First Published on 7th August, 2017
Ai Editorial: Airlines recognize that speed is of essence when it comes to the efficacy of their customer-facing systems. Ai’s Ritesh Gupta explores the role of a cloud-native architecture in delivery velocity as part of the overall digital transformation.
Airlines have been relying on cloud services platforms, signalling a shift in the IT consumption model. So rather than paying for IT infrastructure capacity upfront, today’s organizations are opting for pay-as-you-go model, accessing servers, storage, databases and application services over the Internet.
As seen over the years, cloud has played a key part in digital commerce. For instance, page speed is critical, with every millisecond being crucial. So to step up the conversion rate, cloud infrastructure was chosen to keep latency to minimum, supporting application servers and databases in specific regions to support users. Airlines have been relying on cloud technologies to deliver services such as luggage drops with label printing and self-boarding gates, and personalisation by enabling the customer-facing staff, for instance, providing the airline’s cabin crew with contextual, relevant information to serve their loyalty program members in a consistent manner.
As for emerging cloud developments, airlines can step up their ancillary revenue generation by capitalizing on journey data. As it emerged during our Ancillary Merchandising Conference in Spain this year, a new 3rd party cloud-based platform is emerging that can integrate airline’s inventory system and central reservation system to display contextually relevant information or ads in real-time. So airlines can make the most of their data to garner incremental revenue. Also, in the wake of outages, it is being pointed out that mission-critical systems have to move to the cloud, ensuring stored backups are secure, data is stored in multiple locations to ensure sufficient backup etc.
Airlines are scrutinizing and even executing plans to embrace cloud transformation, banking on open-source offerings rather being bogged down by proprietary technology.
Focus is on ways to integrate real-time data, search, and analytics into applications to optimize travellers’ journey. This essentially has become an integral part of digital transformation, a massive undertaking that features speedy and constructive progress on several counts to strategically leverage digital technology.
In fact, considering the complexity of the IT set up that this industry has, there are options available to integrate applications, data and processes across both on-premises and cloud environments. There are 3 models for cloud computing - Infrastructure as a Service, Platforms as a service and Software as a Service.
Taking advantage of cloud computing:
· Use cloud as a route to market (APIs are the digital services)
· Garner data, integrate data from multiple sources
· Create and capture value – optimize traveller’s journey
Among established organizations in this industry, American Airlines has decided to migrate to cloud a quota of their crucial applications, including aa.com, mobile app and network of check-in kiosks. The plan is to enable developers to swiftly set up and modify application functionalities for American’s passengers. These customer-facing systems will be on cloud. As American chose to move its applications into the cloud, it considered factors such as security (the role of technologies such as encryption and tokenisation comes into the picture) as well as connecting legacy applications to the cloud at enterprise scale.
The cloud business model that the airline has chosen is a hybrid one.
According to the airline’s partner, IBM, the airline would maintain backend connectivity to other on-premise legacy and third-party systems, for “true hybrid cloud functionality”.
Cloud-native architecture as part of digital transformation
As American says, the goal is set up a cloud-native architecture.
What does this mean? It is about capitalizing on cloud computing – making use of vast computing power on-demand and pay-as-you-go. An organization needs a platform for running cloud-native applications and services, as a method for abstracting away from core infrastructure dependencies. For their part, American Airlines intends to create, try and release applications frequently and speedily. Also, all of this would be change ready for release as soon as it is ready. This would be made possible via a microservices architecture (working on an application as a collection of small services; each service implements business capabilities), agile methodology, continuous delivery (individual software updates available for release as soon as they are ready), DevOps (association between software developers and IT with the objective of automating the procedure of software delivery and infrastructure changes), and lean development. So a cloud services platform is must for operating cloud-native applications and services that automates and integrates all these concepts that fall under digital transformation.
Harnessing cloud for digital transformation isn’t a straightforward process, with re-designing of IT architecture or operating in functional silos within IT being primary challenges.
For cloud service delivery, some of the areas specialists recommend that airlines need to assess:
· Assess business goals and their alignment with current IT ecosystem
· How to move to a structured, agile program? Evaluate technologies and the role of staff to deliver new applications
· Ensuring IT understands the business challenges and is aligned with the DevOps cycle
· Finalising cloud service delivery model
· Operating model and training – detailed insight into IT architecture, data and technology
· How to migrate applications to a cloud-native microservice architecture? What makes for a resilient cloud native microservice architecture?
· To what extent one can bring down the probability of prolonged irregular operations?
The days of traditional software development and infrastructure management processes are getting numbered. Cloud has positioned itself as a competitive advantage, letting developers optimize what they offer and presenting airlines with an opportunity to run with lean methodology and automated IT operations.
Hear from senior travel industry executives about digitization and ancillary revenue at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).
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First Published on 4th August, 2017
Travel companies can now count upon cloud-based XML API analysis that helps them in near real-time to understand inbound and outbound shopping traffic from the booking platform. Such cloud-based offerings are useful even for those e-commerce players whose data volumes do not justify major investment in infrastructure and skilled analysts, says Jonathan Boffey, Business Development Director at Triometric. So travel suppliers can access key operational metrics and count on data-driven methodology to improve upon the same.
“The objective is to make data accessible to smaller and specialised travel companies with less data volume, a wealth of shopping analysis to help them thrive in this competitive and margin sensitive business.”
Suppliers can assess areas like product fit, product availability (evaluating product issues, ensuring that inbound availability searches are being correctly returned), look to book ratios, market trends and buying behaviour as it happens, track bookings in terms of volume, product type and transaction value, gain an insight into the performance of the indirect distribution partners, what to change if performance isn’t up to the mark etc.
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First Published on 2nd August, 2017
Ai Editorial: ONYX Hospitality Group is undergoing a transformation that would enable the entire team to “talk everything in terms of a customer profile”. Of course, data is vital to all of this, but by breaking down silos and offering apt training to the staff, a foundation is being laid for a customer-centric culture, writes Ai’s Ritesh Gupta
Customer data platform, data management platform, master data management…these offerings related to management of data have a key to role to play in an organization’s transformation towards customer-centricity.
