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

It’s obvious, or at least it should be by now, that technology is changing the conversation between airlines and travelers. It all begins with the concept of the hyper-connected consumer, or, more specifically, the real-time relationship between your airline and your customers.

No matter how long your airline has been in business, relationships like this one don’t exist yet. That’s because, with the hyper-connected customer, the relationship is complicated. It’s a real-time, digital retailing relationship that many of us have never had before and we’re not sure what to make of it, or what to do with it — or how to keep up with it!

Anywhere, Anytime

In this hyper-connected relationship, the conversation is constant. It can happen anywhere, anytime, and on any device, computer, wearable technology, or even by talking to a real human being. Not only that, but to maintain the customer’s interest and desire to be loyal, the pressure is on to keep it interesting, keep it fresh, and keep it relevant – every day.

 As if all of this wasn’t enough to deal with, rest assured that what we do today won’t be good enough tomorrow. We have to learn constantly and keep gathering more information about our customers. Only when we do this, can we find new ways to build upon and keep these critical relationships as strong as possible.

Yes, the hyper-connected relationship can exhaust you if you don’t find a way to manage it effectively — and thrive in it. Managed properly, it will increase your revenue and keep your customers happy.

So how do we as an industry do that? Well, in this relationship, there is a language – a currency – that is the core of what keeps this relationship alive and growing. It is the single most important asset that you – as the airline – have to bring to the table. If you’ve been reading this blog regularly, you know what this asset is. If not, stay tuned for my next post and I’ll tell you what your biggest asset is (hint: it’s not what you think.)

Of course it’s hard to believe that we even have to Ask the Question as to whether or not the major PSS’ will allow their customers to innovate. After all, it is a “customer is always right” relationship whereby the airlines purchase a technology suite from their PSS provider, and then the technology is delivered with no strings attached. Done. Dusted. Right?

Not exactly; because in the airline industry, the “customer is always right” relationship (when the airline is the customer) is not the norm. In fact, airlines are contractually forbidden from seeking out some of the innovative new solutions available in the market today, based on the agreements they have in place with their PSS/GDS. So, when we ask whether an airline’s PSS will allow airline controlled offers, the shocking answer may very well be “No!

Hypothetically speaking, let’s say an airline shifts its strategic direction or finds itself wanting to create, control, and deliver its offer across all channels (a.k.a.: be the “single source of truth”). The airline decides to adopt third party technologies– let’s call them offer engines – that can integrate with and work alongside its PSS. Is this technologically possible today? Absolutely! Is it contractually allowed? The logical answer is: “well, sure, of course it is.”

But things are not as obvious in our world, as we recently found out from information exposed to all of us during the USAir vs. Sabre jury trial where the jury determined that certain contract provisions found in most GDS/airline distribution agreements were anti-competitive. These provisions, generally grouped together in contracts and labeled as “full content provisions,” include a full-content provision, a content-parity provision, a surcharge prohibition provision, and a direct-connect prohibition provision. Similar provisions are in the very fine print of more than a few airline-PSS contracts.

Provisions such as these undermine an airline’s ability to offer customer choices through things like dynamic bundling and pricing, content differentiation, sales channel optimization, direct connect content delivery, etc. – essentially tying the hands of the airline when it comes to adopting innovative airline distribution.

So the next question is: “How many of those contract provisions have found their way into the airline’s PSS contract?” You may think the answer is “none,” but we suggest airlines check their contracts closely as words may be different, but the intent could very well be the same.

And the next question: “Can the airline, through its existing PSS agreement, decide to deploy its own offer engines (Shopping/pricing, Merchandising, Dynamic Availability, Optimal Schedule Building) and have these engines integrate with its PSS?” Again, we suggest that airlines dig well beyond the simple “Yes” or “No” answer they may get.

They should also ask about cost reductions as the airline may end up handling many services itself rather than relying on the PSS. The airline should also ask about its ability to maintain an acceptable PSS service level when deploying its own engines. And lastly, the airline should ask about the costs associated with deploying its own applications connected to the PSS.

It’s really important that airlines Ask The Questions now before spending precious time developing an offer and distribution strategy, only to find out later the PSS won’t allow it. “Are you wearing handcuffs that will prevent you from being competitive in the coming years?” There’s the real question!

From February 8 – 9 in Hamburg, Germany, Farelogix will be onsite at the Hamburg Aviation Event. Our very own Jim Davidson is one of the event’s keynote speakers on February 8, 2017 from 10:10 AM – 10:30 AM, and will be focusing his presentation on the airline as “Single Source of Truth” and how dynamic, personalized offers are changing the airline industry. Jim will explore the changing anatomy of the airline offer as it moves far beyond traditional fares and ancillaries, and how the latest advancements in technology are changing what is possible in terms of dynamic, omni-channel customer engagement.

In addition to Jim’s keynote, there is a stellar lineup of other speakers and topics. Some of the hot topics that will be addressed include chatbots, mobile, customer segmentation, personalization, predictive analytics to optimize resources, as well as data and how to use it. And for all of us #AvGeeks in attendance, you’ll even have an opportunity to participate in a Virtual Reality Demo – Airspace by Airbus.

