Ai Editorial: Assessing a GDS’ approach towards NDC validation

Ai Editorial: How a group of Amadeus’ stature is looking at NDC-XML oriented standard? Ai’s Ritesh Gupta finds out
First Published 6th February 2016

The quest of being in control of what is being offered has meant that airlines are continuously refining their distribution and IT-related aspects. If on one hand, the industry is finding ways to cope up with technology that is inflexible on the other there is talk of adopting a retailing approach that maximizes value for both the airline and the traveller. Amidst all this, it is interesting to assess the role of a GDS.

Are GDS solutions compatible with what the industry is working at? Would the commercial dealing between carriers and GDSs change as there can be provision for additional content? It could be argued that a PSS vendor who is also a distributor has a conflict of interest when it comes to enabling more direct distribution, thereby putting distribution revenue (GDS segment fees) at risk. So how to balance out this conundrum?

Here we assess the current state of affairs, and look at some of the issues from a GDS perspective:

  • Control: Airlines, in general, feel that their current technology does not provide sufficient control over what they sell.  

“Airlines always have control of their offer. They decide what, when and at what price they sell. NDC as an XML messaging protocol, can help airlines transmit rich content more easily, but ultimately, it is the travel agency that decides what is displayed based on the consumer’s needs,” says Gianni Pisanello, Strategic Marketing Director, Airline Distribution, Amadeus.

Pisanello says with NDC-XML, and any other messaging protocol, airlines control the content they send to travel agencies. “Travel agencies on their side optimise the information they display—be it airline information or hotel information—to maximise sales. This benefits both the airline and the travel agency,” says Pisanello. “In that sense, travel agencies play an important role in selecting what information travellers see at which time, leveraging their retail expertise to maximise sales for the airlines. For example, a travel agent may notice that if a certain picture is shown at a later stage of the buying process, rather than at the outset, sales improve. Or they may see that certain types of pictures work better than others, and as a result they will focus on the former to increase conversions.”

  • Strengthening merchandising: NDC-XML is not a constraint in improving merchandising capabilities, and it intends to actually facilitate them. NDC-XML will need time and resources to be invested before it is widespread, efficient and effective.

“In the short term, airlines can already benefit from merchandising capabilities through the existing infrastructure. NDC-XML allows for a lot of flexibility, and this is one of its strengths. In order to deliver the economies of scale that everyone seeks and needs, the industry will need to continue to work closely together to find a balance between that flexibility and effective standardization as NDC-XML gets deployed,” says Pisanello.

  • Consistency: GDSs are already working towards making it possible for airlines to merchandize their products via travel agents in a manner more consistent with airlines’ own websites.

“In the first three quarters of 2015, we saw an 85% increase in the amount of ancillaries being sold via travel agencies. When we look at our data, we see cases in which 15 out of every 100 air bookings by OTAs include an ancillary sale, and that figure rises to 30 or 40 for certain carriers and agencies,” Pisanello says.

In addition, there are three times more OTAs with integrated airline ancillaries in 2015 compared to 2014. 

Talking of OTAs, these intermediaries offer comparative shopping options on multiple airlines, with focus on letting one compare all flights and associated options and services in full transparency. Pisanello refers to ewo examples:

  • Fareportal on their CheapoAir site enable their users to book paid airline seats using seat map displays with prices. Offering a wide range of seat options from a large selection of airlines means a smoother booking flow and the flight experience their customers really want.
  • Expedia and fare families: they make it easy for travellers to see all of the options and to feel empowered to make the right decision for them; so that travellers can see all the new options airline partners are offering, with clear choices around all of the extras they might want or need, helping them to select the ticket that’s right for them for their specific trip.
  • Standardization: We are already seeing that usage of NDC -XML by airlines and GDSs will vary in its shape and form, resulting in a mix of EDIFACT and XML connectivity. 

NDC-XML is in the early phases of its development, stated Pisanello.

He explained: “Work has to be done to make sure that standardization is reached. The industry should not be disheartened however: evolution in technology, in processes, and in behavior takes time and requires a lot of collaboration, and this is normal in large scale projects. The players in the travel industry will have to work together to try many different things, to experiment with different tools, and together we will converge to a formula that delivers value to all participants, especially to the traveller.”

  • Commercial dealing: NDC is an opportunity for airlines to start controlling their own content and how it is presented in GDS and other indirect channels. “The major threat is that the adoption will cost airlines a lot of money, but at the end the additional content will be another opportunity for GDS to charge airline extra. It also seems that they are not clearly adopting the NDC XML standard, but building their own XML schemes, which also add complexity related to interfacing and data flow,” share an airline executive.

Commenting on this, Pisanello pointed out that NDC-XML being just a messaging protocol, “the high level dynamics will remain the same”.

“As the industry works together and creates new services and features, opportunities for all parties should arise,” he added.

Avoiding different versions of XML: It is being pointed out that GDSs have integrated airline content using proprietary airline API interfaces for several years and airlines have in fact been employing the principles of NDC, such as dynamic pricing control. However, this is not scalable as each airline’s proprietary API requires custom development. NDC will standardise this approach for airlines wishing to adopt NDC and benefit from GDS distribution.​

Pisanello clarified and explained: “Dynamic pricing does not depend on API interfaces. Airlines apply dynamic pricing through their own websites and the GDS all the time. However, proprietary APIs are not always scalable for widespread adoption. NDC-XML will help increase this scalability through a level of standardisation. The industry will need to further standardize the data elements and the booking flows to benefit from full economies of scale.” Explaining further, he said let’s focus on the booking flow. Let’s take the example of selling an additional bag. Two airlines may have different ways of selling that extra bag. One airline might include the sale of that extra bag at the same time as the sale of the flight, allowing for both to be purchased at the same time. A different airline might only offer the sale of an extra bag once the flight has already been purchased. Although the outcome is the same, the purchasing flow is different. This kind of difference means each airline will send a different sequence of XML messages, requiring custom integration for each airline. This in turn limits the level of adoption that the industry can deliver. “NDC-XML provides a strong first level of standardization where XML is used, and avoids many inefficiencies that different versions of XML can create. Based on this foundation, the industry will naturally and in practice further standardize how NDC-XML is applied in order to facilitate the widest adoption. This will involve a process of trial and error.