But how these platforms actually contribute in serving a traveller? What else needs to be done to make it an enterprise-wide initiative?
One organization that is in the middle of such transformation is Bangkok, Thailand-based ONYX Hospitality Group, with a regional portfolio of over 40 operating properties.
“We talk everything in terms of a guest or customer profile,” shared Chetan Patel, ONYX’s Hospitality Group VP Strategic Marketing and E-Commerce. “We are moving towards real-time, 1-to-1, personalised, seamless interactions with our guests. That’s the end goal,” says Patel. The company is working on a new platform, being referred as a CRM platform by ONYX.
The team is still in the process of completing what it has set out for. But it does mean that ONYX is breaking shackles in terms of what impedes customer-centricity in today’s complex shopping environment. “This (new CRM platform) is a way to break silos, via a single point of truth. So whenever one refers to a customer, there is one place where there is the end of the line as far as information is concerned. On one side (of the new platform) we have database about the customer and profiling, and then using the data on the other side to communicate with the customer,” shared Patel.
We explore 5 key areas of transformation:
1. Enterprise-level data-driven decision-making: Silos in a business organization exist, and this doesn’t help as the journey of travellers has evolved from being linear to a dynamic one with real-time “micro-moments” in an omni-channel, multi-device environment. So as we spoke of data platforms, Patel did refer to the difference in digital marketing and information management. But, as a result of this new undertaking, ONYX is streamlining operations around data and analytics at the enterprise level. It has been in the pipeline for a year or so.
Today travel organizations acknowledge the significance of collection and correlation of real-time event information into actionable knowledge, plus gearing up for sharing of data across business functions, and the information management framework has to facilitate connectors to today’s diverse sources of data. A department has to act, and cohesively the effort needs to serve the guest/ passenger.
As for the real utility of this data, it comes from the fact that the entire customer journey is being mapped out. The focus is on how to collect data from each touchpoint and how to interact with the guest – to reach out in a relevant manner as per the booking funnel. “We are basically looking at the CRM platform (with functionalities such as data integration, analytics and integration with web experience management etc.) to do that,” shared Patel.
So, as per the latest dashboard based on the data platform, ONYX is capturing data right from what triggers the search to the next trip, and this entails what people tend to do and what are the opportunities to influence the behavior of the traveller. “The entire journey is being evaluated for our own systems and touchpoints,” mentioned Patel.
There is clarity on the following areas:
· What data needs to be collected from each touchpoint?
· What system will be involved at each touchpoint?
· Where the data will be stored at that touchpoint?
· Who will be the owner of that data once is collected?
2. Data in one customer profile, the base for experience and revenue optimization: A vital aspect is responsibility towards collection of data, and this gets incorporated into the customer profile wherever possible. Various touchpoints and people are responsible for collecting data and reaching out to customers, with everything being spoken in terms of “customer profiles”. “There is a holistic approach to the entire strategy – CRM and team, and everything else will fit into this,” shared Patel.
So, for instance, a user is looking for a property in Phuket after coming across his friend’s experience. He conducts research, comes across an ad from Amari and clicks on it. This data is available in clickstream, but may not be personally identifiable. But once this user lands on the Amari website, there is a possibility to connect with other aspects of the user’s online profile (for instance, Facebook integration on the website, automatically log on to Facebook part of the website, hotel’s Facebook page is listed on the hotel’s website). “We start joining the pieces of the puzzle. Once they return we glean more information. They click on spa, check spa packages so the web experience platform will automatically start profiling the customer. And it will keep the profile in the background in the data. Next time the same user comes on the website, using this past interaction and browsing pattern, content can be customized. So as per the interest shown, the relevant content can get them closer to a decision or conversion.” In case of first time users, they are profiled on the basis of browsing pattern, and from 5th or 6th page onwards, they are served relevant content.
“The web experience platform is in the execution stage, our first website should be live (on this) in September. Also, there is one RFP out there for a CRM system, which will be a single point of truth for all customers that come across us. This system will be leveraged to send out the guest profile information everywhere, and then customize the content, the experience as much as possible,” shared Patel. For instance, post booking, an email confirmation can have cross-selling options depending upon the information from the profiles in the repository. It could be about an upgrade, spa, romantic dinner etc. Similarly, the guest might look for destination-related information or any other section on Amari’s website, this can be capitalized upon during the pre-arrival phase. “So more the customer visits the site, more data is picked by the CRM system. We can personalise based on all these interactions, so better chances of monetization,” he said.
As of now, the primary source of data is the company-owned booking channels and PMS. “If any additional data can be collected at the property, we would incorporate that as well,” said Patel. He also mentioned that if the company consolidates the social media log-in say via Twitter or Facebook, then whatever is publically available is also considered.
3. Personalisation: Every piece of communication triggered by the platform would be on a one-to-one basis. So if a profile indicates that a user’s birthday is coming up or there is someone’s marriage anniversary, then from the 10 pre-defined offers for a particular property based on the business rules set, when the email goes out the CRM platform would find the best fit. “This is for our direct communication and channels,” shared Patel. “Personalisation in marketing means predicting communicating the right message/ offer to right prospect at right time. Personalisation on the ground means more meaningful one-on-one interactions with guests when they are at the property and meeting their needs in a demonstrable manner. All these will increase their propensity to return to our business. Even if we can target a small percentage of our past customers to return, it would be make a sizable difference in our bottomline.”
4. Using analytics for more direct bookings: ONYX is also looking at evaluating the source of booking and then attempting to convert non-direct bookers. So a guest is being targeted with emails, but continues to book with an OTA, then how to attract this customer? “How can we target this guest differently? May be with a much more aggressive offer? May be with a package that has perceivably higher value? Once they are direct, then we can continue to attract them with activities that are special and again based on their profile, keeps them with us,” pointed out Patel. According to the company, 15% of repeat stays from OTA sign-ups to the loyalty programme were direct.