Come join Jim and the other fabulous speakers from Wizzair, Ryanair, Eurowings and more. It promises to be a fantastic two days where innovative ideas will be shared. You can find the full agenda online at http://www.hamburgaviationconference.com/agenda/, and the complete speakers list at http://www.hamburgaviationconference.com/speakers/.

Plus, if you haven’t yet signed up to attend, we have a deal for you! Using this discount code (2381) when you register, you will receive a discount of 30% off the current registration rate. We hope you will take advantage of this offer and that we see you there!

I am sure most everyone knows by now that just before the holidays a jury in the USAir v Sabre antitrust trial determined that certain provisions found in most GDS/airline distribution agreements were anti-competitive. These provisions – generally grouped together and labeled as “full content provisions” – include a full-content provision, a content-parity provision, a surcharge prohibition provision, and a direct-connect prohibition provision.

While the trial results will certainly take some time to play out in the market, one thing is for sure – airlines should be strategizing how they will use this anti-competitive determination to open up their market and distribution opportunities.  It is certainly going to be a once-in-a-long-lifetime of GDS contract provisions negotiation opportunity.

From my point of view, the trial was quite interesting on multiple fronts. So I thought I would share some observations regarding my first opportunity to testify in a jury trial.

As a non-expert witness, I could not actually attend any of the trial proceedings until after I testified. So my first glimpse into the trial was when I was escorted in through a back door and seated directly in the witness box, snuggled in nicely between the judge and the jurors.  No introductions, no handshakes, and no exchanging of pleasantries before getting down to business. In other words, this was not a business meeting that so many of us are accustomed to.  I was immediately sworn in, and then it was off to the races – pausing only momentarily for a sip of water or to look up a line or two from four large bound books (literally over 1,000 pages) of my previous multiple-year-old depositions. (In case you aren’t aware, I had three previous depositions as the Sabre lawyer attempted to, what is called in the legal business, “impeach me.” Yikes!)

A couple of observations:

  • Being a juror is hard work.  This was a very complex case and from what I could tell, the jurors were extremely engaged, attentive, and taking lots of notes.  At the end of my testimony (and that of others who were called to the witness box) the jurors were allowed to submit follow-up questions to the judge. After I testified, the lawyers and judge disappeared for a while,  after which the judge returned to  ask me five or six questions submitted by the jurors.  The questions were relevant, intelligent, and demonstrated the grasp that the jurors had on this case.  Quite amazing.
  • Look at who did and did not show up. An open court room doesn’t necessarily mean people actually show up to watch. I found this quite interesting. Here we were, at a trial that had significant impact on pretty much every airline in the world that is not happy with their GDS full content, parity provision, surcharge and direct connect prohibitions. Yet, not a single airline representative (other than AA) in the house.  What gives?  Lack of interest?  Didn’t know the trial was happening?  Figured you would read the transcripts?  Anyway, I thought this was quite interesting.

There was however one person that seemed intent on grasping all there was to grasp throughout the long weeks of trial – a GDS lawyer. Wonder what his motivation was?

Guess you’ll just have to Ask the Question!

Are You Shopping for a Shopping Engine?

Checklist for NDC “Single Source of Truth” Pricing

One of the visions for IATA’s New Distribution Capability (NDC) is the airline as the “single source of truth”. However, for an airline to control and create its own dynamically-priced offers across every channel requires new levels of performance, scalability, and flexibility not supported by conventional PSS or third party pricing engines.

Airline IT and Revenue Management executives at airlines around the world are scratching their heads as they consider what needs to be done to deliver on NDC, omni-channel dynamic pricing, and personalization. The problem? Most of the time, the airline’s incumbent shop/price provider (which may or may not be the airline’s PSS) cannot scale to accommodate high-volume search, and is limited to ATPCo-filed fares and ancillaries, and has no solution for real-time creation of an offer.

If this sounds familiar to you, then there is no better time than the present to explore the benefits of next generation shopping technology! But before investing in the time and expense of an RFP, consider this checklist as you embark on your search.

Checklist for Your Airline’s NDC-Aligned Shopping Engine

  • Handles extremely extremely high volumes of search requests with millisecond response time, and with unlimited scalability.
  • Supports large data sets, and calendar shopping without performance degradation or cost-prohibitive charges
  • Supports NDC shopping including Affinity and Attribute shopping
  • Includes a rules engine that integrates with any number of airline data sources to influence the offer (e.g. CRM, Frequent Traveler, Loyalty, Revenue Management)
  • Gives airlines unlimited control to configure business rules, with any level of desired granularity (by market, channel, seasonality, equipment, traveler profile/FF, or even individual travelers)
  • Supports ATPCO and non-ATPCO filed fares (i.e. fares created directly by the airline and/or based on bid price)
  • Supports dynamic pricing without reliance on cache or costly PSS hits
  • Provides optional engines for off-PSS Availability Calculation and Schedule-Building
  • Runs on commodity hardware with unlimited scalability
  • Includes an NDC API for delivery of the priced offer to any channel
  • Is PSS-agnostic and fully under the airline’s control

In the interest of full transparency, Farelogix’ new FLX Shop & Price engine just happens to support all of these requirements, and we would be delighted to talk with you about it. Contact sales@farelogix.com and we can answer any questions you may have.

