First Published on 28th August, 2018
NDC schemas supporting a consistent interpretation of the standard, the availability of an implementation guide to support use cases and no need for one to rework on their processes after implementing the 17.2 version have strengthened the case for going ahead with NDC, writes Ai’s Ritesh Gupta
Amadeus has been working on plans to industrialize IATA’s New Distribution Capability, an XML-based data transmission standard.
Focusing on the collaborative route to take the standard forward, the group has signed a spate of agreements in the recent past, including ones with American Express GBT, American Airlines, Carlson Wagonlit Travel (CWT), and BCD Travel in a span of a week. The involved entities are focusing on new use cases for authentic standardization via a test and learn approach.
This route adopted by Amadeus is significant as requisite modern retailing capabilities can only be built on top of the NDC protocol provided it responds to travel providers and sellers’ needs. Amadeus acknowledges that progress made with the version 17.2 in terms of bringing into line the Offer and Order structures in the NDC schemas has set the tone for a dependable understanding of the standard.
“The industry today (when it comes to NDC) is far ahead where things were a year or two ago,” said Gianni Pisanello, VP, NDC-X program, Amadeus.
Laying a solid foundation for various stakeholders
Pisanello underlined progress on three counts.
With the standardization of the schema and the flow as well, is it a case of curbing innovation?
Disagreeing with the same, Pisanello said, “In fact, it is the reverse. By having a standard in place, the industry can create a lot of flexibility and creativity on top of it.” He referred to the role of 4G on top on which mobile apps such as Whatsapp or WeChat were crafted or the Internet which eventually witnessed the entry of Facebook. “Similarly, once NDC is established, the standard will enable the travel industry to innovate much faster how travel is sold and bought.”
Among the set of objectives, a key aspect of Amadeus’ NDC-X program is to ensure that NDC content is easy to access and compare. Initially, the focus is on a simple flow of “shop, order and pay” using the NDC standard. “Post this, the plan is to include the servicing capabilities that travel agencies need, such as the ability to change tickets, or to add ancillaries,” shared Pisanello.
“Once the schema and the standard are in place, airlines have to implement all the right features for the travel agency to do their job i. e. to fulfill the work and provide services to their travellers. Airlines not only need look at content and product offerings that they offer on their respective digital assets, but also at other areas that agencies need for their association with travellers. So in addition to shopping and booking functionalities, but they also need to incorporate vital features such as re-shopping capability,” explained Pisanello.
He added that another critical aspect of NDC would be the performance of airlines’ systems that can handle search requests coming in from various indirect channels. “A sub-second respond (from an airline) would be critical and if this doesn’t happen in the NDC framework then airlines would lose out (be not being present when an intermediary produces results when a user searches).” Airlines are looking for systems that are interoperable, scalable and flexible, unlike proprietary applications used in the past. “We can deal with it (performance required from systems). We are operating on open systems. Our systems have developed real-time capability to process every shopping request, for instance, managing availability of seats in a particular fare class at a given point of time,” stated Pisanello.
Optimizing the offering for travel agencies
As for the workflow of the agencies, Pisanello mentioned that Amadeus from the early stage of its involvement in NDC conveyed it to IATA and airlines that if NDC is going to be tough for agencies to adapt then it can’t be industrialized. “(In such case) it won’t prove useful for high-volume transactions environment,” he said. “Now we see a number of airlines being committed to the same – American Airlines, Qantas, British Airways etc.”
“An aggregator continues to bring together suppliers’ content via a platform to agencies. We can deliver reach and sale whosoever the provider is. With NDC, the industry is upgrading capabilities – airlines working on personalization, relevant offers; aggregators can build offerings on top of NDC content and combine it in new ways; and agencies are essentially retailers. Agents would have varied content, along with their layer of personalization they would have strong opportunity in servicing their customers better,” mentioned Pisanello.
He added that it is important to understand the productivity of the agencies. “What sort of content is needed? There is a difference between the B2C and B2B environment. Whom are we servicing? It isn’t about putting the same content, even different agencies need different content. NDC has been created for agencies. Airlines can’t manage 100% of distribution via their .com or apps. The agency channel is a vital player in this mix, and who would facilitate and serve them the best is an area of expertise as well,” stated Pisanello, who added that NDC shouldn’t be clubbed with the commercial strategy of airlines, be it for the introduction of a surcharge or offering NDC commission to agencies. “These would have happened anyway. They are more of a function of certain carriers’ size and operations in a certain market,” pointed out Pisanello.
Pisanello expects existing infrastructure using EDIFACT and the one based on NDC to continue for years.
Amadeus is working on its web services product. It will aggregate NDC and non-NDC content, and this product is scheduled to be in production for piloting by online travel agencies. It will then be industrialized and enhanced with servicing capabilities. Worldwide deployment is being targeted in the first quarter of next year.