5. Removing pain points during the actual stay: There can be a lot of uncertainties at the time a guest is ready to check-in. The size of the room is one common concern or expectation, for example. ONYX is also looking at the platform to supply critical information at the time of guest check-in and during the course of the stay to make it more personalised and relevant based on past behavior. “You must understand a hotel’s front desk is a busy place. Some areas are process-centric, very operational so actionable information (sitting alongside the PMS screen) needs to help in a quick dialogue based on the profile, past behavior etc.,” said Patel, further explaining his point with a couple of examples.
The team would be trained, so if a guest tends to stay in a certain type of room or prefers a particular location, then the staff can offer the same to them. “It is not about monetization, rather customer experience, too,” says Patel. Similarly, if a booking has come from an OTA, then the staff is instructed to collect the email id. “If there is a sports event in the city and the guest has shown an interest in the same, then offering a ticket in an unprompted manner can uplift the experience. Or a property has worked out 10 offers for a particular month, and depending upon the profile of the guest, an email can sent to indicate the availability of a matching offer. This is where we are headed,” asserted Patel. The plan for the future is to evaluate deployment of beacons to relay relevant messages.
Of course, ONYX Hospitality Group, like every travel organization, will improve in areas like 3rd party data integration and even bank on improvements in probabilistic device matching to better identify travellers, but with such platform the team has laid a foundation for 1-to-1 communication. Even today, as Patel says, ONYX is capable of responding to each and every message on Facebook in a span of minutes/ hours (the brand experiences most traffic on Facebook) and the team will respond to other channels as well. And it is exploring the option of chatbots, too, considering brands need to automate certain areas of communication. The sophistication level of platforms that are available today and their ability to deal with emerging technology such as chatbots is still not there in terms of the sort of end result that companies are looking for.
The only way travel companies can cut down on the probability of an experience going wrong is by capturing all interactions and this is exactly what ONYX is preparing itself for by capturing as much as data they can and crafting customer profiles.
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First Published on 24th July, 2017
Ai Editorial: Travel e-commerce brands are exploring virtual reality or VR to offer travellers a feeling of ‘being’ in a place be it for an aircraft or a hotel. This is being enhanced with an element of interactivity, user-generated content etc., writes Ai’s Ritesh Gupta
Being in a virtual space as if you’re actually there and indulging in something that lures you, excites you is a worthy experience.
For travellers, there are plenty of novel experiences that are emerging in the realm of virtually reality (VR).
For instance, a family having fun in an interactive virtual environment where each member is using their Facebook photos to customize their respective appearances. Or they can even explore a hotel or the experience of flying business class with an airline, where guests or passengers find themselves in a real-life situation and any query can be answered without leaving the virtual environment. Plus, the idea of completing a transaction, too, is a possibility.
New initiatives in travel
· Cathay Pacific has launched their first interactive 360º video advertisement, enabling viewers to have a look at the airline’s first class cabin and interact with the setting. Robecta Ma, Vice-President Marketing, Americas at Cathay Pacific Airways, says this particular initiative was “borne out of the necessity to highlight our ground and in-flight experience to those who have not had access to our products”. She said, “We have been experiencing a lot of success with VR in large-scale events and conventions, where people can interact with our brand in a captive environment.”
· Travel agency Ving (Thomas Cook Northern Europe) recently unveiled a new initiative featuring a virtual world Facebook Spaces (beta version launched in April this year). A place where users can meet friends and socialize, show 360-images etc. in a virtual world for guided tours. Movies have been produced to show some of Ving’s destinations and hotels, among them the ever popular Alcudia on Mallorca, as well as the Greek island of Lefkas. To visit Ving in Facebook Spaces, users need a Facebook profile and a particular VR-headset; Oculus Rift. “We want to be at the forefront of testing new technical solutions that will help take customer experience to the next level. Previously, a VR experience has been more ‘individualistic’ but now, through Facebook Spaces, we can bring a whole collective of people together in the virtual world. Recently, Facebook Spaces also launched live 360-degree video,” said Karin Eriksson, Social Media Manager, Ving Sverig. For Ving, the objective isn’t only to show content in an inspiring way, but also to enable interaction between more people in the VR world. “360-degree video will develop and become much more immersive as stereoscopic / volumetric video develops. Then we’ll get a real feeling of ‘being’ in a place,” she said.
Early days for VR marketing
VR headsets, which fit under mobile or tethered categories, have evolved. Specialists recommend standalone virtual reality apps, embedding VR content in a custom-built website, maximising the reach of such content etc. but all of this is still in its infancy. In one of its recent reports, Worldpay, referring to the readiness of virtual commerce, highlighted the discrepancy across markets. In a majority of developed economies, consumers aren’t ready for it. For instance, only 23% of Dutch consumers believe VR devices are secure for making payments. Whereas the figure shoots up to 59% in case of Chinese shoppers. The study also underlined that pricing of advanced headsets from Oculus and Vive, available for over $700, can be a deterrent for initiating any marketing campaign. Plus, the gap between VR manufacturers’ understanding of consumers vis-à-vis the sort of experiences that marketers intend to deliver also needs to be looked at.
“Even though the travel industry does embrace the benefits of VR as a means of enhancing a customer’s brand experience, the technology is still in its inchoate phase. Hence, most brands are still approaching this in a cautious manner. In our case, we want to make the Cathay Pacific lounge and flight experience accessible to everyone via the usage of VR, especially to those who have not had a chance to fly on our airline,” shared Ma. She added, “While there have been some really great destination focused videos, we haven’t seen as many brands in the travel space fully embrace VR’s potential. It remains to be an area of experimentation yet comes with limitless creativity.”
Eriksson also acknowledged that VR is in its nascent stages. “Consumer VR has only been around for a year, so some may be a bit skeptical about trying out new technical solutions and prefer until someone else has trialed it. That’s a big mistake I think. We prefer to test for ourselves. First on a small scale and then scaling up if the results are positive,” she said. As generally is the case with finalising a budget for marketing, companies generally follow the “70/20/10 Rule” or even “90/9/1” (with majority going to what’s been done over the past few years; next focus on something that has just gone mainstream and last part for testing new concepts/ technology and don’t expect a major RoI). So it is interesting where travel brands fit in VR in their plans as of now.