Or, you might want to consider attending the industry’s first Control-Your-Offer Symposium, taking place in Miami April 5-6, where you can see NDC shopping and merchandising in action.

No matter what solution you choose, we wish you luck on your shopping trip!

If you’re currently figuring out your calendar for the year ahead, we have a great event for you to add. On April 5-6, we are hosting the industry’s first event dedicated to technology for airline-controlled offers.

This invitation-only symposium is specifically for airline IT, revenue management, and e-commerce executives that want to explore strategies and new technologies to dynamically manage all aspects of the airline offer – from pricing and merchandising to optimized availability and schedule-building.

For more information or to request an invitation, please visit http://farelogixoffersymposium2017.com.

Don’t miss this opportunity to hear from industry and product experts on the following topics:

  • How the new world of NDC and “Active Distribution” is transforming pricing and revenue management and driving adoption of new technologies.
  • Real-life case studies of airlines taking control using airline-hosted “offer engines” without taxing the PSS.
  • How Artificial Intelligence, Machine Learning, and Big Data is making it possible to achieve greater profitability per product, moving beyond history-based calculations.
  • How to present optimal search results including dynamic, personalized offers inclusive of custom-tailored availability, schedules, pricing and merchandising offers.

 Plus, we will take you through a technology deep dive into the industry’s only shopping & pricing engine designed for high volume, personalized, omni-channel NDC shopping.

This event will be jam-packed with actionable content to help airlines gain more control of and enhance their offers.

Request your invite today!

 

welcome2017-01

…And we’re off!

A new year, a renewed focus on our products, our services, and our customers.

Plus, an invitation will be forthcoming to our airlines prospects and others on our radar to join us this year for a spring event.

Farelogix is ready for 2017.

Our mission is clear: To deliver the best, most innovative and efficient airline distribution engines to airlines taking control of their offer.

Our products are ready!

And our team is stronger, smarter, and more talented than ever.

We Are Farelogix!

 

 

competition-01-jpg

Yesterday in New York City, an 11-person jury determined that Sabre, through certain provisions in the Sabre/USAir contract, violated U.S. antitrust law and found those provisions harmed competition. The jury awarded USAir/AA a little over $5 million, which will be trebled to $15 million due to the case being an antitrust case, plus attorney’s fees. However, the money was never the real issue in this case.

The real issue was the jury determined that certain provisions found in most GDS/airline distribution agreements were anti-competitive. These provisions, generally grouped together and labeled as “full content provisions”, include a full-content provision, a content-parity provision, a surcharge prohibition provision and a direct-connect prohibition provision.

The impact of this decision should make it much easier for airlines to offer competitive content, generate more competition among GDSs and pave the way for much needed competition and innovation in the airline distribution market.

Farelogix applauds the jury’s finding and looks forward to a more open, transparent and innovative distribution market.

Happy Holidays!

slotprice

I’ve been thinking quite a bit about how inefficient our airline marketplace really is, and how it continues to heighten consumer stress and add unnecessary costs for both airlines and their customers.

Specifically, I am talking about the market inefficiencies and related costs and unproductive consumer behaviors in the process of searching for the “best” airline offer down to the penny – let’s just say, the inefficiencies in search.

Today, it seems consumers feel compelled to search multiple sites, i.e., various OTAs and meta search, because prior experience has taught them that airline prices do vary from one site to the next. I am not referring to negotiated rates, but rather published fares where despite the fact the airline intends a consistent fare, variations exist from storefront to storefront. Often times this price variance is minimal (perhaps taxes rounded up or down!), yet this is enough to motivate consumers to keep searching, believing that the airlines are “up to something” with how they are pricing their product.

The reason for this is, for the most part, that the airlines themselves are not even pricing their own product. Instead, it’s a few third-party companies – primarily the airline’s PSS and the GDSs, using their own home-grown pricing and availability applications – that actually create these pricing discrepancies throughout the marketplace. Why? Well each of these pricing systems use “interpretive” pricing algorithm logic and tax calculation methodologies that, in the end, can (and do) easily create pricing discrepancies. And since the consumer search sites deploy these various pricing applications, variability in pricing exists.

The unintended (or maybe not so unintended over time) consequence of this situation is higher costs to the airline from excessive search and availability transaction costs (or scan charges) imposed on the airlines by those very same third party companies that create the airline prices. It’s a bit odd when you think about it. And, to top it off, the prevailing consumer perception appears to be that the airlines are taking advantage of their customers, when in fact the airlines are powerless over this issue… or are they? What if airlines could replace those disparate pricing systems with a single, airline-controlled pricing engine capable of delivering a “single source of truth” to all channels?

Perhaps now is as good a time as any to Ask the Question.