Ai Editorial: Being flexible and astute with airline merchandising

First published, 27^th April 2016

Ai Editorial: Merchandising needs to be supported by apt infrastructure and adroit front-end user experience to facilitate stronger affiliation with any e-commerce brand. Ai’s Ritesh Gupta takes a detailed look

If being flexible with the crafting of a new offering – say a new fare, a new ancillary product – can result in increased average order value or even augment the customer experience, then it would be a welcome change for any airline.

But how much time does it take to do so?

The technology is making rapid strides, and it is being highlighted that it shouldn’t take more than a day to 3 weeks (depending upon the fulfilment aspect of the new offering) to implement the same. Of course, testing is a vital component, but that shouldn’t restrain from trying out.

In addition to strategy, creativity and, technology, one has to follow “the gut feel”, as Farelogix CEO Jim Davidson pointed out during the recently held Ancillary Merchandising Conference in Barcelona. But all of this needs to be done as quickly as possible. So airlines need to assess the efficacy of technology, especially what can be done with today’s merchandising engine vis-à-vis the PSS. If the PSS/ IT specialist takes 6-8 weeks to do so, and there is another avenue that takes fairly lesser number of days, then it’s clearly a missed opportunity.

“There is a lot of scope for improvement for airlines for being flexible (in this context),” said Justin Steele, Senior Director of Innovation, Switchfly.

It also needs to be highlighted that the work that is done at the back-end to introduce a new offering should be done in a way that there is no amendment required in existing digital assets such as PC website, mobile app etc. Also, if an airline is pushing its content via NDC-enable API then any changes/ new offering is displayed across all the channels to sustain consistency.

The infrastructure behind the offer

Airlines are contemplating the performance of their merchandising and pricing engines, and looking at an apt way to extract the maximum from the same.

Davidson referred to a couple of options, the first one being airlines opting to develop engines on their own. Here the airline owns the IP. In this case, the entity must have the merchandising and pricing product, technical, and support expertise to build and maintain their merchandising and pricing engines. As things stand today, only few airlines have the required skill sets.

Alternatively, if a carrier opts to work with a proficient 3rd party solutions provider, this route can prove to be more cost effective than an airline developing and maintaining the engine on their own. A 3rd party here does all implementation and offers ongoing support (i.e. 24/7 help desk and tech support). General enhancements and updates are generally provided at no charge. However, the airline does not have total control. It also needs to be mentioned that some 3rd party providers will allow the airline themselves to host, operate, and configure the acquired engines.

Acquiring a set of engines that give the airline, rather than the vendor, more operational control is certainly beneficial.

Being smarter with the booking flow

Another area that is being closely looked at is airline.com’s ability to close a transaction on its own platforms.

Airlines need to do away with a typical nine-step (a general figure) selling process that is being employed to sell a seat plus ancillaries.

One needs to focus on testing, and ensure page flow configuration on their sites results in control – the sort of products that one intends to sell, at what stage during the booking flow and also for the routes and a set of customers chosen.

“Everything can’t be sold to the same set of customers the same way,” pointed out Steele.

Is the industry equipped to assess the booking flow in real-time, say what to display after the first click or the third click?

Not really at this juncture, but yes if a customer has logged in or chosen a branded fare it does help to an extent. There is decent progress that the industry has made in analytics, and merchandising technology, and airlines need to look into it.

Dealing with newness of merchandising

Airlines are looking at distribution freedom that is demanding control, as Farelogix stated. It’s all about - what products you offer, how your brand is presented, what the price is when, where as dynamic as you want to be as a retailer, and merchandising ends up being PSS and channel agnostic.

Such freedom needs to be supported by a proficient infrastructure and mechanism especially if a 3rd party is involved. Also, the digital assets owned by airlines must take into account not just transactional and behavioral patterns of a customer, but also contextual details and make all of this an integral part of the booking flow.

As for cracking the same, airlines need to build a solid culture of testing. Also avoid a lengthy RFP process without doing a bake off or trial, and rather plan relatively shorter-term investments and commitments to 3rd party providers under some type of trial program considering the relative newness of airline merchandising.

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