The industry is looking at a single, standardized set of XML messages that can feed all channels. As Gianni says, proprietary APIs are not always scalable for widespread adoption. NDC-XML will help increase this scalability through a level of standardisation.

So is the industry collectively moving towards working out right API strategy that is PSS, channel, and device-agnostic?

“Over time the industry should converge to NDC-XML when XML is used, as this will enable the widest adoption. Some airlines may opt for different approaches depending on their business strategy,” concluded Pisanello.

First Published 6th February 2016

Ai Editorial: One Single Flight Shopping System to Rule them All?

Can there be one single system that will transform flight shopping?  

The travel industry is reinventing flight shopping, and that’s a major data, technology and user experience challenge. Ai’s Ritesh Gupta interviews Routehappy’s CEO Robert Albert about flight shopping

You are searching for a flight, and there are amenities that you are specific looking for, say Wi-Fi. You also intend to make comparison of in-seat in-flight entertainment. You have also heard about the possibility of a virtual tour of the aircraft. How easily can you do all this? Airlines, OTAs and meta-search engines are trying to find ways to facilitate all this and more in our flight search. There are ample signs that we are now moving beyond price differentiation, which by its very definition is a commoditized way of comparing flights. 

If we talk of airlines, there are certain aspects that need to be taken care of. For instance, a consistent fleet type can only strengthen their brand positioning as there would be uniformity in amenities offered.

As an established OTA, Expedia is focused on ensuring its visitors know what exactly is included in certain flight prices at the time of purchase, and allowing them to opt for a ticket with the specific attributes and on-board services. Exploring premium seating options via the online seat map is an example.

Then there are other bigwigs like Google collaborating with airlines to pave way for a real insight into what an aircraft looks like. For example, one can count on the blend of Google Maps and search to check “Virgin America, LAX” for virtual tour of its aircraft.  

Level of differentiation

The term differentiation gets tossed around a lot in the travel sector. So how are various entities going about flight search?

“Differentiation is the theme in flight shopping. Airlines have differentiated their products comprehensively, including fare types, hard product, and services. Flight shopping channels (direct and indirect) are catching up to display the differentiators,” says Robert Albert, CEO, Routehappy, a company that helps airlines to deliver their product attributes wherever flights are sold. The company has been in news for signing a spate of agreements this year, latest being the one with Kayak.

So is there any barometer for product differentiation?

Albert says airlines are at something like “5-15% of their differentiation potential in their own channels” overall, and closer to “0-5% in indirect channels”.

He referred to Delta, Air Berlin and Lufthansa as worthy examples of major airline direct channels that are increasingly differentiating products in their own channels. “Expedia, Google and Travelport are leading the pack in indirect at the moment, with everyone else (GDS, OTA, meta, OBT) working on their differentiation strategies. Fare and product attributes need to be presented in a way that is easy to understand, digest, compare and personalize. Our industry is reinventing flight shopping, and that’s a major data, technology and UX (user experience) challenge,” explained Albert.

Knowing about amenities that I am looking for

Keeping aside standard amenities or something can be chosen from options on a site, there is a possibility that one would want to know about certain aspect of a flight. Let’s say, I am fond of chocolate mousse and tennis. I am flying from London to New York and if I were to search for “chocolate mousse tennis London New York flight” – how quickly one would be able to find relevant info on an airline.com site?

Albert says the first question to ask is when you can consistently search for the basics: flights with Wi-Fi, power ports, seatback entertainment, fresh food, lie flat seats, specific aircraft, baggage, upgradeability, lounge access, etc. He says it’s a combination of providing better information when consumers are searching for flights in general, but also helping airlines and consumers understand product attributes in up-sell offerings.
“Once we achieve that, then airlines and distributors can focus on more nuanced personalization like what kind of food or entertainment offerings are available. As an industry, we need to build our new foundation first. The next few years will be focused on basics of a richer shopping experience. After that you might be able to find flights that serve chocolate mousse and show tennis matches on the seatback,” shared Albert.

Continuing with the above example, when I searched for “chocolate mousse tennis London New York flight” on Google UK, there was an old media review of Thomson’s Dreamliner long-haul flight from the UK and featured a comment about chocolate mousse too. It was ranked eighth, but was closest to relevancy. So  would search engines/ meta-search sites be the best options?

“We believe the industry needs a standard, trusted, fair, and transparent scoring system based on facts first, which can then be personalized,” said Albert. His team built the Routehappy Scores & Amenities API to accomplish this goal — a baseline scoring system by flight and cabin that rates the most important aspects of the experience: aircraft, seat, amenities, and duration compared to the fastest option on any route. Once airlines and consumers no longer have to wade through 100s of flight options and instead can focus on the best options for their trip, airlines and distributors can then provide more information to help flyers pick the best possible product for themselves.

Avoid being generic, inconsistent

It is important to assess whether airlines are overlooking mistakes they are committing when it comes to overshadowing their own product attributes on their brand websites. Albert says it needs to be understood that this is a very hard problem to solve.  “…so I commend all airlines that are enriching the flight shopping experience with differentiation content. Everyone needs to learn what works best for their own website, customer base, airline products, etc.” He added, “Having said that, the major issues I see on airline websites is overly generic or inconsistent presentation of product attributes. By generic, I mean information is presented in too general of a way to be truly useful to a consumer’s decision process or it’s not presented in the decision flow. By inconsistent, I mean information is presented inconsistently so it doesn’t reinforce usefulness, importance, comparability, or accuracy of the product attributes.” 

Data + content + tools

Airlines need to capitalize on data, and content, and make use of tools to stand out with a differentiated offering.