Eriksson also mentioned that Ving sees this as an investment for improving the tour operator’s business. “We already have Customer Service available through Facebook. Through the use of Facebook Spaces we can now provide an extra service that will help assist our customers during the Search and Inspiration phase of their customer journey,” she said.
Points to consider
· Be clear with the objective: Ma also added that some marketers tend to focus on current trends and focus on executing something just to stay trendy. “It’s important to think through why we want to execute something new and be clear about what goals we want to accomplish,” she said. “It’s important to clarify the purpose of creating VR content, crystallize the storyline for the video, ensure the content be enticing enough for the audience and strategize ways of promoting the video effectively. For example, in our case via events, advertising etc.”
· Keep it simple: Ma highlighted that ease of consumption and simplicity are key. “Embracing new technology is already a daunting task hence we want to make sure our audiences/ customers can consume our content easily. The VR ads we are using for our current Hong Kong campaign can be easily viewed on mobile and desktop environments,” she said. As for the sort of preparation that went in for this new initiative, Ma said, “In the beginning stages, we spent a lot of time working on creative concepts and storyboarding for the video to ensure we have a compelling story to tell. While we are excited about what VR can do to enhance our content, it’s important for us that the video should not be presented as an ad but rather an authentic story about two travellers flying on Cathay Pacific from San Francisco to Hong Kong.”
Eriksson shared that a major challenge lies in “creating content that looks and feels as ‘realistic’ as possible, especially with the added constraint of no ‘off the shelf’ technology being available yet that can handle this in a satisfactory enough manner.” But in a few years, it will be possible, she expects.
· Being open to experimentation: Eriksson shared that the team, led by IT engineer and internal VR guru Jonas Carlson Almqvist, has been experimenting and producing 360-degree videos for years, with all available to view on Google Streetview. “We’re still exploring ways on how to now make the next step in 360-degree video as there is great potential here to display travel content in a truly inspiring way,” she said. “It would have been a much more challenging and expensive test to run without this (approach towards continuous testing helped),” she said.
· Measurement: A way to measure is expand the reach, assess coverage in media etc. “We made press releases in different languages, recorded video material (both long and short videos) and then we posted the posts in our social media channels. You can also register on a Guided Tour in Ving’s VR World via a form. Through these activities we can measure, for example, involvement in social media, film views, how many articles are written about us, etc.,” shared Eriksson.
It is important to keep an eye on improvement. “Technology is constantly evolving and the way we experience 360-degree content today will not be the same way we experience VR media in the future,” concluded Eriksson.
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First Published on 19th July, 2017
Ai Editorial: NDC data standard is not only an airline topic. It also affects the travel industry across the board. Considering that there was “too much flexibility in the initial versions of schema and implementations weren’t the same”, the industry is hoping for stabilization in the near future, writes Ai's Ritesh Gupta
If one were to offer a fair assessment of the adoption of IATA’s NDC XML standard after five years or so, then “slow” is an apt way to describe the same.
This industry is riddled with complexities so such progress is understandable to an extent.
In fact, as one of the senior industry executives mentioned, “If Amazon had to deal with intricacies of air travel, then it might not have taken off (as a retailer)!”
NDC is primarily about working out the criterion and workflow of the airline delivering the offer. A key aspect of this plan is to work out a schema that paves for carriers to create and deliver their respective offers to any distribution channel or 3rd party. A standardized schema makes it a scalable, repeatable, and over time economically beneficial process. So in case of any process modification, more so in a sector which has relied on legacy technology, the initial evolution of process, workflow, and featured technology calls for major investment from existing organizations and new entrants.
Common protocol lets two systems understand and interact with each other. So definition of seats, baggage fare etc. becomes clear. So if there is a query from a system - how many seats of this class, category are available at this point of time, when this based on a pre-defined protocol, then the other system would be able to respond.
Significance of standardization
According to IATA, since NDC is a standard it will make such connections more cost effective and faster to deploy. If the partners involved (airlines or agents) see value in the presence of an intermediary, the standard can cater for that – and this is where aggregators come into play. They can be incumbents say, GDSs, or new players who are encouraged to offer their services “because the connectivity is fulfilled via an Internet-based standard which makes the marketplace much more open to competition”.
But, as an executive from a meta-search, points out, “For a meta-search, there are many different sources of content - via GDSs, airline-direct, OTA-direct etc. There is a network of connectivity and the objective is to aggregate as much as possible. But we need to standardize as well. We do focus on it, so when entities converge on that, it would be beneficial for us, too. It is still a work in progress, as others are moving, too. And everyone has their own agenda, and time scale.”
An executive from GDS mentioned that having a set of standard messages is necessary but not sufficient. The executive stated that connecting systems with these standardised messages is the easier part. “Most vendors underestimate the complexity of the integration part.”
What has happened so far?
So there have been a couple of issues with versions and resulting implementations.
The first official industry standard was launched in September 2015 as PADIS version 15.2. Further versions of the schemas are 16.1 and 16.2 while previous versions (1.1.1 and similar) are candidate releases. The evolution of the standard is captured within the different versions, with each new version incorporating improved functions reflecting the feedback from pilots and users.
“Probably because of the complexities (associated with the functioning of airlines and stakeholders), there was too much flexibility in the initial versions of schema and implementations weren’t the same. This is quite unfortunate for an initiative that is “targeting to be a standard”. Today even some of the basic NDC messages are being re-factored. Is the complexity rising at the moment or at least for next 2-3 years?”
Another executive, associated with a travel technology company, agreed and mentioned that “implementers” could interpret schemas in different ways. “The big problem came when the players like KAYAK and SkyScanner, and NDC consuming parties tried to build a one-time NDC connection in order to connect to multiple airlines with the least amount of effort considering that a standard was being planned. But the reality is that because of the varying level of interpretation, connections had to be modified somewhat. So with implementers providing their feedback to the IATA, the industry body has worked out a data modelling exercise. So they are redefining and tightening relationships in the NDC schema to ensure that the flexibility and looseness of the interpretation will go away. The new 17.1 scheme are going to be partly generated from the new airline data model and later on 17.2, the full schema set would be generated from the IATA data model. So when that’s done, there should be standardization in projects and implementations.”