First Published on 24th August, 2018
Ai Editorial: IATA’s NDC standard and ONE Order for product service delivery have an opportunity to partner with OpenTravel to be driven more holistically by working in conjunction with other verticals, asserts Matt Blackmon, OpenTravel Board Executive.
Undertaking one travel trip tends to involve offerings from various suppliers/ intermediaries, featuring ground transportation, flying with an airline, accommodation, car rental, tours etc. Even though travel e-commerce players have been expanding the basket of their offerings (for instance, airlines not only offer a seat and air ancillaries, but also offer other travel products), there are still gaping holes that need to be taken care of across the planning, booking and consumption phases of any travel journey.
And for this various travel verticals jointly need to find a way to streamline the entire experience.
“No one entity owns the customer today. The industry needs to look at a traveler’s journey holistically,” recommends Matt Blackmon, Client Solutions Architect, Switchfly and OpenTravel Board Executive.
Posing a pertinent question, Blackmon asked: Even as airlines are looking at modernizing their retailing and distribution capabilities via IATA’s New Distribution Capability, can the same standard be used for booking a hotel room? “NDC is an airline-specific standard. At this point one cannot sell a hotel room with NDC. OpenTravel’s Hotel 2.0 electronic message structure interacts with NDC as witnessed at hackathons.” Blackmon pointed out that the NDC standard and ONE Order for product service delivery have an opportunity to partner with OpenTravel to be driven more holistically He mentioned that the travel industry needs to focus on maintaining interoperability for disparate systems in all segments of the travel industry.
Blackmon highlighted that OpenTravel diligently assesses the impact of every travel vertical in the journey of a traveler and has impacted the speed to market for this not-for-profit association, which publishes specifications twice a year. “OpenTravel, hotel industry associations (HTNG,HFTP etc.), IATA…all the bodies need to work together, in conjunction, and OpenTravel can leverage it’s 20 years of expertise of evaluating the process of interoperability and streamlining connectivity so that all business partners thrive. Airlines are evaluating the messaging protocol/ interaction and assessing how it would work in sync with other verticals in this industry. IATA NDC and OpenTravel are working together to find opportunities of doing just that so and evaluating cross-standard synergies.”
Making it happen
There are a couple of areas that must be focused upon for this kind of industry-level collaboration to work.
· One would be how to pass personal information of a customer in a secure manner.
“OpenTravel has discussed exploring the option of blockchain technology with multiple organizations across verticals. Not only for payments, but also for passing personal or storing information about a customer via smart contracts (to govern the access to such critical information). A key development going forward would be the participation of various associations, representing various travel verticals,” mentioned Blackmon.
· Second, what sort of information can be shared among two suppliers that mutually benefit both in terms of servicing the customer (and even in a cross-sell for monetary gains)? At the same time, how to ensure that the comfort level of a supplier as far as sharing of critical data (for instance, 1st party data or data that contributes in working out a profile of a traveler) isn’t disturbed?
Blackmon pointed out that if an itinerary has several suppliers, then how can the data be shared to ensure value is added to the entire journey of the trip. “As an industry, we need to look outside of our own verticals and be open to sharing information to deliver a superior passenger or guest experience,” he said. “If you have a travel product/ service on ONE Order, can you see other (travel) products as a supplier?” He also underlined that areas pertaining to where data is being hosted and who all can have access to data are areas that need to be considered as part of the ONE Order initiative.
Owning an experience
As of result of such collaboration, the travel industry can look at owning the experience, rather than owning a customer in a fragmented manner.
“The travel industry if compares itself with the likes of Amazon or Uber, then it needs to learn how to market, personalize and create experiences. That’s what the latest generation wants. Uber capitalized on an opportunity that was around differentiating the interaction and elevating the experience in transportation. The industry should own the experience, akin to what Amazon focuses on. Amazon doesn’t own the distribution for everything that is has to offer. Rather it manages to push economies of scale and scope not only within their proximate company’s boundaries, but outside of it, too, by capitalizing on digital channels to build an ecosystem of buyers, partners and suppliers.”
By Ritesh Gupta
Matt Blackmon, Client Solutions Architect, Switchfly and OpenTravel Board Executive, is scheduled to speak at the upcoming Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 21st August, 2018
Ai Editorial: Other than assessing how the NDC standard is gearing up for industrialization and mass adoption, there are plenty of areas that are demanding attention for airlines to optimize indirect distribution, writes Ai’s Ritesh Gupta
Airlines are increasingly counting on NDC to share their rich, distinctive product data with their indirect distribution partners.
This XML-based data transmission standard is paving way for airlines to make the offer once a request comes in along with the possibility of differentiating their brand through bundling and unbundling.
Other than assessing how the standard is gearing up for industrialization and mass adoption, and ensuring relevant functionalities are in place for the benefit of the agency partners as well as travellers, there are plenty of areas that are demanding attention.