“We built Routehappy Hub to help airlines and distributors do exactly this — a standard platform for airlines to create, manage and deliver their rich product attribute content in any channel they sell or display flights. At the core is our rich content standard, UPA (Universal Product Attribute),” said Albert. This standard combines descriptive and visual content targeted by aircraft, cabin, flight, airport, fare, segment, channel and other criteria, for display in any channel. “Think UPC or SKU but for air travel. We currently have a dozen major airlines creating their UPAs in Routehappy Hub and sharing it for previews, testing and live pilots with major OTAs, metas, GDSs and their own channels,” shared Albert. 

So how to innovate flight shopping with differentiated, personalized content?

Solving this very large problem requires three things:

  • A common technology platform and pipes the industry can share (Routehappy Hub)
  • High quality, targeted product content from airlines (airlines creating UPAs in Routehappy Hub).
  • Product content displays intelligently in flight search results — amenity icons, photo slideshows, product attribute grids, filters, recommendations, upsell offers, etc that are integrated in a way consumers find useful and easy.

Airlines are creating their standard UPA content and sharing it with major distributors and tech platforms for integration.

Cohesive approach

A cohesive approach is needed from the industry to pave way for differentiation.

As Albert mentioned, common platforms and standards are critical for the industry to de-commoditize.

He also stated that organizations like Farelogix, Sojern, Adara, Travelport, Amadeus, Sabre, ATPCO, IATA etc. are all addressing different aspects of the differentiation merchandising opportunity, each with a healthy respect for common platform and standards.

As a rich product attribute content platform, Routehappy Hub is for delivery in any device or touch point.

“Our platform can easily be integrated with other platforms that are responsible for other aspects of merchandising innovation — such as revenue management systems and dynamic merchandising offers. That means that amenity and product data can be integrated into other tools airlines use to inform prices and offers — and then that same product information can be integrated for display to consumers. Each platform needs to do what it does best. There’s no single system that will transform flight shopping itself. It’s a cooperative, worldwide business and technology undertaking,” he says.

Finding the best ways to integrate differentiation content will be a theme in flight shopping for years to come.  

Airlines, distributors, and technology partners need to come together to adopt common platforms and standards to make airline merchandising as good as it is in other industries — and it’s happening.

Follow us on Twitter: @Ai_Connects_Us and Checkout our Events at: www.AiConnects.us

Ai Editorial: In-flight analytics - can I have my favorite chocolate mousse on-board?

In-flight analytics - can I have my favorite chocolate mousse on-board?

This case study is about overcoming the disconnect between what travellers expect and the effort behind data, analytics and personalisation. Ai’s Ritesh Gupta explores the same with his recent flying experience   

I love chocolate mousse. In the recent years, as an economy class passenger, when I have travelled to the U. S, be it for via Air France KLM or British Airways, I have had mousse as part of the in-flight meal. Taking two or even three back-to-back flights over a period of 24-30 hours is no fun. But whenever I had mousse it did refresh me, helping me remaining afloat for few hours at least. The hiccup here is that I am not too sure on which sector I would be served my favourite dessert.

And the worst part– the airline crew having it and not knowing I want it.

Moment of magic @ in-flight: I recently flew four long-haul flights in one trip via British Airways.

Outward: New Delhi to London to Fort Worth.

Inward: San Diego to London to New Delhi.

The chocolate mousse was served as part of my in-flight meal on the following sectors: London To Forth Worth and London to New Delhi sectors. The brand was same. On my last flight, I asked the air-hostess about the brand of the particular chocolate mousse. She didn’t know it, but she served me one more. It delighted me no end.

One way to feel happy when you are flying two back-to-back nine-hour flights.

So before we hear from experts about what can pave way for this not just being a co-incidence, let me share relevant details:

Trip planning, booking and journey   

Booking was done by my company, Ai, via BA website. As for indications that I wanted chocolate mousse, I searched for all the sectors on Google and typed “Chocolate Mousse on BA flights”. This was done via my PC at home and my iPhone. This was done over a period of 2 weeks before my first flight. Other touch-points: I used web check-in for all flights via my PC at home and laptop while on the road, and I also reserved my seat (aisle). I also accessed my in-flight email (Gmail), scanned check-in image via my iPhone for all the trips.

Profile: I am a laid-back traveller, and I don’t think of accruing points/ miles for any loyalty program. As for BA, I travelled after eight years (email id was same).

Points to consider:

  • Understanding my intent as per my usage of devices, Gmail and airline website: Predictive analytics is all about behaviour in context, says Boxever’s VP – Sales, Ultan O Brien. There is a need to understand whether you are in inspiration mode, shopping mode, buying mode or travelling mode, and what different devices you use in those modes. So, an example might be that you tend to search for possible destinations at lunchtime on your office desktop (Mac) or laptop (Macbook), shop in the evening on your (iPad) tablet, book on your home desktop (Windows PC) and travel on your iPhone.  

The context may be derived from external factors - such as looking for sunny destinations in Spain when it’s raining in Dublin, or internal factors - such as searching is generally done on a large screen when time to concentrate is available but firm decisions are made concrete with family members in the evening in a casual manner perhaps sitting on a couch with a mobile tablet device!

These are all things that can be correlated from analytics and understanding the internal and external factors that drive behaviour makes irrational behaviour predictable. 

  • Is Google in a position to offer me something through any of services to connect the dots between my search and Gmail (since dates of travel/ flight itinerary were in Gmail and I searched for BA on Google as well): Google has long been commercialising this data, says O Brien. He says they are more adept at stitching together the information they have on your profile (travel intent) than anyone else on the planet. However, Google’s primary business model is advertising, so they are always using this information to sell onto the travel service providers. He says if one compares the cost of acquiring customer from Google between travel and financial services - travel is twice as expensive per acquisition and the conversion rate in travel is around 6% rather than almost 30% in financial services. 
  • Is there any way BA could have ascertained that I like chocolate mousse and I was looking for it on-board?: Linking the in-flight ePOS device or seatback ordering system linked to the seat allocation number in the PSS cross referenced with the PNR details in the booking engine (which all exist in the single view of the customer) captures the specific preferences of meals, or products (food preferences such as the specific chocolate mousse, drinking beverage preference such as beer, spirit or wine, or service preference such as an additional blanket/ pillow). “Not only could this be predicted but it could be pre-ordered into the standard packing list for that flight,” said O Brien. It is possible to plan dynamic catering automation, and the next natural step is to focus on prediction of food/ beverage/ service preferences onboard.