As of now, it seems like over the past few years, there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc.
So considering that airlines have developed their API based on a particular XML standard (NDC or even other), it would result in different interpretation of these standards. So for an intermediary, say a marketplace, working on multiple airline APIs calls for normalisation into a single version. It has be to ensured that this move brings down the overall bearing on the content and functionality as worked out by airlines through their APIs.
“The problem of different version would exist as different airlines would implement different versions of schemas. And when it comes to aggregators, they would need to deal with such disparity as for dealing with airlines. So the need for interoperability will exist.”
NDC is not only an airline topic as it affects the travel industry across the board.
For their part, IATA has clarified that NDC standard is not locked into XML. There have been plans to release a JSON profile as well.
IATA’s Industry Data Model initiative is focused on refining messaging standards development capability and enhancing interoperability of systems.
As of now (even when questions have been raised whether NDC is truly an open standard or not), the industry is hoping that the NDC version 17.2 would result in stabilization.
Hear from experts at the upcoming Controlling Your Offer Symposium, featuring live demonstrations that take NDC, dynamic pricing, revenue management and merchandising to the next level.
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First Published on 17th July, 2017
Travel e-commerce players, including airlines, hotels, intermediaries etc. are finding ways to connect and access inventory and sales systems via application programming interfaces (APIs). Increasing the average order value or targeting a traveller’s wallet via ancillary offerings is one area that is resulting in interesting initiatives.
OTAs and even hotels and airlines etc. among suppliers, have access to a substantial base of travellers. Importantly they are the ones with an intent to travel. So how can these organisations scale up their revenues, propelled by APIs?
“There is an opportunity for airlines to personalise the trip based on valuable information they already have about passengers (age, destination, leisure or business etc.), especially related to their respective trips,” says travel technology provider BeMyGuest’s CEO Clement Wong. Referring to the company’s expertise in excursions, activities and day tours, he said that each and every product is on meta-tag, whether it’s suitable for a small family or a romantic getaway or an adventurous trip etc. “We are able to provide of all this information within the API,” he said. “We help airlines and hotels monetize the post flight booking or post hotel booking phase/ customers.
In terms of efficiency that APIs bring in, Wong mentioned that hotels and airlines aren’t keen on integrating with multiple APIs. “That’s the last thing they want to do. Travel suppliers can integrate, but that’s not the most efficient use of their time,” he said. “What they are good at is selling to customers, the base they have, so why not focus on offering them the best flight experience, better hotel stay or local excursions. Our role is to streamline connectivity, rather than suppliers working on 10-20 connections for the content related to excursions, activities and day tours.”
Explore how airlines, intermediaries and B2B specialists are going about distribution at the upcoming Bold Strategies for Growth Markets - 4th Mega Event Asia-Pacific (Loyalty & Co-Brand/Ancillary Conferences)
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First Published on 13th July, 2017
Ai Editorial: Stepping up the average order value or targeting incremental revenue per passenger has been identified as one area for airlines to improve upon their financial performance.
Revenue from optional services, such as onboard sales of food and beverages, checked baggage, premium seat assignments, and early boarding benefits, hovered around the $45 billion-mark last year, according to IdeaWorksCompany. But if on one hand, a group of carriers led by Ryanair can garner as much as 25% in ancillary revenue as a percentage of operating revenue, the “traditional” category has a fair bit to catch on.
Ai’s Ritesh Gupta spoke to Joacim Berntsson, Strategic Business Development Manager - Airline Market, Paxport about the gaps that are impeding the average order value, dealing with the current distribution and technology status quo etc. Areas that need to be focused upon:
1. Why apt blend of content, data and technology isn’t enough?: For Berntsson, in order to make more money per passenger, airlines need to put more pieces of a puzzle and these are - choice, content, reach, pricing, flexibility, time-to-market, data, relevance and timing.
Explaining his viewpoint, he said consumers are ready to pay, especially the “Millennials”, and this category can’t be ignored. According to Boston Consulting Group, every third person in the world is a millennial. Berntsson said, “In five years, they will be the core customer group of airlines, the Millennials are very likely to pay extra for both flight- and non-flight related services. They are spoiled with choice and have a strong wish to pick and choose from a la carte menus. So the foundation is there, consumers are ready to pay and airlines have started to unbundle their product – actually, the most profitable airlines in the world are the ones where the biggest share of the revenues comes from ancillary services, and they are mainly low cost carriers. So one might ask oneself, why don’t we see a higher growth with more “traditional” airlines?”
Berntsson further explained that a major reason could be the comparison of the shopping experience that passengers have with airlines vis-à-vis retailers, such as Amazon. “Airlines have a hard time replicating these experiences. People want choice, full descriptions of what they buy, pictures, recommendations etc. One of the main issues is that the distribution systems used in the industry where built 30-40 years ago, and they were built for fares distribution through travel agencies – not merchandising. So in real airlines only reach one third of their customers with their full service offering as the rest buys their fares through travel resellers.” He adds, “And the offering is quite limited, with a wider choice you might achieve somewhat of personalisation without big data, it’s as simple as the more I can chose from the more likely it is that I find something I like – but today’s systems don’t support it. That of course have an effect on average order value but it also a question of pricing, or should we say the optimal pricing for an optimal conversion on sales.”
Referring to the significance of value, he said, “People are prepared to pay, but only for value – to me, charging $15 for a standard seat on a one and a half hour flight isn’t apt, they are not converting me – I can’t see the value. And I think many others feel the same way, just as an example – having a 30% conversion on $8 seats gives 60% more revenue than 10% on $15. So it is not only about technology, it’s also about having merchandising smartness and the possibility to follow up on sales and being able to correct the pricing instantly!”