As the traffic comes in from the indirect channels, airlines can optimize their products. And for this carriers have to refine their XML data processing capability. This is important in terms of letting multiple data sources or traffic from an NDC system to be captured and processed for key IT and business data content that can then be fed into corporate business intelligence environment. Airlines should target actionable information from data projects based around technologies such as Kibana/ELK, Kafka etc. They have 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 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 continuously improving process of set the rules, analyse the outcome and adjust. In a NDC world this becomes dynamic, according to Triometric. Overall, by counting on search data (for who is searching or travelling, what their travel intent is, where they are in their planning/booking process, what might be of interest to them etc.), an airline can differentiate their offering.
Also, in order to optimize indirect distribution, airlines need to enhance their retailing, booking and servicing capabilities for their trade partners. For instance, Qantas chose to introduce a new platform to make its offers more attractive at the point of sale. This way the airline has worked out a mechanism to share images of cabins and meals, and also lets them offer air ancillaries such as extra legroom seating. The Australian airline availed the NDC standard and API technology to extend the capabilities, already worked for its own website, to travel agencies. This ways Qantas has gone beyond price, schedule and availability to craft better offerings for the indirect channel. From travellers’ perspective, there is recognition of the Frequent Flyer tier status, Qantas published and eligible private fares, branded fare rules, better servicing etc. It must be added that in this case the airline hasn’t worked on any graphical user interface.
Another area of consideration should be API connectivity. It isn’t new but airlines still need to dig deeper while working on technical considerations and designing of APIs. 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.
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
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First Published on 17th August, 2018
Ai Editorial: Buoyed by the introduction of version 17.2, IATA’s NDC standard is set to eradicate concerns pertaining to too much flexibility in the schemas. The promise of no fundamental redesigning of the schemas is a positive development, writes Ai’s Ritesh Gupta
The adoption rate of IATA’s New Distribution Capability or NDC has been under scrutiny over the last couple of years. As it turned out, too much flexibility in the initial versions of schema and implementations not being the same was one area that needed to be sorted.
The last year or so has propelled the status, especially with the introduction of NDC 17.2.
“It has set the tone for industrialization and mass adoption of the standard,” said a senior executive associated with a travel technology company.
NDC 17.2 (which refers to second update in 2017) has strengthened the initiatives that started last year.
It has made progress in terms of bringing into line the Offer and Order structures in the NDC schemas to pave way for a dependable understanding of the standard. There have been enhancements to Shopping, Seats and Order Servicing capabilities. Another highlight was the deriving of the maiden data structure from a new Airline Industry Data Model (AIDM). “Progress has been made in terms of functional capabilities (that streamlines the workflow for the travel agency channel) and along with this added features are going to be based on the data model (an infrastructure undertaking for supervising the advancement of messaging standards development capability at IATA). This would help in further evolution of the standard in an automated manner,” said a source. The data model is expected to augment interoperability across the sector. Also, it will result in faster time to market of new or changed data exchange standards and relatively quicker utilization of the standards. Also, according to IATA, there has been removal or renaming of messages and additional schema enhancements and technical cleanup items.
No fundamental redesign of the schemas
According to IATA, the maiden message associated with the data model that appeared in 17.2 was related to Baggage Logistics and Conformance Services.
Release 18.1 contains new models for Offers, Orders, and Seatmap delivered by the NDC AIDM Alignment project as well as models describing aircraft semi-permanent data developed by a project building new XML messages.
Next release, 18.2, is expected to include all models developed as part of NDC AIDM Alignment as well as those related to ONE Order.
With this data model, each message development project can capitalize on current models formulated by other standards groups to generate interoperable messaging standards faster and with higher quality.
According to IATA, The Airline Industry Data Model (AIDM) is being positioned a single point of access to store:
· Industry-agreed vocabulary
· Data definitions and their relationships
· Related business requirements
· To generate interoperable, faster and easier messaging standards
“From here on, there won’t be any than any fundamental redesign of the schemas,” said a source.
This is a positive development as aggregators/ intermediaries like GDS, meta-search engines and travel technology companies had raised questions in the past. This was mainly owing to NDC messages being re-factored, resulting in a complex scenario.
“With sharpening of NDC schema description (schema are set of words that could be used in various ways and this was resulting in flexibility and in the eventual analysis different implementations), the utility of the implementation guideline (best practices for understanding the booking flows) and the contribution of the data model (to avoid the discrepancy owing to inconsistent definitions), the stage is set for a solid foundation to build on. There has been a synchronization at large among various stakeholders post the introduction of NDC 17.2 and what’s in store with versions (NDC 18 and NDC 19),” mentioned the source.
The NDC 18.1 features modifications incurred from the alignment to the data model and complete amendments from this initiative are set to be finished by 18.2, scheduled for release in the third quarter of this year.