Rachel Besant, marketing manager, 15below (the company focuses on data sources which the airline subscribes to - i.e. the FFP, reservations systems, other third party providers including merchandising etc.) says if BA has a system which logs the food options available on their flights, then it is possible to integrate with this data source (whichever system  - third party or internal solution the airline chooses) and offer/ pre-order chocolate mousse, should BA intend to offer this service.  Airlines will be asking if this is a significant enough differentiator for the additional logistical complexity this adds.

How would it work? 

15below, for example as a notifications and workflow provider, could directly hook into this data source and proactively send notification to traveller with option to pre-order their meal. They would then record this action back into the PNR (and other system such as CRM, depending on how BA want this to work).  The tailored workflows would continue to record and extract traveller preferences in order to send very targeted, personalised and timely offers.

  • Empowering in-flight attendant: The flight attendant didn’t know the brand, but served me mousse. So the question in this case is - can the in-flight attendant be empowered in advance to offer me an option to buy mousse or have it complimentary (which she offered me anyway)? Airlines need to work out both the options. O Brien said the item should have been added to the packing list as there was a clear demand – as I indicated a preference towards it on a number of occasions and this was acknowledged. In fact this should almost be self serve - like a digital menu - where you are given preferences to choose to have these options on-board and whether you might be willing to pay for them.

The actual decision to charge or to provide as complimentary should be based on a couple of items bubbling up from the analytics - loyalty status and potential lifetime value to the brand, what’s your recency frequency metric, your average order value, your service recovery score (have the airline messed up with you previously – e. g lost bag, cancelled flight, spilt coffee) , and your social influence score (how likely you are to tweet (or write an article) about the experience?

“So the analytics should be able to predict you want a mousse on the next flight - the decision or option to charge you based on your profile - inform the flight attendant that you are important to the brand and not to charge you for the pleasure,” shared O Brien.

Another executive told me: Realistically it probably wouldn’t be feasible to do any of this without pre-booking your meal (beyond just selecting ‘VGML’,  for example).  In-flight staff don’t have the ability to record what meal you selected, the source mentioned.

  • Crafting an offer around chocolate mousse: I liked the complimentary part so much that I shared this with my daughter and told her it was better than what is served on other European flights. Can I be offered a package around this to enjoy with my family whenever I fly again (with any airline)?

There are airlines that allow one to add chocolates / champagne for any wedding couples on their honeymoon as a pre-order component, to get a fillet steak in economy on transatlantic flights. Also, as per the feedback that I gathered, say if you’re sitting in economy but you’d like a First Class meal, you can now order this (at a cost).  A specialist then arranges all the logistics and supply of these meals ready for the flight take-off.  This is just one way for airlines to offer a more personalised service whilst making some additional revenues.

The key restriction right now is:

  1. Capturing these preferences organically
  2. Linking the preferences to the delivery capability (last mile operator like the caterer and their systems) and,
  3. Execution - deliver of the order at the right time in the right manner (the last three feet - training crew to manage the information in a relevant rather than intrusive manner)

Future

The future of in-flight analytics should be able to offer you the rest of the movie you watched (and didn’t finish) on the last flight - recommendations of movies based on what I have watched - this could be applied to food, drink, duty free products, gifts and home delivery products.

This is the same outside the cabin - offer me a specific coffee as I am entering the airport to have it available in lounge - (Air NZ are already doing this with a Barista type service), baggage location, transfers if I like it with an understanding of my destination (such as office or home locations).

As O Brien says, analytics will re-define the shopping and travel experience over the coming years and make it frictionless to offer and consume preferred products.

Follow Ai on Twitter: @Ai_Connects_Us and Checkout our events: www.AiConnects.us

Ai Editorial: How IATA's NDC is starting to shape up

Dealing with schemas to give shape to IATA’s NDC initiative  



Ai Editorial: Standard development is the core to the entire NDC initiative. Ritesh Gupta assesses how changes continue to take place in “end-to-end” schemas to combat issues

Is the concept of ticketing on its way out? As we move into the era of XML based concept of travelling, it looks like the industry is drifting away from ticketing and associated “multiple coupons”.  

So how are changes in coding or schemas set to drive it?

This fascinating aspect lured me into finding out how executives representing different entities, including ones from airlines, are currently working on it. Working out a new technology communication standard for the distribution of air travel is riddled with challenges.

The first version of “end-to-end” schemas has already been published, but the work is being done on an ongoing basis.

Changing a schema

Issues are being discussed on an ongoing basis by a relevant IATA working group related to the management of schemas. For instance, one of the recent ones was related to a business rule document titled “Interline Flight Shopping and Order Management”.

Before we delve deeper into the details, it needs to be understood that the NDC Shopping schemas would allow airlines to distribute their full product offers and to merchandize their seats, baggage etc. And the NDC Order Management schemas are responsible for managing NDC-driven orders, from booking to fulfilment. As for the offers, they can be crafted as per the current status of a supplier’s inventory, instead of those based upon previously filed products (i.e. dynamic and personalized offers become possible). It also paves way for airlines to directly manage other aspects of the indirect distribution process.

Responsible group

As for the concerned group, the business and technical requirements are being met by the Distribution Data Exchange Working Group (DDXWG). It has been set up by the Passenger Distribution Group (PDG).

The main objective of this group is to document detailed business requirements and develop implementation guidance for data exchange standards in the area of airline distribution, and maintain such documentation on an on-going basis to ensure that the data exchange standards continue to reflect the industry’s business requirements.

