Questioning the travel industry status quo, one blog post at a time

FLX Ancillary AwardGuess what? Our friends at United Airlines nominated the FLX Merchandise product in the Airline Information 2014 Mega Event Awards for Innovation of the Year – and we won! This is news our entire company is thankful for as we head into the holiday season!

We were nominated in the Ancillary Revenue and Merchandising category based on United’s cross-channel use of our Farelogix FLX Merchandise product. United set the stage for us to win by highlighting how we’ve helped them achieve their lofty goal of increasing ancillary revenue by 11% per passenger in Q3 2014, and generating revenues of $3 billion in 2014 from ancillary sales of a variety of products and services, including Economy Plus seats, priority boarding, bags, and various subscriptions.

United hosts the FLX Merchandise product and has integrated it directly into their technology stack. This allows them to quickly and efficiently update product pricing, add new products and services, and continuously optimize their offers. FLX Merchandise also generates offers for United’s Economy Plus seats across channels including through the GDS, allowing travel management partners and travel agencies to seamlessly book extra legroom seats. Read the rest of this entry »

What? Seriously? Am I going to start bucking the conventional wisdom of an airline fare already? Slow down… we are all just fresh off IATA NDC-a-palooza in San Diego where everyone and their aunt was testifying to how ready they are for NDC.

So with the NDC Acceptance Position now a badge of honor (or of courage, for us early supporters), you bet I am taking on the concept of a “fare” because not only is the airline industry no longer just about “fares and schedules,” the very nature and concept of an “airline fare” is now in question.

Ok, I’ll be gentle and do my best to be brief because it may take a bit of time for this to sink in…at least it did for me, but when it did, boy, did the light bulb go off!

FLX-M Still

This new way of thinking is about creating truly dynamic bundles containing what we would traditionally know as a “fare” along with certain ancillaries, where the “fare” is treated as a “service item” within the actual bundle, similar to the ancillaries themselves.  Read the rest of this entry »

 

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In advance of Airline Information’s Mega Event 2014 in New Orleans, Farelogix will once again host a Pre-Conference Ancillary Revenue Workshop on Monday, November 17th. The workshop will feature presentations from IdeaWork’s Jay Sorenson and a representative from United Airlines in which they discuss the motivation and strategy behind implementing an ancillary revenue program.

We will also take the audience on a journey on how these technologies can be implemented. And back by popular demand, we will present our Use-Case Challenge! Our developers will be put to the test with on-the-spot use case scenarios from you, the audience, so be sure to bring your ancillary revenue ideas!

Space is limited so register now!

This week, I thought I’d toss out a question to all of you airline marketers:

Can you imagine a situation in which you invite one of your technology vendors to choose which color to paint your new fleet of planes? Or perhaps invite an outsider to decide how to structure and market your new loyalty program… or maybe even dictate what other companies you are allowed to partner with? Whoa OK, OK, I can hear you answering all the way from here – your answer is (correctly) a resounding no! Of course, your airline brand, your products, and your partners are core elements of your strategy and marketplace identity. Of course you would never turn over the control to a third party!  OK, I guess it was a silly question.

© buchachon

© buchachon

Well if that’s so silly, then maybe try to answer this: Why, in today’s world of merchandising and multi-channel customer engagement, do some airlines allow third parties to dictate what products the airline is allowed to sell and where, largely due to technology limitations and delays? Yes, this happens! “We just don’t know anyone who can help us sell seats the way we really want to so we just do what they can do and try to live with what they can do.” That is a real quote from an airline I met with just two weeks ago!  Or this, recently shared by a major international carrier: “NDC sounds promising because we do so much through the agency channel and we want to extend our merchandising there…but our PSS provider says realistically it will be years before it is possible, so I guess we’ll have to wait.” What? And you accept that answer? When in fact the decision of “should we offer it?” should never be dictated by what a particular technology provider can do. To accept that is to limit your potential right out of the gate!  It’s like your provider telling you to dream big…but only in black and white. Read the rest of this entry »

We recently announced the launch of NDC-Xpress, a technology solution that enables airlines to implement New Distribution Capability (NDC) with minimal risk and unprecedented speed to market. Building on the core technologies of the flagship FLX Airline Commerce Gateway, NDC-Xpress delivers airline-controlled merchandising, pricing, and API distribution in a SaaS model, with implementation delivered in less than six months using the latest NDC schemas (Version 1.1).

NDC-Xpress logoNDC-Xpress enables airlines to immediately begin generating new revenue streams from the sale of value-added services in the agency channel. In addition, significant cost savings may be realized through the delivery of content across multiple indirect channel outlets (i.e., GDSs and other third party aggregators) via a single, standardized XML API inclusive of a common and supported implementation structure.

“The focus of NDC-Xpress is speed to market for the long overdue delivery of airline ancillaries, merchandising, rich content, and value-added services in the agency channel,” said Jim Davidson, President and CEO at Farelogix. “With the final approval of IATA’s Resolution 787 (NDC) by the US Department of Transportation and the competitive push for airlines to offer dynamic and differentiated content across channels – beyond airline.com – the timing could not be better for Farelogix to deliver a solution that brings NDC to life, quickly and to the benefit of all parties.” Read the rest of this entry »

At Farelogix, we consider ourselves a disruptive force in airline distribution technology. We innovate. We push the envelope. We challenge ourselves. And because of all that, we produce some cutting-edge technology. Yet I still find myself in meetings with clients and at conferences asking, “How can this be?” Or, “How can an airline still be pigeon-holed like this?” Of course I’m not going to name names, but I think it is important for you to hear the stories and maybe, like me, you’ll be mad as hell and not willing to take it anymore!

© hxdyl - Fotolia.com

© hxdyl – Fotolia.com

For example, a couple of months back we were meeting with an airline to discuss merchandising. We love merchandising. We, along with the rest of the industry, now know for a fact that airline merchandising leads to better customer happiness and more revenue for the airlines. Plus, (shameless plug) we have awesome merchandising technology. So, needless to say, we were psyched for the meeting and it went really well. We showed them some really cool stuff around pricing seats, and even other cool stuff like dynamically pricing the seats and seat-location bundles, and since we already had a direct connect with this airline, we showed all this working in their system – no gimmicks or hocus pocus. Not exaggerating, it took us less than an hour to create these real examples, built right there in the conference room, and they were wowed.

During the demo we heard a pain-point from the airline. I don’t recall if it was because they were introducing new seat configurations or what, but basically they wanted to change the prices on some seats. It wasn’t even complicated stuff like dynamic seats based on city pair, length of flight, peak travel time, or anything like that. They told us their IT provider told them the request to change the price on a few seats would cost over half-a-million dollars and take up to six months. Six months! We had literally just shown them how they could do it in under an hour. Yet this is what airlines are still putting up with! It doesn’t have to be like this!

Imagine if I were selling a pair of shoes on eBay, and I wanted to change the price from $25 to $20. But instead of just being able to login to eBay and change the price, I had to write eBay, and they would write me back in a month or so to tell me they could change the price on the shoes I was selling but it’d take a month and cost $10,000. I know it sounds ridiculous, but this is the world so many airlines still live in. It’s absolute madness!

So, airlines, the next time your IT provider, or even your in-house IT folks, quote you some seemingly astronomical price or time frame for a merchandising-related implementation, tell them, “Hang on, I’ve got to Ask The Question!” Then call us. Chances are if we are not too busy, we could show your use case actually working in a real airline test system in a day or so.

Remember time is money, and the longer you wait the more money you are losing.

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As a precursor to Airline Information’s upcoming Mega Event Asia-Pacific 2014, we will be sponsoring a complimentary Ancillary Revenue Master Class on Tuesday, August 19, with a featured keynote from IdeaWorks’ Jay Sorensen. This event is a must see for anyone attending the Mega Event as it will shed some light on not only the “why” of airline merchandising, but also the “how,” while also demonstrating why delivering the right product at the right time and price to the right customer will put you on the path to more revenue and happy customers.

Farelogix will be providing some real life examples of merchandising in action, as well as putting our developers to the test with on-the-spot use case scenarios, so bring your ideas on how you’d like to generate ancillary revenue – maybe your use case will be selected!

Registration is still available, but space is limited so register now!

