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Posts Tagged ‘More Revenue Happy Customer’

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.

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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We invite you to attend a one-of-a-kind master class, dedicated to exploring what it takes to successfully grow happy customers and more revenue through effective merchandising and value-added services.

At Merchandising and NDC: The Path to Happy Customers and More Revenue, we will tackle the full, end-to-end process of merchandising and personalization, including how to differentiate your product and brand, creating and optimizing the best offer, leveraging NDC, and understanding what technologies can help your airline stand apart while increasing revenue per passenger. Read the rest of this entry »

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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!

 

Don’t freak out yet, just keep calm and read on.

It’s been a few weeks now since our jaunts to Singapore and Barcelona where we, along with the folks from Airline Information, LEK Consulting, and a handful of great presenters, conducted half-day NDC in Action Symposiums to an audience packed with airlines, GDSs, TMCs, and other technology providers. These symposiums were not about whether NDC is good or not (because all the relevant players agree that it is), but rather focused on Merchandising Strategy, User Experience, and Mid-Sized (not Big) Data, along with performing some real-life demonstrations of “NDC in Action” to show the benefits available to airlines, travel agencies, and consumers.

© learchitecto - Fotolia.com

© learchitecto – Fotolia.com

But back to the question at hand: did LCCs invent NDC? Well, I think the basic premise of NDC lies directly with Low Cost Carriers like as EasyJet and others. These early renegades, when building an airline from scratch, took advantage of some technological innovation (primarily XML) to build their own individual airline APIs (Application Programming Interface), then publish those APIs to internal and external distribution touchpoints like their websites, mobile apps, the GDSs, OTAs, etc. It was pretty novel back then, but looking back it was very logical. They are low-cost airlines, with low-cost mentalities, working with low-cost systems. They are not tied into all the legacy complexities around a big PSS, EDIFACT, and the GDSs. Theirs is a simple and pure concept: distribute their content through their websites and other customer touchpoints using a single integration XML API. Read the rest of this entry »

Now that spring has sprung, we’re packing our bags and hitting the road! We’re going to be at conferences, symposiums, education days, and more—all in the name of innovation in airline distribution!

Check out the upcoming events we’ll be at in the next six weeks.

NDC in Action: A Technology Symposium – Singapore
Along with Airline Information, UATP, and several industry thought leaders, we will demonstrate how NDC will enable airlines and other companies that sell travel to innovate, personalize, dynamically retail, and compete for customers at every touchpoint.

Airline Distribution 2014
This interactive conference is where audience members can contribute to the discussion and meet face-to-face with many of the industry leaders who are solving or working to solve the complex distribution questions facing airlines today. FLX’s Jim Davidson will sit on a panel discussion and give a keynote titled, Airline Merchandising, E-Commerce and Billions of Revenue – Why Some Airlines Are Winning. 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…

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.

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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 »

Ho-Ho-Holy Cow, it’s the end of another year again, and what a year it has been!  Farelogix has had its best year ever while building on and advancing the merchandising and distribution goals of the largest airlines in the world and bringing on new airline customers from all parts of the world! We’ve also been recruiting and hiring some of the best talent imaginable from around the world to join the Farelogix family. Like I said, what a year!

But it’s more than just us, our customers, and our partners, that makes this time of year special.  It’s about the connections that have been made, friendships that have developed, opportunities realized, challenges overcome, and even those mistakes we all make being mended with grace.  What a year!

As we at Farelogix look ahead, we see very bright things, full of new opportunities to showcase our products, full of growth for our company and customers, and full of respect for the challenges that come with growth.

Our optimism spreads to the entire airline and distribution industry, where airlines are now focusing on “customer engagement,” rather than just schedules and fares.  Where consumers are “choosing” not just their flight, but the experience they desire.  And where technology is promising personalization and flair.  Do I dare say that air travel can once again be filled with stories of pleasure, relaxation, and the occasional surprise?

2013 was a great year for us, and we hope it was for you, too. And here’s to 2014 being even better!

Happy Holidays from Farelogix!

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We’re happy to premiere a new video with a very simple, age-old concept: More Revenue Happy Customer. The concept is nothing new, but when it comes to airline distribution, sometimes it’s a concept we’ve struggled finding the right balance for.

Without further ado… Enjoy!

 

View the video on YouTube.