First Published, 11th March 2016
With developments such as the new standard NDC, airlines are able to deliver richer, more personalized offers across multiple channels. But still there is a need to curb the gap between direct and indirect channels when one considers the overall point of sale capabilities, asserts Jim Davidson, CEO, Farelogix
Airlines are increasingly getting proficient at defining their respective retail strategies, and working out a technology infrastructure that would pave way for merchandising capabilities consistent with their chosen policy.
A key decision that every airline has to make is to whether to acquire merchandising technology that they can control and even operate.
As it is turning out, airlines are open to running their own merchandising engines, embracing a flexible approach to creating, managing, and modifying offerings as per their discretion.
The sort of air and non-air products that are being offered - irrespective of the type of trip - too can be a key factor as the traveller may respond positively to a relevant offer shown by the airline. Now this mandates control over both merchandising initiative and technology so that there is a mechanism by which frequent product/ pricing testing can be enabled. Plus, a merchandising system needs to be linked to internal systems such as CRM, customer profiles and FFP database.
Also, carriers acknowledge that managing numerous merchandising processes/ systems across direct and indirect channels is not scalable. If each GDS needs a carrier to execute and support their distinctive procedure/ methodology (say a blend of ATPCO filing and GDS direct filing), then the notion or expectation that airlines will manage their merchandising products and services featuring three-four different ways is a faulty hypothesis, something accepted by both the airlines and GDSs.
Level of control today
So in order to know more, Ai’s Ritesh Gupta asked Jim Davidson, CEO, Farelogix asked if he were to relate as a traveller, which areas of flying disappoint him till date - right from planning to travelling (for both as FFP member and even with an airline with which he doesn’t fly frequently)?
“I do believe the travel shopping process is an area where there is scope for improvement,” stated Davidson.
He added, “Ancillary or bundled products are not readily available when shopping through most travel agencies or corporate booking tools – creating an unnecessary discrepancy and lost opportunity for both the airline – in terms of revenue, and the traveller – in terms of understanding all the products and services that might be available.”
According to him, in this time of online retailing, it is a reasonable expectation to be able to get the airline’s best offer from any touchpoint that an airline or travel agency offers. “Whether you are at airline.com’s mobile site, website, etc. that process should be seamless, and the requirement applies not only during the shop process but also in the case of a trip interruption. Right now, this isn’t always the case, and this can cause customers (and potential customers) quite a bit of inconvenience.”
Looking at the same from airline business solution management perspective, Davidson said the more channels and touchpoint that can showcase an airline’s product and brand, the more the airline can grow revenue and loyalty. “The industry has taken some important steps to solve this problem – including adoption of new merchandising, and distribution technology and industry standards such as NDC, and new distribution approaches from major airlines such as Lufthansa, American, Air Canada, United and others,” he said. “The challenge now is to expedite adoption in the GDS and corporate booking tool channels which serve a large portion of the market worldwide. We are seeing this start now, it just needs to go faster before the gap gets too wide between direct and indirect.”
Airlines are trying to sharpen their distribution technology capabilities. For instance, there are tie-ups in place between airlines and technology providers to facilitate a connection directly to sales partners. This way there is a provision to look into each individual direct interface and offer support in planning and implementation.
Commenting on this trend, Davidson said all of this comes back to airlines taking control of the offer in order to offer more choices and differentiate their products.
“This is why we see airlines investing, now more than ever, in better, more reliable technology for airline-controlled merchandising, distribution and ecommerce, including direct connect as well as new platforms for merchandising and e-commerce that are adaptable, scalable, and more future-proof in the sense new solutions are PSS and channel agnostic,” he said. There are specialists today that are offering airlines the opportunity to markedly enhance their .com spaces while also creating easier methods to reach and appropriately engage more customers.
No conflict as such with travel agents
With NDC-XML, and any other messaging protocol, airlines control the content they send to travel agencies. Travel agencies on their side optimize the information they display—be it airline information or hotel information—to maximize sales. Talking of control, are airlines going to be happy with this equation?
Davidson doesn’t think there is a major conflict in this equation; in fact, it represents a more robust value chain and opportunity for all.
“The airlines are finally in a position to control and personalize their offer using NDC-aligned XML, and third party intermediaries are able to access this broader, richer content and package it for their customers, be it a corporate booking tool, OTA or travel management company. Everyone stands to benefit from a more dynamic approach to travel retailing,” he said.
Moving together with standardization
Airlines are looking at single, standardized set of XML messages to feed their distribution partners.
The good news is that new technologies and standards (NDC) make it possible for airlines to deliver richer, more personalized offers across multiple channels, and make it possible for aggregators to more cost-effectively scale their integration efforts.
Davidson says this is a major accomplishment and bi-lateral win for the industry.
“We are seeing that play out in a number of forms – whether it is OTAs such as Priceline consuming airline direct connects; GDS such as Sabre consuming American Airlines API; or innovative business rewards program such as we see with Air Canada Rewards for Business, which also ties into its XML API,” shared Davidson.
“So the opportunity and real life examples are there. Where we’re falling short again goes back to the pace of adoption and innovation in the indirect channels, specifically when it comes to travel agency point of sale solutions and the GDS, where there are still major limitations in terms of point of sale capabilities,” he said. “What’s the point of putting rich, personalized content in a robust API if it will end up being sold using selling system that strips the offer down to a commoditized “everyone looks the same” display?” There is essentially no industry or business that can effectively compete this way. This is where the biggest innovation is needed, else the gap between direct and indirect channels will continue to widen in spite of NDC.
Ai is scheduled to conduct a “Complimentary MasterClass with Farelogix - Best Practices in Airline Merchandising & Digital Commerce” next month.
Date: 20th April
Location: Barcelona, Spain