“The group acts within the scope set by the PDG, acting as the authoritative source of the industry’s business requirements in the area of airline distribution, and under the methodological guidance of the PADIS Board responsible for the maintenance of all IATA XML and EDIFACT data exchange standards in the passenger services area,” shared a source.

“We can’t specify the number of issues (to be sorted out at this juncture), but yes the core objective is to streamline the process for all the stakeholders. From the moment a request comes in from an agency to the point the offer is tailored as per the request, it has to be ensured that the offer not only matches the intent of the buyer, but also meets the interests of the parties,” explained the source.

Approach

“We need to assess the business requirement, and ensure technical changes don’t affect any other part of the standard – technically or from standard rules perspective,” shared the source.

Making changes

So coming back to the scope of the change in schema related to “Interline Flight Shopping and Order Management”, it emerged that when an order features Offer Responsible Airline (ORA) and Product Offering Airline (POA), then there should be a place holder to contain OrderID and OrderItemID of both ORA and POA. And this called for a new structure.

As to what called for a change in coding, we need to understand that theoretically, the number of suppliers in an offer and eventually an order could be numerous. But there is no need to highlight the arrangement between the parties whenever an agency is receives an offer (So if two airlines or any two suppliers come together to respond to a request, it doesn’t call for detailing the commercial dealing of the parties involved).  And the current structure didn’t reflect this, it called for a change in coding.

Issue: The OrderItemID should only go to the offer responsible airline, but not back to the travel agency or the corporate agency. There is no need to show the commercial agreement or the details (mainly pricing) of each item within the OfferItemID to the buyer. So these are the sort of the issues that are being addressed.

And the work is being done by the group on an ongoing basis.

Guest Editorial: NDC & Analytics

Guest Editorial by Ritesh Gupta for Triometric: How close are airlines to identifying their customers and making those unbundled offers that sell?

There are encouraging signs that this ambition is not just a pipe dream but inching closer to a real and achievable vision. Industry execs around the globe seem to be in agreement that levelling the playing field between the direct and the indirect channel and creating an infrastructure capable of handling content rich ancillary merchandising is the only way forward. Pilots are in progress and there is burgeoning interest across the globe.   But these are still early days as the industry cranks up its dynamic merchandising engines and data-driven decision-making. This means letting go of a flight-centric and transaction focused mentality (and systems) in favour of a customer-centric approach with the customer journey experience at the core of what an airline retails.

What’s happening in the data world?

If we look at how the world of data analytics is shaping up, especially as the industry embraces the NDC standards based on XML, the ability to know the customer better and the context in which he is making the buying decision is quite promising. It’s like several pieces of a big puzzle getting sorted out. If the emphasis is on identifying the customer using factors of probability on the one hand or segmenting them into “look-alike” clusters on the other, then there is a great opportunity to make the most of search behaviour and match it with buying intent. This is where being able to capture and analyse the detail in the data stream between requests and offers comes in.

Analysis to determine customer insights then becomes an ongoing exercise – learning about the behaviour and relating it to the merchandising strategy, paves the way for constant refining of what to offer each time a consumer searches for his next trip.

XML Analytics

It should be noted that the product lines of travel retailers is expanding. Competitive differences being expressed through ancillaries and bundles. Carriers are getting more creative but hampered by their existing infrastructure in the way they personalise, package, and deliver their offers via the third party channel. This is why the ability to use search insights just at the time when a potential booker is looking for something would complement the whole omni-channel shopping landscape. 

“As airlines attempt to respond to a request from the agency channel, as being envisioned with the adoption of the NDC standard, it’s imperative to leverage search and booking data to deliver products and services that customers most value,” says Jonathan Boffey, SVP- Business Development at Triometric, who attended Ai’s Mega Event, held recently in San Diego.

As a specialist in the arena of travel analytics, Triometric highlights that NDC is based on XML and XML data analysis offers deep intelligence into customer shopping intent and buying behaviour. 

The industry is already looking at making NDC shopping data more accessible.

For its part, Triometric has just launched an optional analytics service for airline clients that monitors the XML data stream passing through Farelogix’s NDC-Xpress platform, an offering that is equipped to deliver airline-controlled merchandising, pricing and API distribution in a SaaS model. The analytics component will enable carriers to make the most of intelligence embedded in the rich NDC-schema compliant XML message streams. The company can also deliver equivalent reporting to other NDC booking environments.

“Understanding how travellers search and book for travel is increasingly vital for airlines as they embrace NDC standards,” says Boffey. “It a big part of the NDC opportunity and it can be applied anywhere along the B2B supply chain. Whether transacted by the end consumer directly or through an agent, if the traveller data is rich enough then there is ample scope to use the available insight in the tailoring and pricing of offers,” says Boffey.

Cracking that relevant offer

“There is a big realisation (among carriers) about the potential of leveraging data sets, but as of now the use is quite limited,” says Boffey. 

On the positive side, there are airlines that work with a set of rules that helps them to independently manage their own product propositions (inventory, availability, price, product biasing etc.). For example, one can work out channel-specific merchandising rules, and this would pave the way for control of what can be sold.

Bringing the element of analytics into it, by delving deeper into search requests, offers and bookings every day, one would gain an insight into customers’ travel intentions and preferences. As Triometric asserts, this would help in tailoring better offers for conversions based on customer context and market demand.

This of course depends on large data volume processing capabilities and real-time analytics, delivered via visual dashboards and key indicator alerts that give airlines visibility into shopping intent on which these more accurate and timely personalised offers depend.

So critically what would happen at the point of search?

“So on the basis of the segmentation and the defined rules that set the scene for the chosen product mix, offers are shaped up. Now an airline might have a set of 50 offers. Which ones would be most apt and match more closely to the buying intent needs to be analysed on an ongoing basis. The success of these needs to be measured – “closing the loop”. Then over a period of time the system would prioritise accordingly. This means that in responding to a search, the airline would be in a position to come up with not just a relevant offer, but one that had been tried and tested. The fact that the basket of ancillary products is increasing, makes this issue more complex. So airlines need to be spot on with their work at the backend, and gear up for the changes,” explained Boffey.

