Covid19 - “Airlines could have done a better job in responding to passenger needs”

Interview with Alexander v. Bernstorff, Director Airline Solutions, InteRES

16^th July, 2020

Airlines and travel tech companies have witnessed the need to serve millions of concerned and even peeved passengers during the pandemic.

This had to be done for changing previously issued tickets, refunds etc. The industry responded, for instance, with the introduction of automated emergency flexibility solution. Did automation work? Overall, how did the industry fare? Is this the right time for airlines to transform their business model at this juncture in order to become a retailer?  

Ai’s Ritesh Gupta spoke to InteRES’ von Bernstorff about the same. Excerpts:

Ai: How do you think the industry on the whole has managed to respond to passengers?

Alexander: The industry has done a poor job in responding to passenger needs and the main drivers of complexity are still prevalent. As long as traditional carriers are not willing to abandon the concept of a fare, a ticket and an EMD, changes of any kind will never be handled without friction. Airlines are telling me that supporting ticketless air travel means a one-year project to them and that’s not much time in airline IT project terms. So why have we not been seeing a massive increase of ticketless travel over the past years, especially as NDC, an airline-driven project, has been suggesting ticketless from its very beginning in 2012?  

Our industry cannot progress as long as we’re implementing NDC based on EDIFACT and Teletype. Unfortunately, that’s what we are seeing all around.

Fares and fare rules have gotten so complicated that even costly automated tools are subject to errors and also cases they cannot process at all. How can we expect the customer to understand and deal with such an amount of complexity? Modern OOMS solutions like the InteRES Airline Retail Engine are built to process business logic for changes and refunds as a service (aka NDC), thus enabling a superb user experience of simple shop and re-shop and complex re-issues are made obsolete. OOMS is an offer- and order-management system; by separating NDC and ONE Order, a situation was created where airlines are looking for offer-management and order-management as separate solutions. The problem with this is that airlines and vendors designed offer management based on the existing order management process, i.e. PNRs, fares, RBDs, tickets and EMDs. And what now? They are looking for vendors with modern order management systems (based on ONE Order) and find that their offer management and a modern order management are not compatible.

From a consumer’s perspective the problem is that airlines are not willing to approach the various elements of complexity because the customer is not at the heart of an airline’s thought process. As a result, passengers still have to manoeuvre through a jungle of ticket conditions (not always very logical rules…), often requiring help from the airline’s service centre.

Ai: As a travel tech professional, what according to you is the biggest lesson from this pandemic?

Alexander: At the moment we can see many airlines launching just another cost cutting programme and innovation may be blocked (again) for many years to come – with user experience still way behind “normal” modern digital e-commerce.

There is an opportunity for those who act now in order to build state-of-the-art, durable digital systems and processes - ideally jointly with partners along the travel value chain - that are not only addressing customer expectations (and thus help to differentiate from the competition) but will also be much more cost efficient.

Ai: As you say, the Corona crisis is like a magnifier for so many structural problems.  How can airlines better prepare for any pandemic or any situation?

Alexander: Digitalisation is the key. The current sheer amount of manual interaction between airlines and their customers (and this flows through the whole value chain and many travel agents are more than frustrated) puts light on the shortcomings of missed digital renewal.

So instead of introducing frictionless (and far less costly) online servicing capabilities, consumers have to deal with a mess. It has never been more obvious that the underlying processes have to be simplified, and thus also the systems supporting these processes. These kinds of projects are not very popular with airline executives but after they managed to postpone digitalisation for a decade or two, it’s now the time for some heavy-duty plumbing. And although after the crisis this will not solve immediate problems, it will be the enabler for future adaptations of an airline’s business model, service offering and user experience.

Ai: Do you recommend airlines focusing on transforming their business model at this juncture in order to become a retailer? If yes, why?

Alexander: Yes, and here are the reasons.

First and foremost, renewing their business model will help airlines to look at their customers and the processes and technology serving their customers differently. Airline managers have been discussing the customer journey for many years – with no result. No wonder, as still desktop and kiosk and mobile are approached as completely different animals. For a retailer, post-mobile is imperative and it could be a refreshing experience for many airlines.

Beyond a different approach, the need for ancillary revenues beyond seats and bags is obvious. In average, airlines offering more than just a flight seemed to have more cash when the Corona crisis began compared to their traditional competitors. However, traditional commercial systems cannot properly handle services that are not directly fulfilled by the airline. Necessary enhancements take ages to implement and are costly. Next-generation offer- and order-management systems like our Airline Retail Engine, combined with real dynamic pricing capabilities based on enhanced pricing models, are the way forward.

In addition, and as sad as it may be, middlemen like some tour operators will not survive the crisis. Airlines now have the opportunity to step into offering hotel and tour content and consumers will appreciate their local or regional competency and cherish content curated by their preferred carrier.

Ai: How does this bring NDC and ONE Order into the equation? How to build new, modern e-commerce and online servicing capabilities?

Alexander: During the past year or two I am seeing the discussion around NDC and ONE Order go crazy. When we started out, the idea behind was a different one than performing a simple technical upgrade, i.e. put an XML layer on top of the existing EDIFACT process.

NDC and ONE Order are 2 x 50% of the whole game. Combined, they enable airlines to design, implement and run modern, digital systems and processes and – over time – to replace or to discontinue many or all of the existing complex legacy systems. In addition, they allow airlines to communicate with the entire industry using modern industry standard data formats, e.g. between airline and a third-party city tour provider. That being said, NDC and ONE Order deliberately do not come with “best practice” or dedicated systems.

Ai: What do you mean by redesigning the process?

Alexander:  The change process in particular has to be modernized. Simply put, as a customer I want to exactly understand what the change conditions, i.e. exchange and refund, are. This is not the case today for airlines using the traditional process based on hard-coded fare rules, the dependency on tickets and EMDs, the distinction between change and cancel and the necessity in certain cases to perform a past-date-cross-check. Remember that when we started NDC we deliberately refused to having a “servicing task-force” because we wanted to get rid of the current craziness. Unfortunately, we have not seen any implementation where a change is a service.

Now what’s important with NDC and ONE Order is that these data formats are well designed to support a simplified, user friendly process. There are other ways of doing it, but we should not waste or time with discussions if NDC is the rich data format if we haven’t come to the point where we want to increase customer satisfaction.

Ken Segall, Steve Job’s creative advertising director for about twelve years, says that simplicity is what made Apple so successful, because “Complexity is what frustrates employees and confuses customers”. Anecdotally, airlines – at least some of them – believe that mastering an ever-increasing complexity is what makes them successful. “Too many people are brought into the process, more levels of approval are created, more research is demanded and, as a result, it becomes more difficult for common sense to prevail.”, says Segall. But it should be the other way around, and Steve Jobs knew that: “Simplicity was the lens through which Steve Jobs observed everything. In the pursuit of simplicity, compromise was never tolerated.”