facilitated by NDC. Plus, during this phase, airlines will be in a position to propose enhanced content in the form of new products and services and new shopping experience for sellers and customers. Ultimately, this roadmap will be driven by customers’ needs i.e. the travel trade, the buyer and the needs of the traveler (business and leisure), according to IATA.

 

Hear from experts at the upcoming Ancillary Merchandising Conference to be held in London 9-11 April, 2019

Follow Ai on Twitter: @Ai_Connects_Us

 

Ai Editorial: 5 areas to evaluate for mobile app development and analytics

First Published on 29th November, 2018

Ai Editorial: UX- and tech-savvy companies have set a new benchmark in mobile product development and analytics. Ai’s Ritesh Gupta looks at 5 areas.  

 

The practice of maintaining and running a mobile asset has evolved considerably. Be it for working on a code that runs natively on Android and iOS or iteration speed coming down from minutes to a matter of seconds are excellent examples of how UX- and tech-savvy companies have set a new benchmark in mobile product development.

Significance of mobile can’t be underestimated, but organizations have to be nimble to drop and pick new ways to optimize mobile product development and analytics. Do you know Airbnb has decided to move on from the technology/ approach it had chosen for the Experiences offering a couple of years ago?

“Mobile is not only reshaping the customer journey of today, it’s rebooting the entire travel experience in the process,” this is what Travelport Digital’s Regional Sales Director, Jim Nation, mentioned at the recently held Ai’s MegaEvent in Long Beach, California.

This means airlines have to dig deep to understand the intricacies of mobile. One critical aspect is mobile devices are oftentimes the primary or only form of communication while travelling. So it is important to not only provide passengers with transparent information during the booking process, but also proactively coming up with real-time information directly to their device of choice – be it for flight departure time and gate updates, information about baggage carousels and public transport upon arrival etc.

As an airline flying into several countries, JetStar is trying to test and learn across different regions to understand which products or services should be supported on mobile depending on the mobile take up and travel habits of customers in different countries. For instance, capitalizing on push notifications for personalized or integrating payments to mobile devices.

We explore some of the developments that show how progress is being made in this arena:

1.     Supporting agile processes: As airlines empower autonomous teams and embrace DevOps (supports effective collaboration between teams), approach to monitoring needs to evolve as well. Accordingly, savvy organizations are refining their respective DevOps workflows via a productive set of APIs and SDKs. Eventually a key objective is to capitalize on the data to sort errors, continuous software delivery, enhanced customer experience etc. and drive the performance of mobile assets.

2.     App development: The industry has been assessing mobile development programming languages for cross-platform compatibility, responsiveness to different screen sizes etc. Digital commerce specialists need to open up mobile development to more engineers as well as ship code rapidly by leveraging cross-platform nature of any approach that is chosen. In this context, the industry has been assessing mobile development programming languages for cross-platform compatibility, responsiveness to different screen sizes etc. It is vital to evaluate what enables product engineers to work effectively. In case of Airbnb, the team chose to drop React Native this year, and there were conversations around React Native vs. NativeScript approaches (these approaches provide a series of cross-platform JavaScript APIs for common mobile tasks) to app development. Airbnb also indicated that every company or the specific team should look at their requirements and accordingly decide on app development. It was React Native on which Airbnb had counted on to introduce Experiences, an entirely new business for Airbnb.

3.     Right SDK: Mobile app analytics software developments kits (SDKs) are integral part of understanding the user behavior and overall app performance. But it doesn’t mean that travel companies can overlook the safety issue associated with analytics SDKs.  One aspect is handling of users private data and whether the same is resulting in breaching of a store’s privacy policy. From a performance perspective, specialists point out that SDKs can slow down an app, result in errors or crash, too.   

4.     Data-driven analysis: Mobile specialists also recommend constant action on behavorial data collected to better understand specific customer profiles and journeys. Emphasis is on the use of digital devices of selected people for data-driven analysis.

Travelport recommends delving into why things happened the way that they did. Also, focus on preempting what might happen in the time to come and also automating decisions and actions to deliver the best possible outcome at each user interaction.

5.     Product management analytics: mixpanel is a recent blog post mentioned that goals, key performance indicators (KPIs), and metrics aren’t the same and are often interchanged. Once teams select their goals, they can determine the KPIs and metrics that support them. Transaction and engagement metrics are two common product management metrics. And to understand metrics, product specialists can rely on segmentation (segregate users by the traits they share, such as behavior), cohort analysis, retention and funnel analysis.  

 

Follow Ai on Twitter: @Ai_Connects_Us

 

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

First Published on 15th November, 2018

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

 

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

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

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

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

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

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

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

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

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

Challenge for indirect channels  

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

Follow Ai on Twitter: @Ai_Connects_Us

 

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

First Published on 6th November, 2018

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

 

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

What can airlines learn from the same?  

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

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

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

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

Being part of open travel system 

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

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

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

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

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

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

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

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

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

 

For Ai’s Events, check - www.aieventdates.com

Follow Ai on Twitter: @Ai_Connects_Us

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

First Published on 31st October, 2018

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

 

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

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

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

 

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

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

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

Showing the way

JetStar's approach stands on a couple of counts:

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

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

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

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

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

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

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

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

Meeting passenger's needs going forward

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

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

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

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

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

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

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

 

By Ritesh Gupta

The Ai Editorial Team

 

Follow Ai on Twitter: @Ai_Connects_Us

 

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

First Published on 29th October

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

 

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

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

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

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

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

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

New skillset, new ways of functioning

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

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

 

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

Making the most of investment

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

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

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

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

 

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

Follow Ai on Twitter: @Ai_Connects_Us

 

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

First Published on 25th October, 2018

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

 

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

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

Real-time decision-making

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

Follow Ai on Twitter: @Ai_Connects_Us

 

Editorials

  • Ai Video: Curbing loyalty fraud with machine learning +

    12th December, 2019 Airlines are looking at ways to curb illegitimate access to a member's loyalty account and resulting imbalance in a member’s spending or reward activity owing to hacking. Considering Read More
  • Ai Video: Nurturing loyalty via positive emotion of being rewarded +

    6th December, 2019 Airlines are evaluating ways to sharpen their respective loyalty cycles, i. e. letting a member earn and burn faster. What makes the game interesting today is how Read More
  • Ai Editorial: Gearing up for the era of automated personalisation +

    4th December, 2019 Ai Editorial: Personalisation models in e-commerce are not only looking at aspects like predicting a visitor's likelihood of conversion, but machine learning deployed to match different offer Read More
  • 1
  • 2
  • 3
  • 4
  • 5