First Published on 28th January, 2019
Ai Editorial: The lure of banking on data sources and artificial intelligence to vastly improve on pricing for all channels in real-time can’t be ignored. But how can airlines, associated with the concept of booking classes and published fares over the years, take a vital step, probes Ai’s Ritesh Gupta
Calculating the availability of a seat in real-time and pricing what is to be offered accordingly is one of the most intriguing facets of the overall offer optimization.
The prevalent inflexible cabin structure or reservation booking designators is being termed as an irrelevant way of functioning in today’s digital era. As IATA asserts, every possible grouping of “service, price, conditions and customer restrictions are issued” by the carrier prior to any request even being made. These are then chosen and utilized at the time an offer is priced. The industry is attempting to overcome limitations, including the number of price points offered.
In fact, what airlines can offer isn’t just about a seat or an air ancillary. Dynamic Offer refers to a defined set of products and services, with a defined set of conditions, offered in real-time, on a one-time basis, and, in response to a request. IATA states it features contextualized and relevant offers, referencing who is making the request, Total Offer Management of both flights and ancillary products, and continuous price points.
What is being envisaged is – working on continuous pricing (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) and dynamically managing the offer (including ancillary offerings; to dynamically working out several bundles, promotions and offers). There have been discussions around drifting away from distinct inventory and pricing processes, capitalizing on data sources not being counted upon and eventually banking on the prowess of artificial intelligence. Sophisticated retailing entails AI-enabled dynamic pricing, and this encompasses all channels, with the same for indirect channels being facilitated by NDC standard as airline would respond to every shopping request with a tailored offer. Since AI’s efficacy depends on the availability of the input data, capturing and processing of the data is key.
So where does the industry stand today?
On one hand the industry is making progress, with travel technology specialists working on industry-specific systems that bank on behavioral economics and artificial intelligence (AI) algorithms and IATA’s standard NDC envisioning up all offers being crafted from airlines’ Offer Management System with no filed fares to be used. There are offerings that work in conjunction with both ATPCO-based fares as well as non-ATPCO fares managed directly by the airline. On the other, the decades old methodology of pricing an itinerary, for instance, in case of two full-service carriers combining to serve a passenger means that taking a big leap isn’t a straightforward task.
“Dynamic pricing is very complicated. There are a couple of pilots at this juncture (pricing engines with such capabilities starting to emerge or being developed today). The industry is getting closer, with specialists getting ready for implementation,” shared a source. “Implementations have different aspects to it though. Considering that an airline has a large portion of revenue being garnered via a GDS or features an interline partner (since airlines currently publish fares to specialized organizations managing fare and rule data which is accessed by entities like GDSs), then it would need filing of fares of pricing an itinerary. It's difficult to collaborate with interline and codeshare partners on joint itineraries. The indirect distribution systems rely entirely on booking classes and published fares. It would take a while for dynamic pricing to take full adaptation into the industry.” This aspect can’t be ignored as current functioning is deeply entrenched, since booking classes also feature in many associated processes - in corporate travel contracts, agency agreements, and interline and codeshare agreements.
One big leap
So what can be the turning point?
The executive explained: “It would take one of the biggest alliances to do this. That would give a critical mass to dynamic pricing.”
“Airlines, as an industry, are unique in a way. They work with competitors to complete an itinerary of a passenger. If one airline can do dynamic pricing and the other can’t, then the former has to go to the lowest common denominator, which means it can’t be done. If both can do it, then dynamic pricing would attain depth. Till the point 2-3 big airlines move deeply into this, partnerships get formed with a certain level of sophistication, filing of fares would remain (for a considerable period of time).”
Retailing for airlines as desired in today’s digital era requires negating several challenges, and the list includes distribution and technological-related ones for all airline commercial systems. Other areas include change management, people with the right skill set and approach (for instance, growth mindset), and training people. But such transformation won’t be easy, considering reliance on booking classes and published fares. Also, as IATA also acknowledges, the implementation of Dynamic Offer Creation involves a parallel transformation within distribution and internal systems that will necessitate a different outlook and considerable financing in the time to come.
Hear from senior industry executives about the retailing and NDC 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
First Published on 23rd January, 2019
Ai Editorial: API connectivity isn’t new but airlines need to dig deeper while working on technical considerations and designing of APIs, writes Ai’s Ritesh Gupta
The battle for capturing data trail of consumers is an intriguing one. Making the most of 1st party data is imperative for every retailer, but considering the prowess of 3rd party biggies and travel intermediaries, airlines have to ensure they are ready to serve their traffic in the best possible manner.
Rather just relying on a handful of 3rd party sources for traffic, airlines have to collectively support fragmented distribution.
In this context, the role of APIs in sustaining agility and leveraging one's own data is under scrutiny.
"An API is just about moving data," mentioned Kevin O’Shaughnessy, CityHook, during one of Ai’s workshop in Long Beach, California recently.
Few recommendations from O’Shaughnessy:
· First rule of setting up an API is focus on it internally (organizations can run better with their own APIs. This way they can capitalize on data from their business applications and act on it for particular needs), then limited public API and eventually privileged services.
· API means 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.
Traditional ways of selling are being challenged and displaced by ecosystem models in which organizations compete and collaborate across multiple fronts. Organizations are gearing up to 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. API connectivity isn’t new but airlines need to dig deeper while working on technical considerations and designing of APIs.
Few considerations for airlines when it comes to API strategy:
1. Open API: Airlines are working on 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 major one being the danger of losing out on owning the customer experience. But APIs are being designed 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.
An established carrier, in an interview with Ai, acknowledged that their open API could be used in several foreign markets including China, except the booking capability (which is being only trialed in a certain market).
This restricted approach in China, for instance not introducing booking capability via open API isn’t surprising considering the hurdles - there is a language barrier, a broad domestic ecosystem of potential API users that follow different approaches when developing digital platforms and end-consumers with China-specific consumption characteristics. “Although travel is a global game, we do not believe in simply extending existing offerings made in our local market, but in thoughtful tailoring to the local needs with our distribution colleagues that have a substantial knowledge of this important market,” shared a senior executive working with the same airline.
2. UI-level API: There is an opportunity to boost the conversion rate via user interface (UI) level API. Specialists recommend offering a combination of both XML or server side request and UI widget. This means full UI all the way down through the technology stack is provided. The reason: when the UI and code associated with it enables one to continuously optimize the business and improve upon the attach rate along with the revenue metrics for that business which can be airline or any B2B partner that is taking the booking from travellers. In case, airlines use their own UI and only use B2B partner’s API, the partner may not able to influence the optimization of that UI.
3. Supporting APIs with data processing: As for those airlines trying to support distribution via their own APIs, one shouldn’t underestimate what it takes to adopt and execute on a strategy of NDC API distribution. They need to sharpen their data processing capabilities in order to process in real-time the potentially huge volumes of valuable search data from NDC APIs. Airlines need to collect and process the recent search data across all their channels. They also need to have appropriate skills to analyze 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, analyze the outcome and adjust. In a NDC world this becomes dynamic.
Hear from senior industry executives about the role of APIs 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
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
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
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.
“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
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
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
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.
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
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
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
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