“In terms of consistency, any update after 17.2 would have core functionalities of this version. So this means that an airline can skip immediate versions and straightaway work on a release after that since 60-70% of the functionalities would still be retained (say between 17.2 and 19.1),” explained an executive. This essentially points out to the fact that various data element names and concepts would follow the data model rules/ instructions rather than any core redesign of the schemas or the way they serve.
First Published on 13th August, 2018
Be it for having a bigger say early on in the booking funnel to targeting the second wallet of the traveller, airlines are looking at transforming themselves to make the most of every interaction on their digital assets.
One of the relatively higher margin products that has gained traction in the recent past is the tours and activities segment. “When you think of your last vacation, (in all probability) more than the airline you flew with or the hotel you stayed at, you tend to think of what experiences you indulged in or the activities you enjoyed while being in the destination,” says Shane Mayer, Director of Business Development and Partnerships at GetYourGuide.
From financial gains perspective, Mayer added that this segment can result in “hotel-like commissions” for a travel e-commerce player (coming around a net margin of 15%). Around $130 billion in spent annually on tours and activities. As for selling options for airlines, they can opt for a white-label solution, opt for API connectivity or use widgets. “We on an average drive €10-15 to our partners per transaction,” shared Mayer, who also added that the company runs their customer service department in-house to serve the travellers.
More than revenue generation, destination discovery is being seen as a big opportunity for airlines to overcome commoditization of their core offering. Airlines need to increase the width of their funnel to allow for a higher quality of user engagement. This can happen earlier on in the booking process by focusing on destination content and related inventory (be it for tours, activities transportation etc.), and via a layer of intelligence that ensures that airlines understand the preferences of travellers. “(It is about) extending your brand into a destination and shaping a trip into an amazing experience,” said Mayer.
Hear from experts about targeting the `second wallet’ at the upcoming Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 31st July, 2018
Ai Editorial: American Airlines, SilverRail and Kiwi.com are making progress with their respective digital assets by counting on the talent and efficacy of self-organizing cross-functional teams, writes Ai’s Ritesh Gupta
There is one common aspect that stands out among those travel companies that have embarked on the path to digitalization. It is about the way they structure their talent pool in order to bring agile principles into their respective businesses.
Key to continuous refining of digital assets lies in empowering `small teams’. These self-organizing cross-functional teams focus on iterative development and are offered full ownership and accountability for what they work on. Be it for an airline of American Airlines size, an intermediary like Kiwi.com or a travel technology specialist in SilverRail Technologies, all these organizations have exemplified the prowess of such approach toward product development. Before understanding how these teams tend to function, let’s assess what these companies have achieved by structuring their teams this way:
· Kiwi.com chose to offer a new functionality in NOMAD that would return 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. So what over the years has proven to be a time-consuming and complex exercise for a user (since it can take multiples sessions to find the cheapest flight for different connections), now has been simplified. Kiwi.com asserts that there product does all the work and visitors to their site can reap rewards of the results shown by algorithm created by their team.
· SilverRail recently came up with an outstanding breakthrough to simplify the rail journey for travellers before they even leave their place. The company played its part in enabling Virgin Trains to become the first travel operator to sell tickets through Amazon Alexa. So travellers can use their voice, via Alexa-enabled Amazon devices, and Amazon Pay for this voice-based transaction.
Making it work
In one of our recent interviews, Bill McKimm, Business Development Director, Thoughtworks, referred to the significance of being “agile” and how a prototype of a new offering 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. Also, the chosen architecture paves way for the development team to deliver rapidly. As for how the structuring or a framework like Scrum to embrace agility work is as follows:
There is an executive who is responsible for finalizing a list of specifics/ functions that the desired product would need and accordingly, prioritize the work that needs to be done. There is a timeframe and updates that flow in from the team working on the project. There are reviews and room for improvement with work being done. The idea is to learn, adapt, get better and try again. From his own experience, Kiwi.com’s CEO Oliver Dlouhy says, “Innovative features usually require more work and polishing – you can still produce them incrementally, you even might want to get feedback along the way (prototype, beta, etc.), but you might release them once the increments work as a whole, fulfill the need and deliver the experience the customer shall receive.”
According to Dlouhy, incrementalism is harmful when confused with “doing only one-offs” or shipping half-baked products.
Agility is considered to be a mindset. Companies like Kiwi.com looking 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.
SilverRail ensures the team is supported with tools and resources needed. A couple of other aspects that ensure people are empowered:
· Gear up for swift learning through shorter cycles and constant delivery pipelines. In a blog post, SilverRail recommended that companies need to encourage teams to spot impediments and allow for time and aid to get them sorted. Plus, one should focus on capitalizing on the aggregation of marginal gains to garner exponential returns with minimal investment.
· Another recommendation from SilverRail: Set up means for clarity so that teams are optimizing for the throughput of the system and not any specific or single part. Cut down on short term initiatives that affect long term velocity and manage technical debt that has the possibility of expanding. Assess and quantity every aspect and set up a core set of key performance indicators that drive to the largest gains in velocity.
How can airlines and travel companies embrace innovation? Hear from experts at the upcoming Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 13th July, 2018
Majority of airlines are not agile enough and most are not willing to fail fast, thus they will always be behind until they change their internal processes to stay ahead of their customers, writes Ai's Ritesh Gupta.
What does being agile signify from the perspective of being user-centric?
At its core, UX is about creating ease of use. So being agile, being equipped to create compelling, relevant experiences across all touchpoints, devices etc. is must.
Mike Slone, Chief Experience Officer, Travelaer says airlines need to act fast and ensure technology doesn’t prove to be a roadblock in their quest of being user centric.
Citing an example, Slone said, “Delta Air Lines offers a consistent UX.” He explained: “Below the engine” or working alongside their IBE or Internet Booking Engine, they are working with a lot of technology providers.” Technology has been developed in-house, too. “Airlines need to re-assess their technology requirements – they need to control the user interface and functionality on their digital experiences and often to do this they will need full control of their IBE, which most do not have today.” Travel technology specialists should be able to assist and enable an airline digital team with their IBE, not provide them with an IBE. “There is a difference. At Travelaer, we are producing tools in a modular format via API or UI that will enhance the user experience for an airline, but we don’t always expect them to adopt our entire IBE. This is different than most travel tech providers that offer airlines everything or nothing approach.”
Also, UX isn’t equal to user interface (UI). There is a need to understand passengers’ journey, from the beginning of the trip idea. “The issue is that technology products across the customer journey are in different departments and there is no one person who owns the journey and not one (entity) who owns the technology behind it. For airlines to be successful, they need teams that think across the silos, go beyond them (silos) and integrate them. Often that means a digital transformation of sorts,” said Slone.
Hear from senior industry executives about the significance of UX and being agile at the upcoming #MegaAPAC - Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 10th July, 2018
Ai Editorial: Why selling via a digital retail platform is an attractive proposition? Airlines can learn from Amazon about 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, writes Ai’s Ritesh Gupta
The connotation of selling has evolved considerably.
Why would one airline agree upon selling another airline’s flight when for years the two entities have considered each other to be a competitor? If a traveller is fond of reading a book, can an airline include this is an offer for an itinerary which features a seven-hour halt starting from mid-night?
Selling today is about understanding one’s context, being aware of one’s preferences, and in case of leisure travel, it definitely has to offer a memorable experience. How can airlines get closer to selling this way?
To make it work, there are several areas that need to click. The industry on the whole has to evolve – not only airlines, but also the offerings of travel technology companies and even the industry processes – so that an airline operates as agile, data-driven and digital organization.
Following an ecosystem model
Outside of the travel industry, there are dynamics in the arena of today’s digital platform economy that demand attention from selling perspective. Selling as a single-sided market player is what airlines need to do away with. Rather there is a need to comprehend how digital economy works and this brings to the fore the significance of gearing up for a platform economy model.
“The traditional businesses (like airlines) are today disrupted by new players which are acting as digital platforms – two -sided marketplace. The nature of the business is so significantly different, that traditional players cannot compete directly in their current setup as single-sided market players,” said Marko Javornik, VP/ GM Mobility and Travel, Comtrade Digital Services. He added that these new players have taken a significant value away from the traditional players in all traditional industries.
The reason for this is that the digital platforms are commoditizing as well as bypassing the traditional players.
“Some airlines have finally understood that they can take the same tool and get their own share of the digital platform economy. Some will decide to go bold like Ryanair decided to go – trying to create a top level B2C platform and create an ecosystem of retailers around it. Some will go different route. There are different ways how airlines can create or join an open travel ecosystem. However, if airlines do not have a digital platform strategy on their own (even if it is a B2B only), then other players are taking away the advantages and slowly reducing the value that comes to the airline,” said Javornik.
“The essential idea is that airline uses it’s unique physical touchpoints, existing digital touchpoints and its brand to build a digital platform strategy. This will probably not be a direct competition to the winning platforms of today, but rather facilitating secondary marketplaces that will balance out the strong powers of the current winners,” he said.
The example of Ryanair
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. “This way you know that customers like what you are offering them and you know that in the future, they will like it even more because you learn with each data point. It is a different thinking than it was used in building traditional IT systems,” said Javornik.
The journey of Ryanair, which started few years ago, is an example of how the airline is going strong with their digital platform economy through their “Amazon for Travel” program based on the MyRyanair platform.
“Ryanair was one of the first airlines that understood the power of digital technology to disrupt the existing business model. For airlines, the fundamental component of this is single view of customer, which is basically what MyRyanair is. This is modelled in a way that provides immediate benefit to end users, which is why the users like it and use it,” said Javornik, who added that the platform has over 43 million members and is proving to be an excellent foundation for Ryanair to start focusing on its digital assets.