 

Now that DOT has cleared the storm clouds over NDC, airline conference rooms around the globe are being booked for meetings about NDC.  These meetings range from a simple, internal exploratory discussions on the NDC topic to serious “next steps” planning sessions on whether the airline will buy or build its own NDC API, while also prioritizing which GDSs and aggregators are ready to accept the airline’s NDC XML API when it’s ready.

© agsandrew - Fotolia.com

© agsandrew – Fotolia.com

Now before we get into whether to NDC or not NDC, I think a few clarifying facts and terms are in order. Along with the term “NDC,” one will quickly have to deal with terms and concepts like “NDC Solution Providers,” “Aggregators,” and “NDC Schema.”  So let’s start with some basic definitions.

NDC Solution Providers are generally technology companies, including those operating a PSS (Passenger Service System), that have both the capability and interest in building out airline NDC XML API connectors inclusive of comprehensive integration with the airline host and other systems, such as merchandising and pricing.  (In case you were wondering, Farelogix fits into this category). I like to call this group the Makers.

NDC-Capable Aggregators are generally distribution-related companies or travel technology companies that possess the capability to accept and integrate an airline’s NDC XML API with other airline content from one or more sources.  Obviously the GDS companies are the biggest of these aggregators, but there are a growing number of others making a name for themselves in this space.  I call these folks the Takers.

NDC Schema is the actual technical connectivity roadmap that is being standardized by IATA and airline/3rd party workgroups.  NDC Schema version 1.1 is anticipated to be finalized and published in Q4 of this year.

This version 1.1 schema will officially be the first technical “rules of engagement,” if you will, for those NDC Solution Providers and NDC-Capable Aggregators.  The Solution Providers (the Makers) will build out the airline connectivity, most likely starting with the NDC-shop, as this defines the offer/pricing creation at the airline level – the essence of NDC. The NDC Solution Providers will follow the NDC Schema so that the NDC-Capable Aggregators (the Takers) will have a reliable and consistent set of connectivity messages.  In other words, if an NDC-Capable Aggregator connects to two or more airline NDC XML APIs (even if for shop only) where those airline XML APIs were built by different NDC Solution Providers, they will send and receive consistent and expected data.  This makes the life for an NDC-Capable Aggregator a heck of a lot easier and enables them to scale and perform multiple airline connectivity for their customers in the most efficient manner.

Up Next… the real questions around “To NDC, or Not To NDC” because you know we just love to Ask the Question!

We recently had the opportunity, along with consulting firm L.E.K., to share our thoughts and insight on ancillary services and airline merchandising in a feature in IATA’s Airlines International magazine. Here’s a brief excerpt:

Ancillaries are not only a boon to airline economics but also an opportunity to enhance the customer experience and airline brand loyalty. Meeting the customer’s demand for greater choice, convenience, and value is the new competitive playing field. The key to meeting this demand is intelligent use of data—from customer demographics and trip purpose, to buying history, real-time trip conditions, and even revenue-managed inventory—to create the most relevant offer, and then deliver it no matter where the traveler happens to be shopping or browsing, even in-flight. Intelligent merchandising is, put simply, engaging with your customer, and acknowledging their specific needs.

You can read the article in its entirety, courtesy of Airlines International, here.

As the proliferation of airline ancillary sales advances, selling in the travel agency channel continues to stand as the last bastion. Airline websites have long been capable of selling these value-based products and services, and airlines are making considerable headway at selling via kiosks, mobile apps, and call centers. Yet trying to sell these same services through the agency channel continues to be problematic (one only has to think of AA’s fare families being marketed and sold by either an odd or even number).

© Maksym Yemelyanov - Fotolia.com

© Maksym Yemelyanov – Fotolia.com

With advancements in distribution communications (especially now that NDC has DOT’s blessing), sending and receiving ancillary product and service information to/from the agency channel is less a technical problem, and more an issue of change management. The technical problem of displaying and transacting those ancillaries is one that companies like Travelport—with their investment in the travel agency desktop—are quickly working to solve. But what about that pesky change management issue?

One must not underestimate the foundational challenge facing the travel agency community.  The reality is that with NDC finally getting the okay, more and more airlines will adopt this distribution methodology of delivering their content – in real time – directly via their API to the GDS who in turn will aggregate it and deliver it to the agent desktop.  Read the rest of this entry »