Ai Editorial: Quest for control set to take merchandising to another level

First Published on 21st February, 2017

Ai Editorial: Dealing with highly integrated processes meant for inventory, distribution and sales isn’t easy for airlines. But if one persists and decides to rework on IT  infrastructure, commercial strategy, data integration etc., then it can yield better results for merchandising, writes Ai’s Ritesh Gupta

 

Inclusion of air- and non-air ancillary services into an airline’s commercial strategy is on the rise, and so is the need for better cross-platform experiences and integrating data across channels, complete pricing and shopping and merchandising solutions that focus on revenue grow on demand, dynamic pricing and personalisation and is platform agnostic.

All of this if done in a meticulous way can also pave way for customer-centricity, and control over what to be offered to a traveller, the way its shown, on which channel etc.

Quest for control also indicates that merchandising-related initiatives are undergoing change – for instance, if on one hand new non-GDS interfaces are being developed, on the other the introduction of air ancillaries features GDS prominently in the mix.

We look at areas that indicate airlines are making progress with their merchandising strategy:

·          Every offer to depict “value”: Airlines acknowledge the need to react quickly and adjust pricing dynamically, in a flexible way according to rise or fall in demand. Of course, a major concern here is to manage price sensitive customers. In this context, dynamic bundling and cross-selling become significant - including personalized pricing and up-selling. This refers to creation of sales offers based on demand.

As Vayant’s CEO Eric Dumas indicates, airlines need to focus on technology for optional services and branded fares management, once they are filed and distributed. He says airlines can choose to unbundle sales of seats, meals, baggage, class upgrades, lounge access and more, charge different prices or create separate offers to different consumer segments. Or they can blend all elements together in order to create a vast volume of unique, personalized sales offers with the accuracy relying on real-time data. This way airlines can manage their pricing (raise it or bring it down), but by adding an extra value or services to the package airline is making its customers feel valued.

·          Sharing inventory and content in “non-traditional ways: Airlines are looking at several approaches for direct connections. The objective is here to capitalize on additional content that could not be displayed previously. Also, another major consideration is offering additional services at relatively lower cost than before. As indicated by NDC projects, airlines can selectively craft offers/ bundles for routes as chosen, being in control of merchandising. Also, another highlight is differentiation coming in via elaborate content depicting what the product/ service is all about. As we have witnessed, airlines have been working on their IT set up to ensure they put their sales and distribution in other baskets rather than only one. For instance, a new non-GDS interface in case of Lufthansa’s deal with Siemens and Volkswagen  (Amadeus Cytric bypasses Amadeus GDS to hook into Amadeus Altea).

·          Offering value to intermediaries: Airlines can scale up their direct connect IT set up and own rule-based merchandising engine to maximize their distribution strategy. Of course, there can be channel-specific or partner-specific hurdles, but as indicated by NDC pilots/ projects, all of this can be sorted. Also, a major highlight of such arrangement is: an airline working on special bundles that can be sold via intermediaries’ platform. This can be tailored for one intermediary, too. For instance, a tour operator or an OTA can exclusively offer lounge voucher or avail complementary additional luggage option. 

·          GDS continues to be an integral part of distribution mix: In a recent article posted by Airline Weekly, Scott Kirby, president of United Airlines mentioned: “…As for 3rd parties, I am all in favour of our third parties being able to sell ancillaries.” He said this isn’t an avenue to push direct sales, rather he asserted that customers should be “able to shop where it’s most convenient for them. I want it to be cost efficient, but I also want them to have full access to all of our products”. Amadeus is allowing airlines, such as Etihad Airways, to display images of  product and ancillary services, such as exit row seating. Sabre asserts that the group makes ancillary and branded fare content available through all points of sale that they develop. In an interview with Ai around mid-2016, Sabre mentioned that 72% of bookable air content in Sabre offers an ancillary and/or branded fare.

·          Facilitating sales via APIs: Today airlines have worked on their API gateway, publishing end-to-end PSS API in public domain. APIs are available for flight and fare availability, ticket issuance, payment etc. Airlines are making standardized data available to developers, allowing them to use the interface to integrate direct booking links for offers from the airline into their web- and app-based offers.

Sabre also says an advanced level of merchandising capability is also built into APIs, which are used by developers to build or update a customized booking applications for their websites or to use Sabre content within another application.

·          Capitalising on intelligence in real-time: As airlines focus on NDC systems, there would be provision for XML analytics that is tied in to the NDC API. The objective is to gain an insight into operational performance of web services and XML APIs coupled with real-time intelligence that the XML message flow contains. Right from merchandising solution to real-time PSS data reliable interfacing to the external contemporary system where the proper data aggregation could be maintained to API strategy to harnessing the intelligence embedded in the rich NDC-schema compliant XML message streams, airlines need to prepare in a diligent manner.

The pace of change might be slow, the number of airlines going about refining their merchandising strategy might be low, but it is a positive sign considering prevalent highly integrated processes, and change doesn’t come easy to this industry.

 

Gain an insight into intriguing issues at Ai’s 11th edition of Ancillary Merchandising Conference in Spain this year. 

Date: 25 Apr 2017 - 27 Apr 2017; Location: Mallorca, Spain 

For more info, click here

 

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