“The platform provides an improvement to the user experience of the existing core services that Ryanair provides. However, the future potential of this platform is enormous and the value will grow with time,” he said.
“Ryanair understands that digital assets will count a lot in the future, maybe more than physical assets. Having a large number of active users is definitely one key metric. Lifetime value of users is another one. While at the beginning both numbers will look small compared to the winners of digital platform economy that really is misleading. Here we are talking about an additional business that brings new revenues and profits to the core business which is put under pressure. And the core business can uplift the digital platform with a pace that simply does not work for digital only players. You just cannot compare oranges and apples. In fact, you should look for the differences and then take advantage of them,” explained Javornik.
Citing an example, Javornik referred to digital advertising. “The profit garnered may be small in comparison to what Google and Facebook earn at this juncture. However, if an average airline can make additional €5m or €10m out of digital advertising on top of its core business as pure profit, this can be a very big thing for the airline.”
Traditional ways of selling are being challenged and displaced by ecosystem models in which organizations compete and collaborate across multiple fronts.
Hear from senior industry executives about the significance of running a digital platform at the upcoming #MegaAPAC - Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 29th June, 2018
Ai Editorial: Airlines can't focus only on IATA's NDC distribution standard or One Order to attain customer-centricity. In addition they need to break organizational silos, leverage data and set up CEM platforms and go for adaptive IT architecture as part of their journey to become digital organizations, writes Ai's Ritesh Gupta
Being ready to serve a passenger as per their intent is what today’s organizations are after.
Comparison between airlines’ offering and any product from a retailer, say a book or clothes, is unfair. Clearly, planning, buying and the consumption of a travel product is a prolonged journey. Even the day of travel when a traveller goes to the airport, the time it takes to board the flight, in-flight experience etc. is unique. Plus, a traveller has multiple avenues to get in touch with an airline. And the fact that airlines, especially full service carriers, have been using legacy IT set up and airline-specific systems and associated processes for decades, coming to grips with digitalization isn’t a straightforward task.
The stage has reached where the whole business model of running only logistics operations as an airline is also being questioned. Digitalization starts a radical change in organization culture. Eventually people and processes are put in place to embrace rapid learning cycles, empowering autonomous teams to innovate and validate at speed – be it for the product offered or the way customers are served in an omni-channel environment.
So how are airlines getting ready to embrace digitalization?
From personalization’s standpoint, Chris Eite, SITA’s VP Passenger Services says, “Certain carriers in the Asia Pacific region are undergoing a big transformation.” Referring to the example of Singapore Airlines, Eite said, “This (transformation) is starting to get reflected in terms of impacting the look and feel of the way an airlines treats me. It is a huge leap as it indicates that such organizations are starting to use the data they have lot more than what they have done in the past.”
The journey of personalization
A key component of how transformation results in customer-centricity is the combination of IT set up and data collection, processing and eventually offering insight via relevant dashboards for various disciplines (such as marketing, customer service etc.) to use for decision-making.
In their endeavor to come up with a passenger experience that considers context and real-time response, airlines need to count on computing power, data storage, and open-source frameworks. Eite acknowledged that airlines are looking beyond the legacy set up and gearing up for modern commerce and omni-channel service. Focus is on how data about customers is being garnered (CRM, loyalty, PSS etc.), it is being processed via a customer experience platform, say working in conjunction with CRM, to deliver a differentiated experience. “Some airlines are starting to focus on differentiation. This impacts the customer in a meaningful manner and in turn results in retention. (By acting on data), airlines are starting to move insights into operational systems. Biasing is starting to happen, for instance, in terms of seating on the aircraft,” said Eite. “Within a frequent flyer program, higher lifetime value is being identified and accordingly biasing some form of the product, driven by data analytics.”
As for going deeper into identifying and delivering a personalized offer/ service at every touchpoint, say at the airport, Eite mentioned that even if data dexterity is attained by being a digital organization, it doesn’t mean that systems managing key operational facets like departure control systems are going to change overnight. “These systems – reservation, DCS – the way they are handled is still sort of cumbersome.” Overall, the way flying tends to happen and the way airlines manage the journey – from check-in to boarding gates to in-flight, they have certain processes, the systems reflect that. “How IT can streamline all of this (processes that handle a passenger at the airport), supports all the data that is available and then how IT additionally paves way for treating a customer in a non-commoditized way would key going forward,” he said.
Eite acknowledged that if on one hand certain carriers in the region are making diligent efforts to gear up for today’s connected era, there are others that aren’t even gearing up to leverage their digital assets optimally. “If we talk of NDC, one key aspect is to be in control of the offer being pushed to the indirect channel. But airlines in APAC need to introspect and assess how they are doing the same via their own .com or app?” Eite mentioned there are carriers in the APAC region that “hardly seem to be knowing about their passengers, there is lack of personalization and are offering same offers not considering the type of traveller, their context, who is accompanying etc.”