While the business information is critical, different product searches will place different demands on the booking systems and these differences need to be understood. The team at Triometric has ensured that its latest platform also gives the IT department an insight into critical operational performance, and one would be able to slice and dice data according to key metrics. These include - performance (errors, response time etc.), product availability (no offer, how many offers were given, did the offer match the search request), price sensitivity and margin (look-to-book ratios, what sort of mix is working out well – core product plus third party products etc.) and relevance/ personalization. 

So what’s the timetable?

 Online travel is a fast paced and highly competitive environment where systems must be monitored and maintained to run optimally at all times to avoid any degradation of service to the user or loss of revenue opportunities. 

“The NDC program is gathering pace”, says Boffey, “Many carriers have been through IATA’s familiarization program and are conducting pilots.  Very soon, NDC compliance will no longer be optional for all the major and most of middle tier carriers”.  IATA the driving force behind NDC is already intent on taking NDC to the next level with the One Order industry-led programme aimed at modernising the multiple and rigid booking, ticketing, delivery and accounting methods with a single, flexible order management process. The ultimate goal is a single customer order record holding all data elements required for order fulfilment across the travel cycle. That’s were analytics and the intelligence it can provide is also headed.

Ai Editorial: Flight search – cracking the code of “revealing intent”

Ai Editorial: Airlines need to address basic issues to make the most of search traffic and tapping it for ancillary revenue generation. Ai’s Ritesh Gupta studies 5 issues

Is search entirely about intent? Why it is important to assess what the user did to get to an airline’s website or a particular page? Is it time to consider Google to be an OTA?

These are some pertinent questions that airlines need to address as one tries to capitalize on traffic emanating from search. With OTAs and meta-search engines excelling in making deft use of search marketing, it is not an easy task for travel suppliers to compete.

But as a specialist in this arena, Seth Cassel, president, EveryMundo, believes airlines can forge ahead with sustainable strategies instead of trying to do SEO “transactionally”, as in “a dollar in, a dollar out.”  

One of the interesting developments has been the emergence of the “Book On Google” option.

“We are not convinced that Google wants to become an OTA,” says Cassel. He adds, “Regardless, what we see right now is that organic search still drives the plurality of traffic from search engines, and that paid search is still capturing more clicks than Google Flights. That could change, but so far it has not created a fundamentally different search landscape. If anything it underscores the importance of having performance website infrastructure that can be leveraged for SEO and other direct channel marketing strategies, like paid search and email.”

We will build on this, and here are 5 issues that airlines need to address:

  1. Evaluating what the user did to get to the page: One needs to consider the source of traffic when making decisions about what offers to make to certain users as they land on a website. As Cassel recommends, it is important to step out of the purchase funnel and ask, “How can I identify as early as possible the wants and needs of the user and present them with experiences and information that ultimately improves the likelihood that I get them on my airplane?” Because if they do not fly on your plane, they do not buy ancillary products. So the primary goal is to convert visitors into passengers. If airlines understand where their traffic comes from, they can leverage information about how and where they acquired passengers and then present those users with very specific purchase experiences tailored to what is known about them.

Cassel says not all respective passengers should necessarily have the same experience or be offered the same products as they reach an airline’s website. “Currently, there is a heavy focus on profiling individuals once they have shared information or interacted heavily with an airline, and good technology is also available to leverage the activity and information provided by the user,” he says. “Looking at the source of the traffic to the airline’s website and looking at what the user did to get to the page -- not just what the user does once they arrive at the website – can provide good insights into ancillary opportunities and that customer’s intentions with the airline.”

  1. Assessing user intent: It is important for airlines to know that search is not entirely about intent, says Cassel. “It is about revealing intent – and that is different. As the marketer and provider of your service, you simply need to match a user’s intent with honesty about what products and services you are selling,” explains Cassel. The goal is not to reach every customer on a highly individualized basis. Airlines have to be honest about the demand for and availability of their products, and leverage available tools and technology to measure the potential.
     

An airline that flies to only 10 cities, for example, cannot expect to drive millions and millions in revenue from nationwide search because it simply cannot sell that much. There are also limitations based on language, geography, and the quality of the infrastructure an airline presents to its audience. If someone is searching for things to do in Miami, for example, an airline can make an attempt to sell them a flight, but the opportunity might be very slight. Trying to get in front of a user like that is going to be expensive and limited in its ability to return revenue because there are lots of other properties willing to spend more money to get that person’s attention online. 

“The flip side of that is for airlines to be aggressive about spending and growth effectiveness. Airlines should be looking at the competitive environment to see what they have to offer. Look at the website infrastructure, functionality, and online tools to drive and enhance performance. Make investments in sustainable strategies instead of trying to do SEO “transactionally”, as in “a dollar in, a dollar out.”,” says Cassel.   

