Our chat with Marc Rosenberg, President, Strataconnex.
From a Traveller's Lens
How close are airlines to the point of creating a consistent, personalized, and value-added product for each passenger? And how are they looking at improvising on their distribution?
As for offering a relevant product via direct distribution, airlines are moving on from using a fairly simplistic algorithm, and are starting to adopt technology capable of taking input from customer management systems, usually in the form of a customer “score” that equates to a set of products to be offered. In order to know more about this and the current issues in distribution, Ai’s Ritesh Gupta spoke to Rosenberg. Excerpts:
Ai: As a traveller, what do you make of the experience of buying tickets for your flight?
It can be argued that the new technologies should simplify the process and to a certain extent it has. However, I must confess it is taking me longer than ever to sift through all the options available. As each airline embarks on its own distribution strategy I can no longer assume any one source has all the options available. And they don’t, but when I finally drill down to my final choice the new technologies is allowing me to see all the detail I would ever want to know.
Ai: How a passenger is being made to feel that the airline is smart enough to offer what he or she actually needs?
The ability for an airline to display all its products and details on their own site, and soon with NDC adoption, on the sites of many travel retailers really allows for an airline to control the display of its content. It was very frustrating to me when shopping a Trans-pacific premium economy seat that many online retailers did not even offer premium economy as a search option. Of course, I found it on each airline’s own website. I cannot begin to imagine the lost sales from those of us who are self-bookers. As for being smart I think we have a way to go before I would give the airlines a thumbs up.
Ai: How would compare the option of booking your airline ticket via airline website and via any OTA or a meta-search engine?
Experience tells me you cannot go wrong with a direct look and see at most airline sites. However, and understandably, each carrier has bias toward its site to sell its own services. So if the airline is not flying non-stop to a particular city, you will not know that another carrier does. The OTAs and meta-search engines on the other hand will give me more routing options so if I am not familiar with a city pair they are my first choice to start the search. The problem is on my recent Trans-pacific search many OTAs did not offer the premium economy option and in some instances did not have access to certain carrier’s content.
So depending on your routing and knowledge of airline networks you have to look at several different sites before having the options you deem best for your needs.
Of course, a travel agent can provide most services and save you a lot of time and hassle, usually for a well deserved service fee. Unfortunately for travel agents I am a bad potential client. I am a control freak when it comes to my travel and I always want firsthand knowledge of options etc.
Ai: So going by your experience would it be right to say that indirect channel is also in the infancy stage in terms of taking new airline content such as premium seating?
The technology even in the web cannot move quickly enough to adopt new airline products. Premium economy has been out for a couple of years it’s hard to believe some third party sellers cannot show it as an option in a search.
Ai: It is often said the distribution of airlines’ offering via indirect channels tends to revolve around price and schedule. How is this so called commoditization evolving?
With the NDC work at IATA I am hopeful the travel retailers will finally have access to the same richness of content that the airlines enjoy on their own carrier site. The technology most travel agents use is limiting them to have the airlines content unless of course they go directly to an airline site. I believe the commoditization will swing the other way, NDC being a significant factor in achieving that.
Ai: How do you see Lufthansa group’s decision to focus on individualized price options and ancillary services?
Each carrier has its own distribution strategy to meet its own needs. Lufthansa, like many airlines, is working toward embracing new technologies that should over time increase their earnings. How they go about it is a different discussion but I salute Lufthansa for having a vision and pursuing it.
Ai: Lufthansa Group’s new commercial strategy includes a clear cost differentiation in the various booking channels. What do you make of this?
It is very difficult for many stakeholders in our industry to accept the notion that differentiated costs are associated with different booking options and that any enterprise that is accountable for profit needs to pursue a strategy that maximizes profit and minimizes cost of acquisition.
What we should not lose in all of this is that every booking channel option brings with it certain benefits that the other may not. For example, the corporate managed channel needs a much more sophisticated booking channel that encompasses security, payment controls, managed reports etc. That channel has no appetite for the booking channels I use as a self employed business traveller. Should I not have the option to reduce my costs to book travel? And should the supplier (air, hotel, car etc.) not have the option of giving me that alternative? Where does it say I have to book and pay on the same terms as a large global corporate account. And why should I not be entitled to creative incentives to book one carrier over another? The managed corporate accounts enjoy all sorts of volume related airline and hotel and car discounts. What I am really saying is that each target audience has different needs and each supplier should organize themselves to cater to those market segments they chose to want to do business with.
Ai: Many airlines offer on their websites ancillary services, branded packages and related content. However the distribution of this data to indirect channels is limited. What’s your viewpoint regarding this?
This situation is not because most airlines are trying to deny the indirect channels from having the rich content. The technology of choice of most indirect channels is not capable at this time of providing that capability. It is changing for the better, all be it slowly. IATA’s NDC efforts will go a long way to solve for the current gap of the have and the haves not.