“It is also a question about relevance and timing, when am I prepared to buy what – it is not until a few days before I travel that I start thinking about if I need a parking slot or need a transfer.”
As for data, Berntsson also referred to the need to look beyond big data and bank on small data as well. This is an issue at large with other suppliers, too. For instance, hotel companies are recommended to overcome analytical limitations of individual “silos” of market and channel segment data and rather improve upon their demand segmentation and also net contribution of each segment. Citing an example, Berntsson mentioned, “If I travel from Stockholm to Rhodes it is possible to be more predictive that will convert more – it is possible to pre-package a parking or transfer offer in relation to my flight times, it is likely I need a transfer in Rhodes around the time I arrive? The airline know what aircraft I am on so proposing me seats and meals should be easy, also post-booking – when it is likely I am prepared to share more of my wallet, but very few do.”
2. Be open to change: Airlines tends to be operationally, process and cost-focused, and at large aren’t savvy enough to embrace the requisite organizational change needed to become a retailer. As highlighted in one of our recent articles, airlines can start small, in a smart way and capitalize on opportunities. For instance, Paxport referred to the “pre-order” service in Scandinavia. “Airlines experience a €70 average order buying, very often with a 15% conversion. Customers can choose their duty-free in advance. Technology isn’t an issue rather the drive or willingness to do it is the biggest hurdle. Look for right KPIs and return on investment with whatever is being done. Airlines should look at the 15% conversion rate rather than worrying about .5% fulfillment error!
3. Changing the status quo: Berntsson points out that airlines are quite stuck in their internal - sometimes operational processes, with risk management and that’s understandable. “But there are ways to work around that, but you will need to look at the whole picture – if I change my distribution how will that work with my current payment and settlement set-up? It’s about daring to invite a new 3rd party company to help, will that increase the cost base of the airline? Not necessarily – there is “new money” to share with those companies, and in my opinion that money is the only way to break up an old business model that is costing the airlines a lot of money. But for a period of time it will have to be a mix of old technology/ business model and new technology/ business model, if you can manage the transition smart enough you will come out at the other end of the tunnel a much “happier” airline.”
The number of airlines opting to alter their respective commercial strategies have only been few till date.
4. Evaluate connectivity for differentiated content and offers: Airlines can refine their API connectivity and are trying to work on an exclusive basis or in a tailored manner for their offerings with intermediaries. For instance, flight offers and bundled ancillaries for certain routes for a specific agency or a tour operator. Changes are being made in the merchandising engine, rules are being defined, content is being delivered etc. So this doesn’t involve any traditional means of distribution.
Also, when we talk of distribution of content via an API, airlines need to be wary of the initiative. NDC is essentially defining the model and workflow of the airline creating and delivering the offer. The very nature of the NDC initiative is to create a robust schema that enables any airline to create and deliver its offers to any distribution channel or third party entity. As we highlighted in this article, there are airlines which have implemented NDC APIs, but have no real strategy on how to improve their distribution-related KPIs. Just implementing some NDC APIs will not drive revenue, nor improve customer service.
Berntsson agrees and says NDC will not make airlines better retailers, but it will make it easier from a technological stand point. NDC and One Order are fine, but “it is about a lot of different things; to become merchandisers, to know your customers better etc. – some are getting there slowly but surely,” he says.
As for a challenge with NDC, while deploying an NDC API between airline and intermediaries there have been evolving versions of the schema. This meant the likes of meta-search engines have had to improvise their implementation for different airlines. Doesn’t this increase complexity around a standard that is supposed to be uniform? Yes, it does,” said Berntsson, “Not only that, but even if being a standard from a communication perspective, doing the same calls etc., the offer of the airlines, their product structure, business rules, ancillaries can all differ from airline to airline making it more complex. One way of getting around that would be to use a 3rd party technology provider handling versions and differences between airlines.”
So be it for what, when and how to offer to a passenger, drifting away from the status quo, embracing change as an organization or making the most of NDC standard, airlines need to be swift to step up the average order value.
Hear from senior travel industry executives about digitization, differentiation and NDC at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).
For more, click here
Follow Ai on Twitter: @Ai_Connects_Us
First Published on 10th July, 2017
Airlines have been contemplating initiatives about personalisation and big data.
Now is the time to act on something small (and build on it), says Boxever’s Enterprise Sales Director, Liam Ryan. “If you start small, one can in effect prove one simple use case. Build on it, two use cases, three and more, and not within a span of one year or months, rather in a matter of weeks, $ or dollar return and value for your customers can be shown to the airline,” recommends Ryan.
Ryan says the likes of airlines and OTAs find it tough to deal with various sources, both homogenous and heterogeneous, data sources. And then the hurdle is how to put it together. “Once an organization can put it together, then they have the ability to figure out what they want to do with it,” he says. He goes on to explain how airlines can be precise with what they intend to, and then build on the same to craft a “personalised, special moment just for passengers, and a result airlines ends up offering value to them”.
Data-driven organizations ensure their customer data collection fits in with constantly evolving behavior based on their context. So if an airline doesn’t end up connecting the dots and act on the context of a situation, then it would end up missing out on optimizing the experience.
Further, Boxever asserts that in order to attain personalisation at scale, it is vital for any organization to being able to merge all of their data, to personalize with the help of artificial intelligence (involving data science and decision making algorithms to handle increased complexity) and finally to engage across every channel – in essence to be available where a consumer is, not where you’d like them to be. If anything is disconnected, it won’t work.
First Published on 6th July, 2017
In the context of airlines, one area that is being evaluated is how digitization can impact the way what is being sold and does it depict differentiation, writes Ai’s Ritesh Gupta
Digitization is a core focus of enterprises today, one that results in relevant response to every customer interaction, data-driven decision-making across the entity, ability to differentiate the product, quick introduction of products etc.
Of course, IT and systems need to support digitization. Internally airlines have to gear up for apt IT infrastructure and refine their merchandising, e-commerce capabilities. So, if an airline intends to work with a tour operator, how quickly rules can be defined in the merchandising engine to offer tailored bundles via standarized connectivity that results in control? Another area that needs to be assessed is streamlining of the overall functioning of the industry, for instance, the reliance on business processes that are still based on the paper-based workflows. If the combined impact of complexity in both technology and distribution leads to inconsistency for the passenger, then there would always be a gap in the passenger experience.
If an airline is gearing for the digital world along with the interfaces, passenger-facing systems, data collection, and data processing on top of the legacy systems, then is it the right approach? As a section of the industry asserts, don’t overlook the limitations of legacy systems as they can’t deliver in certain areas because they were never designed to.
Ai’s Ritesh Gupta spoke to Travel in Motion’s Daniel Friedli about a couple of issues, right from introducing new products, to being in control of the offer:
If we talk of agility, why do airlines tend to miss out on creating the offer themselves? What should they offer in real-time? Why aren’t they showing the product despite investing in the same, be it for aircraft, meals etc.? Do complexities like interlining hamper the direct creation of offer?
Friedli says there are several reasons why airlines may not be as agile as the consumers expect, and as consumer retailers or other industries may be.
One of the major drawbacks for those airlines that chose to use ticketless systems has always been interline and codeshare distribution with most carriers that do have the traditional ticket-based systems.
“One (challenge) certainly is interlining, although that is not the main driver,” he said. (This is understandable as it is an industry transition phase and interline partners will likely still require the legacy connectivity to be maintained and you will still need the legacy systems to distribute through traditional GDS channels until a critical mass is built in the NDC Aggregator channel to replace it).” Others are the complexity to distribute any product through any channel very quickly and easily,” Friedli says. According to Friedli, it often takes 9-12 months to get a product live in all channels, and that makes for a very expensive launch. Another reason is the lack of ability to ‘test and learn’ – meaning the ability to try a new product quickly and easily, with little investment, and to test this across various markets – ceasing sales if the product is not successful. “That means, each implementation is a large risk because considerable effort is required for an implementation. Should the product fail, it could end up being an expensive investment,” explained Friedli. So airlines need to automate every aspect of test and deployment, and release fast. Architecture is one critical aspect of digitization, and it is all about agility and speed-to-market.
Also, airlines need to reach outside their own sales infrastructure with the same capabilities that they can do internally, such as through their e-commerce site. Standardization of the IATA NDC XML schemas is playing its part here - a communications structure to support dynamically-created messages that contain varying and targeted offers, potentially specific to each customer. As for offers, airlines need to work out a mechanism that can take all the data points, checks business rules and availability, bundles the offer items, calculates the pricing, and deliver it along with branding and rich media to the passenger.
Airlines have been separating core functioning of a PSS that are needed to run operations, and opting to control their own merchandising, e-commerce and API technologies for differentiation.
“It is foreseeable that more and more of the offer creation process will be done by individual systems. Some may be within the PSS, others may not. That isn’t relevant. It is about combining the revenue management with the product variety and price determination. Mixing that with segmentation or personalisation, and understanding the context of a request – that is where airlines are moving to. Currently, systems are being developed to enable this, and NDC and “API-zation” in general is enabling the airlines to then push these intelligent, contextual offers out to the customers,” mentioned Friedli.
As for supporting ATPCO-based fares as well as non-ATPCO fares, Friedli indicated that ATPCO and non-ATPCO pricing will exist hand-in-hand in the short-term. “The majority of mainline, traditional airlines will continue to use ATPCO pricing for the foreseeable future for pricing to many channels. But I think we’ll see ATPCO pricing increase in the level of flexibility. Not so much in terms of the interpretation of the fares, but rather the outcome of the price where the discounting of the prices will be discounted by any given percentage,” he said. “At the same time, we’ll see non-ATPCO pricing increase for many of the newer channels, such as NDC connections or other direct connects. This is basically the premise of the LCC pricing and traditional airlines are moving, into that direction.”
Hear from senior travel industry executives about digitization, differentiation and NDC at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).
For more, click here
Follow Ai on Twitter: @Ai_Connects_Us
First Published on 4th July, 2017
Bookings for ground transportation and mobility at large haven’t been streamlined yet. They aren’t booked as some of the other trip essentials, say hotels, car rental or flights, are shopped for. Ai’s Ritesh Gupta spoke to Rentalcars Connect’s MD Fraser Ellacott about how this lucrative pie is shaping up.
What can simplify travel shopping?
If one scrutinizes overall trip planning and booking process, then the time spent on taking a decision, buying trip essentials from various merchants, completing a transaction without any hiccup etc. are some of the major hurdles that can hamper the experience.
Travel suppliers and e-commerce intermediaries are assiduously looking at the blend of content, technology and data to figure out the intent and come up with a relevant offering as per the stage of the journey. The key here to be a part of those, as Google says, “micro-moments”. These moments can be scattered across various ecosystems, such as Facebook or Google, airline.com, OTAs, meta-search engines etc.
Consumers do find a way out, and there are plenty of examples of how the blend of devices, technology, interfaces, one-touch payment etc is resulting in new experiences:
· Seeking details from a chatbot and eventually completing a transaction.
· Interacting with a family member over a messaging platform, deciding on a restaurant and ordering a cab together from respective locations.
· Starting a search within in an ecosystem, say Facebook, and with just one more click gaining access to offers from different vendors to book!
So the onus is on the entire travel e-commerce sector to be a part of this era of seamless, contextual shopping.
Choice and seamlessness
Established organizations like the priceline group are looking at the entire travel booking funnel, and it is clear that they aren’t averse to embracing change and astutely looking at the collaborative route to break through the shackles of complexity.
For instance, booking.com is now looking beyond accommodation. The team is always evaluating new ideas, like the new chat interface Booking.com Assistant, for example.
As for content, bookings aren’t just restricted to conventional or long-established options – be it for accommodation or transportation.
So, another priceline company, B2B car rental specialist Rentalcars Connect, is keen on expanding its “ride” and “drive” offerings.
