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

Posts Tagged ‘ancillary services’

An effective airline merchandising program showcases your brand, delights your customers, and grows both revenue and loyalty.  But effective airline merchandising is not easy to accomplish.  Embracing value-added services, personalization, and New Distribution Capability (NDC) requires innovation on many levels, from strategy to technology.

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Farelogix is pleased to announce Dan McKone of L.E.K. Consulting and Jeff Hong of Hawaiian Airlines will both speak at the Ancillary Master Class on August 31st, 2015. Dan McKone is a Managing Director with L.E.K. Consulting, as well as a Partner and member of L.E.K.’s Global Leadership Team.  He currently heads the firm’s Retail Sector and Head of Travel/Lodging in the Americas.  He has directed more than 300 projects spanning corporate strategy, new concept development, and channel strategy, pricing and positioning.

Jeff Hong is currently the Director of Commercial Applications with Hawaiian Airlines.  After a successful tour-of-duty with the United States Army, a period working with a technology startup, and working with Microsoft, he returned to his home state of Hawaii.  At Hawaiian he specializes in delivering cutting edge solutions for the airline.

It is not too late to sign up for the Merchandising Master Class.  For more information, please click here.  If you would like to register for the event, please click here.

After attending the Merchandising Master Class, please be sure to attend Airline Information’s 2nd Annual Mega Event Asia Pacific 2015.  This conference will bring together industry stakeholders responsible for merchandising to discuss the latest trends, best practices, actionable strategies and insights.

FLX-M Use Case Challenge

There are many universal truths in life: money isn’t everything, laughter is the best medicine, and so on. I think another one is that people really love a good meal. And for decades another universal truth was that airplane food was bad. But that’s all changing! Today, airline meal options are plentiful and tasty. Airlines are going gourmet and some even have culinary delights from celebrity chefs!

The power of meals to differentiate an airline’s brand – and drive revenue – has made this a popular Use Case topic, and so we’ve decided to feature an example. So, how does an airline approach premium meals for Economy Cabin?

Like any product offering, there are a few basic questions for the airline to answer. In this case, things like:  What meals will the airline offer? In what conditions does a particular meal make it onto the menu (based on markets, flights, regions, etc.)? And what—if anything—will the airline charge for the meals, taking into account personalization and loyalty status? Each of these “answers” are is easily configured in FLX Merchandise, which will then drive the business rules engine to pass the correct offer or choices to the airline’s point-of-sale using standardized XML web services. Let’s take a quick look. Read the rest of this entry »

FLX-M Use Case Challenge

Airline Merchandising isn’t always about creating value by selling additional products and services. Very often, using merchandising to reward loyalty can be just as beneficial. Loyal and high-value customers often expect a certain level of service, and retaining these customers by providing certain perks can be extremely valuable. This brings us to today’s Use Case Challenge…

Today’s Challenge: Chauffeur Services

In this example, an airline wants to offer chauffeur drive services at departure and arrival for travelers in the first- and business-class cabins who have the highest level of frequent flier status. In this example, we’ll focus on the arrival portion of the offer. Let’s see how this looks in the offer designer…

Follow the JFK – * node to the 0.00 USD node. In this scenario, the service is offered at no charge for those travelers in first and business class, who also are members of the Tier 1 frequent flier program. Read the rest of this entry »

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 »

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.

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 »

As you may remember from my last blog, I have been spending more time with my knitting, but quite frankly I have knitted enough sweaters for everyone on my 2014 Christmas list. And just wait ‘til you see the sweater vest I knitted for Mike Premo. It will go great with the bow tie.

So what now?

© Brian Jackson - Fotolia.com

© Brian Jackson – Fotolia.com

Well, I was thinking that since we have spent almost two years talking to, and working with, a number of airlines on their merchandising strategies and approaches, we thought it might be fun to categorize some of the more interesting findings on this very hot topic for airlines, consumers, travel agencies, corporations, and technology providers alike.

So that’s what we are going to do. We are going to write about some of the challenges, opportunities, and learnings around the topic of airline merchandising gleaned over the past two years.  It will be fun, a bit controversial, and, most of all, informative by providing a foundation for continuing productive dialogue, debate, and innovation surrounding this most important topic.

So what do we have teed up for the next few months?

    •  “Top 10 Reasons Not to Get Started with Airline Merchandising”

    •  “Oh, the Things We’ve Heard: Memorable Quotes and Quips from Airline, Agency, and Distribution Folks Around the World as They Discuss the Concept of Airline Merchandising”

    •  “Why the UX Never Sleeps, So Neither Can We: Our World Has Changed, But Have We?”

    •  “The Last Mile: Merchandising Through the Travel Agency Channel”

    •  “We Know Merchandising Creates Happy Customers More Revenue, But Cost Savings, Too?”

    •  “You Can Run, But You Cannot Hide: Mastering the Airline Silo Game”

That should keep me busy for a while. Although I’ve heard scrapbooking is making a come back…

I reread Sabre’s DOT comment on IATA’s Resolution 787, and what I really think it boils down to is them saying there is no need for a new standard because they can already do everything the airlines are asking for! Seems like they believe the world revolves around them. What about all those other aggregators, GDSs, and airline distribution partners that would benefit from having an airline connectivity standard?

According to Sabre, it appears like the only thing airlines have to do is purchase (I’m assuming they won’t give it away for free) some route-based advertising in Sabre Red’s “Graphical PromoSpot” and boom—product differentiation completed. Don’t worry airlines, you can also get a Text PromoSpot for agents still using the cryptic screen. Funny thing is, we believe airlines want more than just highlighting amenities and services. It’s about transacting dynamic, personalized, and relevant offers at time of search and throughout the travel process, like many airlines already deliver on their website.

At any rate, Sabre sums up their position well here, “That assertion [Resolution 787] is that new technical standards, to be jointly agreed and jointly controlled by airlines under the auspices of IATA, are needed because, it is claimed, GDSs, such as Sabre, will not otherwise be able to support efforts by airlines to highlight their amenities and services and to make “personalized” offers to consumers. This assertion is not true.”[1] Read the rest of this entry »

I had the privilege of presenting to the fine folks of the FBTA last week. This is not my first time with the group, and knowing they can be a little feisty at times, I came prepared to bare all. There is no holding back with this group. They remind me a lot of the group from LABTA.

My presentation was all about airline ancillary services and the impact these might have on corporate travel managers and their travelers. Whether it’s a new bundled airline product freshly negotiated by savvy travel managers or a set of company-authorized a-la-carte optional services based on trip type or duration, a whole new world has opened up for today’s corporate travel managers… if they want it that is. I bet most will, but I suspect some will run for the hills because navigating in this new world where the corporate travel managers are negotiating the travel experience is new territory. The days of simply negotiating a discount in return for volume are long gone.  And simply getting your travelers an entry-level frequent flyer status just won’t cut it.

As is typical with this group, presenters only get through their first three slides before the “Hands of Challenge” arise. No different this day, but I expected and prepared for it. In reality, this is really what I love about this group—dialogue! Ok, maybe more like pointed questions, but I love it anyway. At first they seemed very school-like by raising their hands and politely waiting their turn to ask, but that only lasted a few minutes. We talked about how airlines are working hard to create an “experience” for their travelers rather than just a trip, and how travel managers now have the ability to influence their travelers experience by engaging airlines to customize product bundles based on type of travel—say a training venue versus a sales trip halfway around the world for the top salespeople in the organization.  Read the rest of this entry »