Improving selling and servicing – not just about transformation
In order to be in control of the offer and serving the way passenger intend to be served, airlines not only have to transform themselves, but they also need support from technology providers as well as the industry processes such as One Order that are being planned.
Airlines are assessing opportunities about how to optimize their inventory and work out data-driven offers. In addition to air and non-air ancillaries, retailing platforms and B2B connectivity have positioned airlines to target the second wallet. The possibility of moving merchandising, pricing, scheduling and availability out of the PSS in order to create an offer that is under the control of the airline.
Eite mentioned that there are other issues that aren’t only necessarily about operations vs. commerce aspects of a PSS.
He shared that revenue management systems are not well equipped to cater to increasing number of ancillary options that airlines offer today. These systems fall short of delivering real-time dynamic pricing options without disrupting the booking flow. And the flow is an integral part of ancillary sales success.
“The industry is struggling with RM at this juncture (in terms of managing ancillaries). So if ancillaries are contributing 30-40% of the revenue generation, how RM as a discipline has responded to the same,” said Eite. “RM is starting to respond – improving upon the forecasting around total revenue per passenger and evaluating profitability per passenger with the product being unbundled.”
In terms of progress, the industry is counting on predictive analytics for ancillary pricing by taking into account traveller type, price point, timing etc.
It is interesting to assess how the entire industry is enabling airlines to dynamically create and price bundles of itineraries and ancillary services at a transactional level.
“Also, a lot of airlines have been going ahead with a “me too” approach with their ancillary selling. Each carrier needs to assess impact of ancillaries on profitability plus how systems such as revenue accounting get impacted, how the interline world works with ancillaries and unbundling,” said Eite.
Another area that highlights complexity is in the nature of contracts plus the lack of appetite for risk (to go ahead with relatively young technology companies) in this industry. One reason that airlines don’t come across as agile retailers is owing to the fact they are averse to going beyond one tech provider. For instance, airlines need to partner those Internet Booking Engine (IBE) companies which are investing in API’s that allow airlines or partnering software developers to build their own user interfaces or applications on top of their outdated IBE’s.
“Also, when you consider NDC and the concept of One Order, one of the complexities is to work around the interline world especially when the emphasis on direct selling,” said Eite.
One Order removes the current booking, ticketing and miscellaneous document records and combines the content of those into a single retail and customer focused order, according to IATA. But switching over to One Order will affect operations, including reservations, ticketing, customer servicing and revenue accounting areas. “In addition to interlining it is important to assess how One Order would streamline the concept of Super PNR (a record consisting of all the different bookings) and tie the whole travel experience around it,” said Eite. IATA has worked out three solution architecture for One Order environments and envisioned transition paths to move from the current PSS record-based environment. So the challenges would include switching from the current data model built around PNRs, ETKTs and EMDs to the new data model built around orders plus dealing with interline between airlines using current and new processes.
“In case of no changes there are hardly any issues, but if changes have to made into a trip itinerary (which contains bookings related to hotels, car rental, excursions etc.) owing to weather, technical issues at the airline level or even when the traveller changes plan, then One Order will streamline the process, but it would take time to happen,” said Eite.
Augmenting indirect distribution
Airlines need to find ways to support fragmented distribution.
As much as they can find brand agnostic travellers and high yielding travellers from indirect channels (via search engines or GDS companies), there is also need to ensure they refine their API connectivity. So be it for conversational commerce or the emerging blockchain technology, enabling technology for them to pursue would be APIs.
A couple of areas where airlines can improve:
Many pieces of puzzle need to come together
So for airlines to attain customer-centricity, it is imperative to not only transform themselves by breaking organizational silos, embracing customer experience management platforms and adaptive IT architecture. But equally important is how the entire industry evolves and complements proactive airlines in their quest to serve the passengers in the best possible manner.
Chris Eite, SITA’s VP Passenger Services is scheduled to speak at the upcoming Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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First Published on 26th June, 2018
Ai Editorial: Airlines are investing in infrastructure to make data usable in real-time and at scale for search and analytics use cases. But there are significant challenges in processing and surfacing XML data which needs to be in place to pave the way for actionable business intelligence. Ai’s Ritesh Gupta spoke to Triometric’s Jonathan Boffey about the same.
Digital organizations count on data as a core asset in their quest to serve their passengers in an earnest manner in today’s connected era. It is imperative to not only act on 1st party data, but also ones emanating from non-company owned sources, including 3rd party distribution partners, to deliver a consistent offering.
Airlines, as an industry, too have been gearing up for the same.
