Welcome to the Farelogix Blog

It’s where we discuss news and trends, and question the status quo.

Interested in airline distribution, offer management, dynamic pricing or digital commerce?

Jump in. Stay informed:

Is it the end of the PSS as we know it?

Untitled-design-10.png

Our answer is ‘yes’.

At the recent Farelogix “Controlling Your Offer” pre-conference workshop at the Aviation Festival in London, Henry Harteveldt referenced a great movie, Hidden Figures. It’s a poignant true story of a group of female African American “human computers” (mathematicians) working at NASA during the time of the Space Race in the 1960s. The women cross race and gender boundaries to help put an astronaut into orbit and return safely to Earth.

A memorable part of the film is when the long-awaited IBM is delivered. It’s massive and can’t fit through the door of the room dedicated to housing it. Once walls are broken, enabling it to be set in place, it sits - waiting to unleash its mathematical might. However, excitement around its arrival wanes as technicians fail to get it up and running. It goes unused until the group of “human computers” take it on themselves to master the technology and save their jobs.

The nonhuman computer was the IBM 7090 data processing system. It became the primary computer responsible for tracking, monitoring, and controlling NASA’s early space missions. In 1960, a typical system sold for $2.9 million (equivalent to $55,400,000 in 2016)[1], yet it had dramatically less compute power than today’s smart phone.

Moore’s law wins again. Times change as do our technology needs and our definition of what is possible. What was state-of-the-art, commanding a premium price becomes commoditized and/or replaced. That’s what is happening to the traditional airline PSS.

PSS systems were designed to be the complex workhorses they are, providing essential functions for managing airline reservations and operations. The PSS was not designed to deliver on the strategic imperatives of airlines seeking to master digital retail, dynamic pricing and revenue optimization. This strategic functionality must be executed by modern technology that is better, faster and cheaper and purpose built for today’s world.

What can airlines do better, faster and cheaper by using technology other than the PSS? Here are some examples:

Control The Offer: With NDC-aligned technology airlines are able to create, control, personalize and fulfill the offer across all channels. It’s now possible for airlines to control all elements of the product including scheduling, availability and pricing. In fact, there’s no longer any need for the PSS to play a role in Flight Shopping processes. Read our recent blog post for more information on this topic >>

Handle Massive Volumes: Social media and the rise of metasearch has resulted in an enormous increase in search traffic. Add the capabilities of voice search (e.g. Amazon Alexa) and other innovations, it seems high volume search is here to stay. Not only are newer technologies better able to cope with this trend, delivering results in milli-seconds without a cache to guarantee accuracy, they also bypass the PSS/GDS thereby saving on look-to-book fees.

Do Dynamic: Whether data comes from the CRM, Loyalty Program, social graph, contextual factors or insights derived through Artificial Intelligence, airlines will want to use it to better service the customer. And that means becoming dynamic. A hot topic is Dynamic Pricing – but any element of the offer can be created and delivered to all airline channels in real-time, with the right technology.

Grow with the Future: Gartner recently introduced the Bi-Modal IT concept to address the need for digital transformation. It suggests introducing new technology (mode 2) to speed innovation, while at the same time maintaining traditional systems (mode 1) to de-risk business critical services. Critics of this approach note that it’s essentially ‘bolting on innovation’ instead of embracing it, adding that too much attention is placed on the status quo rather than committing to change IT for the better. Modern air commerce technology enables airlines to do it all – leveraging traditional processes where required (e.g. supporting ATPCO pricing) while taking advantage of today’s opportunities (e.g. Dynamic Pricing) and preparing for the commerce landscape of tomorrow (e.g. Machine-Learning). This reality is far removed from the 1950s and 1960s technology depicted in Hidden Figures.

It also makes sense to look beyond capabilities when considering the role of the PSS. Any business needs to carefully manage all elements critical to future success and avoid vendor lock-in.  The fact that the PSS market is dominated by a handful of powerful players, who require airlines to enter into onerous 10-year contracts, is something that would make other industries wince with discomfort. Check out our recent blog post for more on this topic. >>

The topic “ARE WE REALLY SEEING AN END TO THE PSS AS WE KNOW IT?” will be explored by Farelogix CEO, Jim Davidson and other panelists at the New Generation of Airline Passenger Service Systems 2017 in London, 10 – 12 October. Attend the session at 09.25 on Wednesday, 11 October to discover more. To book a meeting with Jim or another member of the Farelogix team at the event, email sales@farelogix.com.

[1] https://en.wikipedia.org/wiki/IBM_7090

Contact Us

Comments: