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Archive for the ‘Airline Distribution’ Category

More airline revenue happier customers

 

“The offer is the airline’s biggest asset.” ~Jim Davidson, CEO, Farelogix.

Traditionally, airlines create products at static price points in the PSS, and then distribute them through different channels via the PSS/GDS. A couple of years ago, IATA got airlines thinking differently when it introduced New Distribution Capability (NDC) and the concept of the ‘offer’. With NDC, when an airline receives a ‘request’ from a customer, it responds by dynamically creating and pricing a personalized ‘offer’ made up of flights and ancillary products. It then presents the ‘offer’ to the customer. Initially NDC framed the ‘request’ and ‘offer’ as coming via the travel agent or Travel Management Company (TMC) channel.

We now we think of the ‘request’ in broader terms. The ‘request’ can come through any channel or touchpoint. It can also be explicit (e.g. a request through the agent or an online search) or implicit (i.e. figured out from various data inputs). The airline then dynamically creates a personalized offer that meets the customer’s need and the commercial imperatives of the airline.

What information do airlines use to help them make the right offer? Check out the image below for some examples:

Data that controls the airline offer

Source: Jim Davidson, Farelogix Pre-Conference Workshop, Aviation Festival 2017.

Still wondering why the offer is important? It boils down to two things – more revenue for the airline and happier customers. The better the airline gets at predicting what a customer needs (and wants), the easier it will be to satisfy more of that need, and earn more money in the process. Another bonus is that the airline will be able to better manage its product inventory.

Dynamic Pricing

“Dynamic Pricing will require the ability to conceivably create and publish endless prices/offers in a frictionless manner tailored to a customer of one.” ~Henry H. Harteveldt, Atmosphere Research.

By applying the science of Dynamic Pricing to enabling technology the airline can price the offer on-the-fly. Here are a few ways to do this:

  • Modify ATPCO fares: Begin with the base price and apply a discount based on variables such as load factor.
  • Build from Market Price or Bid Price: Begin with the Market Price from the Revenue Management (RM) system and apply a mark-up based on factors like carrying cost, load factor, and channel.
  • Build Personalized Bundles: Begin with Market Price and add value to the fare with ancillaries that the customer will find compelling, like premium seat, priority boarding, and first bag free.
  • React to Market Changes: Adjust a base price depending on unusual search and/or booking data.
React to unusual flight search volumes

Source: Jim Davidson, Farelogix Pre-Conference Workshop, Aviation Festival 2017.

Single Source of Truth

In today’s hyper-connected world, customer relationships are key to establishing loyalty and trust. It’s important that an offer be consistent whether the customer is talking to an agent, on a meta-search site, visiting airline.com, or even asking Amazon Alexa.

To ensure this happens, the airline must create and control the offer, and become the ‘single source of truth’ – another concept at the heart of NDC. That way, the customer can trust that the fare they are offered is the best value for them, regardless of channel.

“Multiple searches can result in a $12 difference in the offer. Becoming the Single Source of Truth solves this problem.” ~Jim Davidson, CEO, Farelogix.

How Do We Get There?

Legacy technology and processes are the biggest obstacle to airline offer creation and control. This is because data is not integrated with the pricing engine; control of the offer is outsourced to the PSS or GDS; and there’s no dynamic pricing.

With modern technology for airline commerce, it’s now possible for the airline to move offer creation away from the PSS/GDS and gain control of all aspects of the offer, including scheduling, availability, pricing, and merchandising. With airlines in control, Revenue Managers will be empowered to create offers based on market and bid price, be able to expand product availability to stages further in the customer journey, and dynamically adjust the offer based on data inputs. In short, Revenue Management will become a hot-bed of innovation.

This is the route to happier customers and more revenue.

Want To Learn More About This Technology?

Farelogix Airline Commerce Gateway powers airline-controlled distribution, shopping, pricing, merchandising, and retailing across channels. Our technology is used by some of the world’s biggest airlines like American Airlines, Delta, Emirates, Lufthansa, United and many more. For more information, arrange a quick consultation with a member of our commercial team by emailing sales@farelogix.com.

It’s beeOptical fibern a long time coming, but it’s incredibly rewarding to finally see NDC connectivity to the Sabre GDS enabling airline product differentiation, personalization, and improved profitability.

If you missed the news, I’ll recap it for you. American Airlines recently announced its GDS integration to Sabre using the airlines’ NDC-style API. It’s no secret that Farelogix built and powers the AA direct connect API, and that we are incredibly proud of the work that has been done with the airline to date. Connecting a full-service airline’s API to a GDS is no easy feat – at least doing it the first time – but all three companies (Sabre, AA, and Farelogix) worked hard and cooperatively to make this happen. But, believe it or not, that’s not the real story here.

The real story is what this connectivity to Sabre means for an industry that has basically been “stuck” in third party distribution limbo for years. This announcement just changed the status quo for everyone, and it’s a win-win situation for all. No one loses.

Airlines win by being able to offer differentiated content, which can increase loyalty and generate new revenue. The TMCs/OTAs win by having the most up-to-date and relevant airline content, helping to secure their value proposition to their customers. The GDSs win by being able to deliver (and ultimately display and sell) new airline services to their users (i.e., airlines, TMCs, and corporate booking tools). Consumers and corporate travelers win by getting access to the airline content and product choices they have been clamoring for, with minimal process change.

Given our history with Sabre, I was skeptical about ever seeing this level of win-win situation in airline distribution in my lifetime. But there it is, staring us right in the face. And although there is still much more work that has to be done to bring the entire industry in line with NDC, for once we are all moving forward in the right direction. New airline connectivity to GDSs is here, and it is reloading the value proposition for what was always viewed as a tired, outdated, and over-priced distribution channel. Plus, any future GDS integrations with our other airline customers will be almost automatic since 90 percent of the integration work is reusable with any GDS, thanks to an NDC-aligned integration standard.

How great is that? And in my lifetime too!

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 »

Finally, we put an end to 2013. It was a year of ongoing litigation, lobbying, lethargy, legacy, and three-letter acronyms (DOT, NDC, etc.) that may actually be behind us. I know that certainly is the case for Farelogix. It’s been a long time since we could call off the lawyers and lobbyists, and I can’t remember the last time I could look at my upcoming travel plans and not see regular trips to DC. Sure, I may pop by occasionally to say hi to my friends at DOT, but only when I’m in town to have dinner with Premo or attend an industry conference.

640px-Pink_knitting_in_front_of_pink_sweatshirt

And NDC was finally exposed for what it really is – a boring technology schema that allows airlines to deliver rich content to travel agencies, even through the GDSs no less (see AA, AC, WS). Seriously, we spent all of 2013 arguing over something that is actually good for everyone in our supply chain. Boy, I bet we all would like to have some of that time and money back. Oh well, at least we contributed to the economic recovery. Read the rest of this entry »

In case you missed last week, IATA’s Alexander Popovich wrote a great piece in Tnooz explaining some of the fears and angst surrounding NDC. Definitely worth the read!

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NB: This is a viewpoint by, Aleks Popovich, senior vice president for financial and distribution at the International Air Transport Association.

Providing customers with more information and choice, enabling agents to sell a wider range of products and opening up a new realm of services more closely tailored to customers’ needs.

This should be a welcome development in the travel industry.

However, IATA is well aware that many in the travel agency community are concerned about IATA’s Resolution 787, the foundation document for the New Distribution Capability (NDC) project.

Yet despite the filing of 400+ comments and motions for or against Resolution 787 with the US Department of Transportation, there has been almost no attention paid to what is really driving travel agent angst over the NDC project: fear of the unknown.

Read the rest of the article at Tnooz.

Farelogix’ Senior Vice President and General Counsel, Edna Lopez, recently had an article published in ABA Transportation Committee Quarterly. We have republished the article below. You can learn more about the ABA’s Transportation Committee here.

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Fighting Against Market ‘Disruption’

I spent all day trying to figure out how to take American [Airlines] down.1 This one statement captures the very heart of the struggle by Sabre to maintain control of the airline ticket distribution industry and is just one of many excerpts from internal company emails that came to light during the antitrust trial brought by American Airlines against Sabre in October 2012.2 A key factor that elicited such a strong comment was apparently Sabre’s view that AA [American] remains the one disruptive force in the [ticket distribution] industry”3 and that this ‘disruption’ was rooted in American’s desire to utilize alternative ticket distribution technology.4

Although the trial lasted only five days before the parties settled, the details that emerged in testimony and other documents shed an unprecedented, some would say shocking, light into the internal strategies and tactics of some of the most powerful companies in the airline ticket distribution industry. At the very least, the testimony and documents demonstrate an awareness of the dawning of a new age in distribution, a fear of what that new age might bring to those in power, and a desire to maintain the status quo—at all costs—for as long as possible.5 Read the rest of this entry »

I have now read in its entirety the Sabre comment filed with the DOT. Wow! Seventy-seven pages of Sabre showing PowerPoint slides and screenshots of what’s to come… at some point… in the future… eventually. The part I found the most interesting was —————redact————————, especially when they discussed the future development of —————————————redact————————. They have really nailed it because I would have thought that taking the approach of —————redact————————————– would have yielded a better return on their technology investment. But hey, good for them.

Well, since Sabre has clearly presented their technology and product plans for the future of new-world distribution technology, I feel compelled to do the same. So here it is, The Farelogix Technology and Product Strategy for the Future: We are mainly investing in —————redact———————— to the tune of $—————redact———–. This will also us to revolutionize the way the airline industry performs —————redact————————————————-. We will be incorporating new and advanced fusion-based accelerator ———————————————redact———————— which will yield a significant reduction in cost of operations for airlines and travel agencies and by utilizing —————redact———————— will generate transaction response times of less than 2 milliseconds. Now that is a strategy!

So, there it is. Clear as day… or at least clear as Sabre’s strategy.

As always, your comments welcome.

© HaywireMedia - Fotolia.com

© HaywireMedia – Fotolia.com

I started reading Sabre’s comment to the DOT regarding IATA’s Resolution 787 (NDC) on the airplane the other day.  It only took a few paragraphs for me to realize that their comment was not really about NDC, but rather a defensive commentary insisting they can—or will at some point in the future be able to—do everything when it comes to providing airlines with the distribution technology airlines and travel agencies desire.  OK, but “the lady doth protest too much, methinks.”

So Sabre, in its comment to DOT, rather than commenting on the merits or shortcomings of Resolution 787 like everyone else did, submitted a voluminous 77-page document outlining how they can—whoops, I mean, will at some point in the future be able to—do everything the airlines, travel agencies, corporations, and consumers want. It makes me think of petulant 5-year-olds arguing on the playground. “Can not!” “Can too!”

Much of their comment includes screenshots. Hey, I like pictures as much as the next guy, and we even submitted some pictures in our DOT comment, but in the end it is not about pictures or even demos.  It’s about real product capabilities and value creation. In their comment, Sabre referenced a demo they gave at the DOT’s Advisory Committee for Aviation Consumer Protection as proof that they already have all these great distribution capabilities. I was at that particular meeting at the DOT and witnessed the Sabre demo.  Now, I know Sabre likes to call Farelogix products that have been in production for years mock-ups, so I won’t use that term, but words like prototype, untested, and unproven did come to mind as I was viewing that Sabre demo in DC.  So, Sabre, I will take your assertions with a grain of salt—a big, giant saltlick-sized grain of salt. Read the rest of this entry »

Empty_Box_Person_Looking_InOk, sometimes I am easily confused, but this one is taking the cake. I am totally confounded because in the last several months practically everyone I have spoken to—travel agencies, corporate travel managers, and even GDSs (well, Sabre and Farelogix aren’t really on speaking terms lately, so not all GDSs)—has expressed interest in having viewable, transparent, and bookable access to the various airline merchandising and ancillary services many airlines have on their websites. Everyone wants it, which makes perfect sense. Having access to more options that are relevant, up-to-the-minute, accurate, and maybe even personalized for the individual traveler making the request is clearly good for consumers, corporate travelers, corporations, travel agencies, OTAs, and GDSs. It’s good for everybody!

Enter IATA. IATA, through its standards-setting body, has developed its optional NDC initiative. This standards initiative was developed with input from various travel supply chain players. They worked long and hard to define a technology integration and workflow standard that enables an airline to deliver relevant, up-to-the-minute, accurate, and maybe even personalized offers to travel agencies, consumers, corporate travelers, corporations, OTAs, and GDSs. So, essentially IATA is enabling more airline content to be delivered and more is good, right?  Read the rest of this entry »

© alphaspirit - Fotolia.com

© alphaspirit – Fotolia.com

As the airline industry begins to adopt modern and sophisticated distribution technology, we are delighted that United Airlines and Priceline have selected Farelogix as their technology provider in this innovative solution. It is clear Airline Commerce is expanding by leaps and bounds! On that note, we invite interested airlines to come see what all the fuss is about, and join us for the Farelogix Technology Symposium, taking place here in Miami in just a few weeks.

 

 

 

Delivering on NDC Ad