  1. Keywords and mistakes: The most common mistakes are lack of discipline, lack of granularity, and reliance on very broad-stroke approaches. Cassel says search engine marketing today is so competitive on a global basis that the only way to do it effectively and continue to improve performance is to build -- from the outset -- very specific, highly granular campaigns. “Then airlines can move into micro-optimization, high-performance issues, campaign management improvement and stability. But without that early discipline and granularity as a base, airlines will not have the rich data they need later on for visibility and continued improvement,” he says. Also, airlines do not need to have a full-service infrastructure in a given language to execute paid strategies in that language. Other shortcomings are lack of a global view of search. Explaining the same, Cassel points out:  If you are a passenger sitting in Miami who wants want to fly from Paris to Madrid, why shouldn’t you be able to make that purchase in your language, whether that is English, Spanish, French, or something else? Airlines can usually find a lot of opportunities in the long tail by going after that kind of traffic on a global basis.
  1. When your direct channel falls short: The reality is that airlines offer flights, says Cassel. They should perceive flights as what the user is looking for, and try to match the product-specific online strategies of the best retailers in the world. “Ancillary opportunities are often flight-specific or localized in nature. So the natural follow-on is that airlines can improve ancillary sales by improving conversion within the context of the individual flights they offer. If the airline already knows and has an understanding of what a passenger is looking for, they should automatically deliver products and service offerings based on what is important to that passenger and that flight, especially if the goal is to improve revenue and improve service.” Airlines should launch dedicated pages for every route they fly, in every language they market, and in every market they operate. Importantly, this is not just about organic and paid search – it’s about pointing all cross-channel marketing efforts including email, remarketing and social media toward infrastructure that matches the users’ specific intent.
  1. Improving messages/ content for ads: Adding key messaging into ad copy is a very powerful way to improve click-through rates and engagement with copy, and to move visitors further down the purchase funnel. Airlines can leverage content to entice users through incrementally more information, and have them come to the airline as slightly more informed users, based on personalized or user-specific information. The flip side is that there is an opportunity to use content and messaging to qualify the user away from the airline’s website. If someone in Dallas searches for flights to London, and your airline offers London flights only from New York and Chicago, the airline should add that info in the ad copy, because otherwise airlines pay for traffic that they really cannot follow through on. Airlines can entice and inform users to encourage them to come to the website for the right reasons, and also provide them with qualifying information to avoid costly but unproductive visits to the website.
     

Ai Editorial: Extending your PSS Box - a likely scenario for NDC?

Ai Editorial: The onus is on airline IT companies to deliver as airlines say PSS providers are too slow in “reinventing” their PSS systems. So how to go about NDC? Ritesh Gupta finds out 

The discussion around how airlines are going about embracing the new NDC standard and what’s the sort of change that is resulting in their internal system architecture is an interesting one.

Before I delve deeper into the issue of NDC implementation, it is clear that for airlines the limitations of legacy systems is turning out to be an investment decision. And it’s just not about distribution of content. For instance, airlines are being recommended to look at the entire payment chain, from gateway to risk, to acquiring, and identify areas in which they can prioritize improvements. But dealing with legacy systems isn’t easy as they have largely been designed to handle credit card transactions only.

So the going hasn’t been smooth for airline IT or e-commerce executives, especially those who are a part of FSCs, in general. There is a need to grow capabilities beyond traditional commerce management.

“The most exciting aspect about my role is to leverage changes in technology available for airline commercial activity. However, the challenge is to integrate it effectively with legacy systems such as reservation where there is no much progress in technology. Unfortunately, it is somehow still the same engine behind the scene like decades ago!” says an airline executive. A candid admission indeed.

PSS and complication interfacing

A pivotal figure when it comes to NDC is the airline PSS system. As proposed, integration of NDC specifics can be done at different levels. The possibilities are – “extend your PSS Box” or “Do it outside your PSS Box”.

An overhaul to core services (reservations, schedule and inventory, ticketing, departure control etc.) and streamlining associated functions (loyalty, revenue management, and business intelligence and revenue integrity) is a humungous task.

So how are airline commercial systems evolving?

“It seems that airline commercial systems are developing in the same direction as in the retail industry; however airline industry is few years behind retail because of the complexity of its business,” says  Radoslaw Dutkowski, Director eCommerce and Ancillary Services, LOT Polish Airlines

Dutkowski believes that airlines are becoming more customer focused and are trying to effectively use the customer data which are they already have, but the processing of the data and on-request real time usage is definitely a challenge.

It is especially a problem of data integration from different systems based on completely different philosophy and aggregation methods. “I would find legacy PSS systems as a major obstacle in getting quick and well aggregated customer view as it requires complicated interfacing which may impact data accuracy and reliability,” says Dutkowski.

Fine tuning of PSS just not enough

As it is being pointed out, the fine tuning of legacy PSS wouldn’t be effective as the core of the system still lays in 70’s of the XX century.

“Legacy PSS systems should be actually redeveloped almost from scratch if it brings any major improvement, what is not going to happen in a very near future. That’s why I would rather focus on real time PSS data reliable interfacing to the external contemporary system where the proper data aggregation could be maintained. What (it) means (is) building a mirror of PSS database outside of PSS, which could be used for generation of the accurate offer for individual passengers,” explained an airline executive.

Investment decision

Airlines have invested considerably in several assets and want to protect these or ensure they can be easily integrated in an NDC world. ​Airlines are likely to have some rich content or CMS systems; however, it is likely these will have to be extended as they likely only cover the direct channel so may need to account for indirect channels also. Pricing and revenue management expertise already exist today and these systems will need to be integrated. Offer management or merchandising will likely need new investment, as the area of retailing will be a new skillset for airlines and new technologies will be required. Similarly, order management requires new investment, in order to support the lifecycle of the order across all channels used by the airline customer. Airline profile will require airlines to file their NDC capabilities so NDC actors can use this information to send NDC traffic to the airline for the end user shopping request; this will also require some investment.

A likely scenario

To mitigate the limitations of PSS systems, full service carriers or FSCs started to implement separate engines and modules such as availability and pricing, customer database, merchandising, NDC interfaces etc. outside of PSS as legacy systems are not effective enough to be used for sharpening their retailing strategy.

“Effectively it means that in the near future PSS may only be used for routine operation such us PNR creation, however the content will be fed from the different modern retailing systems,” explained a source. “ The current PSS providers are too slow in redeveloping/ reinventing their PSS system as it is capital-intensive process, so I wouldn’t expect that the major improvement in this matter in a short term. The only solution is to build the independent modularized system which will help to compete on the market, especially with LCCs as they don’t usually have such problem.”

It could be argued that a PSS vendor who is also a distributor has a conflict of interest when it comes to enabling more direct distribution, thereby putting distribution revenue (GDS segment fees) at risk. That said, NDC is a new technology and that development has to be funded, so additional fee is reasonable.