For airlines, the journey of being in control of their own data and making the most of it hasn’t only been about breaking organizational silos, embracing customer experience management platforms and adaptive IT architecture. Carriers have also acknowledged the need to modernize airline-specific systems and legacy processes. One tangible result that needs to come out from such massive transformation is the understanding of travellers’ buying preferences, what is being searched for, the most popular destinations etc. The available intelligence has to pave the way for improved airline network planning and revenue management, airport route development and travel-related marketing.
Airlines’ data processing capability
A testament of any successful digital or technology transformation is the intelligent information that comes from transformed data.
As airlines sharpen their ability to store and analyze large volumes of disparate data, how are they looking at understanding the search pattern even from their indirect channels especially in the wake of IATA’s NDC standard that has been around for nearly six years now?
It is vital to assess how airlines are counting on various data sources and focusing on real-time processing.
“Airlines need to sharpen their respective XML data processing capabilities,” asserts Jonathan Boffey, Triometric‘s SVP for Business Development.
According to Boffey, the capability should allow multiple data sources such as Kafka log queues or packet level network traffic from an NDC system to be captured and processed for key IT and business data content that can then be fed into corporate BI environment such as QlikView or Open Source big data technologies such as ELK.
As for how Triometric is playing their part in preparing airlines for the same, the company promises to deliver via their new offering, Trio Data Engine.
The Trio Engine initiative brings together a number of key technologies that will greatly improve the chances of airlines trying to deliver actionable information from data projects based around technologies such as Kibana/ELK, Kafka. Pentaho and QlikView amongst others.
“For airlines, it (Trio Engine) can process in real-time the potentially huge volumes of valuable search data from NDC APIs.”
Significance of search data in a digital economy
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 continuously improving process of set the rules, analyse the outcome and adjust. In a NDC world this becomes dynamic,” says Boffey.
Boffey also highlighted that by counting on search data, an airline can differentiate their offering for several reasons.
“Firstly for ‘right price’ reasons, everyone is using recent booking history in their RM system to predict the probability of getting another booking. That has nothing to do with how many people are actively searching and potentially not booking. Secondly for ‘right product’ reasons, you need to understand who is searching or travelling, what their travel intent is, where they are in their planning/booking process and what might be of interest to them. Most if not all of this information can be gleaned from analysing search data,” said Boffey. Overall, counting on search data, airlines can diligently become a part of a digital economy. By being aware of the intent and what is of interest to passengers, digital teams can embrace rapid learning cycles and work on tailored offering for different channels.
On how airlines are looking for a deeper insight from the indirect channel, Boffey underlined that is there is low search data availability for GDS-based distribution channels but with the NDC channel share growing that will change and this is the opportunity.
Dealing with ELK and budgeting properly
ELK is acronym for three open source projects: Elasticsearch, Logstash, and Kibana.
Kibana is an open-source data visualization and exploration tool used for log and time series analytics, operational intelligence use cases etc. It is known for features such as histograms, line graphs, pie charts, heat maps etc. Elasticsearch is an open-source, RESTful, distributed search and analytics engine and Logstash is an open source, server-side data processing pipeline that ingests data from log file sources.
As for specific initiatives, Boffey mentioned that whilst some airlines still view NDC analytics as next year’s project, the advanced airlines are starting to deploying open source solutions such as Kibana-based reporting but struggling to get meaningful results.
“Kibana is an attractive reporting interface but the “garbage in” challenge still applies when it comes to what it has available to report,” he said.
Boffey continued, “Logstash is the data collection part of ELK. It provides great support for standard server and website log file formats which is fine for the brand.com direct channel. In the NDC world, you need to pair and convert XML based requests and responses into actionable business intelligence. The ELK stack doesn’t handle XML well.”
According to Triometric, real-time Trio Engine can be used to solve the XML processing problem and feed an ELK stack so Kibana delivers on NDC.
“Open Source technologies such as ELK have apparently low entry costs but the devil is very much in the detail. Toe-in-the-water style approaches to ELK or other open source technology based projects that lack proper planning are not an appropriate approach to solving this serious data crunching challenge. Big Data requires heavy lifting. A clear plan and sizable investment is required - Airlines need to budget properly for it,” said Boffey.
Role of AI in data processing
Boffey summarized and mentioned that today the main focus is still on collecting the right data and getting it processed into a usable form for largely manual decision making process.
“Make the decision and take an action – that’s where the ROI is. There is a lot of interest in AI technologies. AI is the automation of processes that in this area will include analytics and related decision making. AI means more data can be processed and more real-time tuning of systems and that translates into dynamic offer optimisation and revenue. It all hinges on having the correct data approach. Whilst there is an element of ‘walk before run’, the opportunity for the advancing airline is pretty clear,” concluded Boffey.
How airlines are going about their data strategy? Hear from senior industry executives at the upcoming Mega Event Asia-Pacific (Ancillary, Loyalty and Co-Brand Conferences) to be held in Bangkok, Thailand (28-30 August, 2018).
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