“We assess the future from two lenses,” says Rentalcars Connect’s MD Fraser Ellacott, referring to B2B partners, including airlines, OTAs etc., and the consumer lens, developing the product for the B2C business. “Transport can be difficult, complex, and fragmented. And it’s only getting more complex as consumers are given more and more choices,” says Ellacott. “As customers we’re faced with a barrage of different suppliers, transport types, ways to buy, ways to pay… it’s confusing, especially when you’re in a place you don’t know. We need to solve the customer problem – make it easy for them to get around and work with our partners to create a frictionless future.”
Ground transportation content
The team acknowledges that there is a need to offer integrated solutions for ground transportation to its partners. According to Ellacott, as per one of the recent company surveys of over 3000 partners spanning across all major markets, 83% are considering options beyond car rental, and 78% strongly looking for one partner for seamless integration and offering choice to their customers. “This is a big validation of our strategy (to scale up ground transportation capability) and craft a frictionless experience, easing out hassles associated with bookings (related to this part of travel),” he said. So on the B2C side, there is Rideways offering for bookable taxis, transfers – luxury cars, mini vans, compact cars etc. and further being scaled up to train and shuttle buses over the next six months. “All products are offered to partners as well. We are looking at all forms of transportation, mobility in general.”
“If one considers a trip for a family, it would feature airport experience, then reaching to the accommodation booked for the destination, getting around via various ground transportation options…it’s about offering easy solutions to all of this, and we are looking at content to match the needs of travellers,” shared Ellacott.
Monetization – massive opportunity
Ellacott acknowledged the evolution of booking.com and mentioned that his team is closely aligned and supporting the broader portfolio. He added that in-trip experience and excursion do account for massive share of a customer’s wallet. Overall, the car rental category stands at $60 billion and ground transportation $200 billion.
If we talk of bookings on the excursion side, there is a big gap as of today. As for the opportunity, as per my recent experience to Iceland, it took 5-6 sessions spanning over a week to understand the location and the sort of in-trip experiences that suited my preferences. For a couple and child (kid under-11 is generally free to travel) one can spend around $1500 or so for 4 day-long excursions (two of the most costliest tours and two starting range ones) as per the price list of itineraries being sold by two of the leading bus operators (the most popular transportation other than car rental). If we Google “Reykjavik to Jorkulsarlon, an exotic 700 km return, 12-hour road journey”, there are only few bookable options, although there is plenty of content from review sites, blogs etc. including Lonely Planet, Viator, there was only one vendor and that too at the bottom of the search. Even post booking, there wasn’t any proposition considering the data trail - Google (search, videos, check-in details with Gmail), Booking.com, Airbnb.com (including clicks on the “experiences” section) and Finnair.
Ellacott asserts that vital steps are being taken in conjunction with airlines. He referred to a widget launched on Finnair’s website, featuring transportation options. “Increasingly we are finding that airlines are looking at broader interest-, experience and ancillary aspect attached to that. Airlines have a wealth of data, who is going, where they are going…such contextual, meaningful data can contribute in personalised offers, and airlines are well placed to do it.”
Partnerships driven by data
When companies open up their respective APIs, as we have experienced, it results in experiences that save consumer’s time and effort. In fact, simple interfaces or the post booking service aspect via timely reminders or notifications, can get customers hooked to book often. But airlines do need to facilitate sharing of data, although the reluctance to do so is also understandable. But, as Ellacott also says, data is key to raising the conversion rate. “We have over 400+ strong team that is involved in testing and iteration to work out best possible options,” he said. Initiatives like A/B testing are done and airlines tend to benefit from best of the results. Ellacott, who has worked with three airlines during his career, said airlines need to step their data sharing capabilities, and tend to opt for white-label solution since it is easier to work out technically. “Ultimately consumer knowledge is power, there is a need to understand how engines behind the product work and accordingly one can personalise the offer. Those airlines that invest in this are well place to capitalize on this,” he said.
Other than airlines, Rentalcars Connect is exploring possibilities with various ecosystems to capitalize on the intent of the travellers. “Social media, review sites etc. are rich in terms of consumer data, and imagine how significant the opportunity would be when one can refine and present with relevant options, be it for a business or leisure traveller,” said Ellacott. Indeed big OTAs are well-placed especially using scale to their advantage, as they are able to address issues with talent, technology and capital, and be part of the emerging trends.
It is clear that established online travel groups are in a position to broaden their partner base, be it for top of the booking funnel and moving down, for instance, partnering with an airline when abandonment happens on their airline.com. “We don’t prioritize investment or show inclination toward any one partner. But do we work closely with airlines to make them understand the significance of intent, not to bombard customers with irrelevant options across various touchpoints, rather streamline the booking flow with vast products to choose from but only presenting refined, best suited options. Also, being sophisticated with retargeting in terms of relevance, frequency, and maximize the attachment rate. If done in an unplanned manner, then retargeting can adversely impact the brand loyalty as customers tend to unsubscribe, get annoyed,” shared Ellacott.
In all, Rentalcars Connect is forging data-driven partnerships with various stakeholders.
Gearing up for trends
Ellacott mentioned that in addition to content, data and integration of the offerings, payments in another area of focus.
Also, it is imperative for the company to keep a tab on how some of the trends are expected to impact the functioning of the car rental industry. So be it for self-driving technology or evolution of the traditional car rental model, Rentalcars Connect’s leadership team is constantly evaluating how mobility is shaping and how in certain markets people are going about car ownership. A case in point is peculiar ways in which China has shaped up over the last 18 months or so. For instance, in first- and second-tier cities in China, car sharing has gained prominence, a trend unsettling what was once a key segment for car ownership. Supply of ride sharing services has resulted in extra convenience for short-distance mobility requirements.
“We are observing trends in China, this market is going to leapfrog compared to any other when it comes to mobility,” said Ellacott, referring to access vs. ownership as well as China-based bike hire company Mobike gearing for operations in Manchester and Salford. The GPS-tracked smart bicycles can be locked anywhere and unlocked using a smartphone app.
Hear from senior travel industry executives about latest trends in ancillary revenue generation at the upcoming The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).
For more, click here
Follow Ai on Twitter: @Ai_Connects_Us