Points of contention other than technology

There are few other crucial points, as Paul Byrne, SVP Development, OpenJaw Technologies, and Member Board of Directors, Open Travel Alliance points out, that are impeding the adoption:

  • Firstly, there is no public proven business case as ​ yet. The IATA pilot projects are providing technical validation that the schemas meet the business needs; however, the commercial details of these pilots are sensitive in nature.
  • Secondly, the commercial model between airlines and business partner is what will drive adoption. Although this is outside the scope of NDC, it will have a large influence in how quickly the airlines will move.
  • Thirdly, airlines tend to be conservative in adopting new technology.
  • Lastly, without understanding how NDC solves the full end-to-end process, some airlines will probably not commence even with the straightforward pieces that are currently possible.

 

Ai Editorial: The game of “air ticket plus trip essentials” – are you predicting it right?

Ai Editorial: How astutely are you predicting what, when and where to offer a hotel room or car rental as a user is about to book a seat on a plane? Ritesh Gupta finds out

Airlines, just like other travel e-commerce sites, are vulnerable to losing out on a visitor in a matter of few seconds. It is imperative to be spot on with the sort of work that happens the moment a user lands on a site, or even when a traveller opens an email.  

Airlines need to ensure they maximize any opportunity to cross-sell in order to step up the average order value. A key here is to embrace a dynamic form of merchandising and marketing, fundamentally based on data-driven decision-making. 

There needs to be a mechanism that would predict what a customer is likely to buy.

“What to offer each individual customer, when, and through which channel is the new merchandising paradigm. What this means is that unique and personalized offers for individual customers based on their attributes,” says Boxever’s VP – Sales, Ultan O'Brien. There is seemingly an extreme polarization – if you get it right, then customers can buy a lot more; if your offer goes wrong, then there is cart abandonment and dismay is what a customer ends up with. “People not only buy more products when offered ones that are more relevant to them, but they are also more loyal to brands that seem to understand them and can accurately predict what products to offer them,” says O Brien.

Trip essentials – how to offer them aptly?

Making the right offer at the right time is a challenge for most, says Justin Steele, Senior Director of Innovation, Switchfly.

Predicting what would click is the key here. Here we explore how it matters:

For most airlines, as Steele says, hotel ancillaries are best sold post purchase, or after the customer has completed his or her airline ticket purchase. One great method is through a simple `pre-trip’ email. Do not just send an email with a link saying `need a hotel?’ asking the user to click a link, enter their specific dates, and conduct a search. Users can do this on their own. Instead, try to predict the top 2-3 hotels that customer is likely to purchase.

Steele further explains: Airlines can use previous customer information such as purchase history (star rating, chain affiliation), demographics, or even member tier status to begin the targeting process. Airlines can also use other factors such as length of stay, days of the week travelling, number of travellers in the party and other factors. The goal is derive the top 2-3 hotels that this customer is most likely to purchase in their destination. Then, display these 2-3 hotels directly in the email with live pricing allowing the customer to see results. Use minimal content to surround the hotel property. Large pictures with hotel name, star rating, and total price are the only 4 required pieces.

Timing is the next key. Airlines need to learn the travel journey and purchase habits of their customers. “Airlines should be able to say, “customers who book their flight 6 months in advance, and that are traveling with a family are most likely to begin their hotel search / booking process 3 months in advance” and airlines can target their email for the exact date the customer is about to think about a hotel purchase,” he says.

As for ensuring the path of booking is not riddled with unnecessary products or content, Steele says the focus should be on well-timed, planned touch points. “A certain subset of ancillaries belong in-path, varying by factors such as airline, route and business model. These ancillaries should be limited to items that a customer requires in order to complete a ticket booking,” he says. An example of this is that many customers will not book a long haul flight unless they can pick their seat. “Other ancillaries need to be sprinkled throughout non-intrusive touch points – we call these casual checkpoints. Some additional casual checkpoints include the confirmation page, confirmation emails, pre-trip emails, check in time and pre-boarding,” he says.  “Understanding the relevance of the offer and the timing of the offer in the customers purchased decision process can help airlines determine which products to market, when to market and where to market. Then tweak and test. This is definitely not a ‘set it and forget it process.’ The process needs to continue to be refined by the airline.”

Old approach

O'Brien says the existing descriptive and diagnostic analytics landscape has traditionally been a very lean-back approach to merchandising ancillaries. A typical example might be to create an email segment from an operational CRM by querying all family bookings who purchased previous (the same time last year), and who added a specific ancillary (also bought a hotel, car or insurance package). “It’s using historical data points to inform a contact strategy with the customer that is delivering increasingly limited success – mainly because it is generally based on stale information and is part of a generic grouped campaign rather than personalized to an individual,” he says.

He adds, “The result is a form of scatter gun marketing communication – with a kind of “throw mud at the wall and see what sticks approach” – which is batched rather than real-time (so tends to be stale and out of date) retrospective in its nature and based on historical information (thus missing any intermediate interactions the customer has with the brand that can indicate an intent to spend, a buying persona, a context and the relevant product(s) of interest).

The New World

By using a data-first merchandising platform - which captures all interactions as well as shopping and buying behaviour across all channels – airlines can commence building a unique contact strategy for each visitor, traveller or customer.

“The use of predictive analytics to drive offers in practical terms means you stop asking the question “What products do I need to sell” and start asking “When will a specific customer next make a purchase?" and "How best can we communicate to them to make it happen?”, says O Brien.

According to him, predictive marketing is really about understanding who the customer is, what products they might be interested in based on their behaviour as well as their transaction history – and then marketing contextual relevant personalized offers in an automated way, orchestrating this across all customer touch points to achieve what is referred to as customer-centric marketing. So, when a customer has not purchased a product it’s then about inspiring them or pre-targeting them with appropriate travel experience. When they are however in the purchasing funnel it’s about offering the optimal assembled product set (or dynamic package) to convert them, and re-targeting them with the next best ancillary to widen their traditional travel basket.

Whatever airlines strive to offer needs to be spot on. Anticipating the next product a customer will want to purchase right before the customer does, then making it available to the customer through the proper channel is a top priority right now.

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