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

Posts Tagged ‘product differentiation’

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“The Offer” is now the airline’s biggest asset.

Sound silly? Hard to believe? I mean come on… airline’s biggest asset…it must be the people, right? Or the fleet of new airplanes? Or maybe those fancy remodeled lounges…. Oh wait, no, the biggest asset must be that new seating configuration or the stand-up bar in the back of the plane. Right? Wrong. All of those things are important…but they are not the airline’s biggest asset when it comes to competitive advantage and earning More Revenue and Happy Customers.

No, the airline’s biggest asset is, without a doubt, the offer it makes to potential customers literally millions of times per day through its various sales channels. Because at the end of the day, if potential customers don’t turn into real live customers, all those other “hard” assets mentioned above become extremely burdensome for any airline. The airline’s ability to monetize those assets essentially comes down to the offer it makes to its potential customers via its web site, call center, mobile app, corporate booking tool, or travel agency, including OTAs and meta search.

Yet, most airlines today put the creation of their offer – and control of their biggest asset – in the hands of strangers! Bizarre, isn’t it? OK, maybe 3rd parties like the PSS and GDS are not strangers, but it’s safe to say the offer is not their biggest asset…and that those companies cannot possibly understand what is the best offer creation methodology for you, the airline. Worse yet, some of these 3rd parties may not even have your best interests at heart when it comes to what drives their business model.

So, what to do if you are an airline seeking to take greater care of, and invest in, your biggest asset? First off, Ask the Question. Then take action! By action, I mean grab back control of your ability to Create, Control, and Deliver your offer to your sales channels – using technology that is fully scalable and under YOUR control. In other words, become the “Single Source of Truth” and don’t look back!

 More on how to do that coming up.

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 »

We recently announced the launch of NDC-Xpress, a technology solution that enables airlines to implement New Distribution Capability (NDC) with minimal risk and unprecedented speed to market. Building on the core technologies of the flagship FLX Airline Commerce Gateway, NDC-Xpress delivers airline-controlled merchandising, pricing, and API distribution in a SaaS model, with implementation delivered in less than six months using the latest NDC schemas (Version 1.1).

NDC-Xpress logoNDC-Xpress enables airlines to immediately begin generating new revenue streams from the sale of value-added services in the agency channel. In addition, significant cost savings may be realized through the delivery of content across multiple indirect channel outlets (i.e., GDSs and other third party aggregators) via a single, standardized XML API inclusive of a common and supported implementation structure.

“The focus of NDC-Xpress is speed to market for the long overdue delivery of airline ancillaries, merchandising, rich content, and value-added services in the agency channel,” said Jim Davidson, President and CEO at Farelogix. “With the final approval of IATA’s Resolution 787 (NDC) by the US Department of Transportation and the competitive push for airlines to offer dynamic and differentiated content across channels – beyond airline.com – the timing could not be better for Farelogix to deliver a solution that brings NDC to life, quickly and to the benefit of all parties.” Read the rest of this entry »

TakeTravelForward recently posted an article on airline distribution and how it is time the industry shift to a consumer-centric marketplace as opposed to one where an intermediary controls the product offers to airline travelers. They also produced a series of videos on the same subject. We thought it was worth reposting on our blog in case you missed it. Enjoy!

 

Today, airlines are competing for consumers in ways never imagined just a few years ago. For decades much of the airline industry had been relegated to a commoditized offer of an available fare and schedule. In fact, the inability of airlines to differentiate their product offerings led to what many viewed as a “race to the bottom” in terms of innovation, service, and the entire experience from “buy to fly.”

But why did this happen? Did the airlines really want to give consumers a bad experience? Of course not. They simply could not maintain profitability in an era of rising fuel prices and a mass commoditization of their product.

The turmoil in the industry today reflects that the pendulum is now swinging back, as airlines strive to offer consumers new and better travel experiences that are unique to the airline. But the shift is not so easy, and there is friction across the industry. While airlines are willing to share any information necessary to deliver customized offers to travelers, friction is inevitable as airlines try to achieve these changes against a backdrop of an entrenched business model that may serve the dominant industry intermediary (the GDSs) well but has left consumers as a mere afterthought.

Today’s consumers are unique and different, and so are their trips—vacations, business trips, weddings, and more. Consumers want to be treated special, rewarded for loyalty, given options and choice, and know they’re getting the best deal.

The Internet has given us the power to search and comparison shop for the best deal, and the notion of “one-size-fits-all” has been replaced with “Real-time, Transparent and Personalized.” Consumers enjoy and expect these benefits in today’s transparent retail world, and it should be no different when they search for and purchase air travel. Now is the time for the travel distribution industry to join in.

 
Episode 1: Do You Really Know What Happens When You Shop For An Airline Ticket?

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I truly love this industry, especially the airline industry, and most especially the airline distribution subset. It is chocked full of opportunity, drama, tension, and lots of industry panels talking about how things need to change and get better.

So, the other evening I put on my fuzzy-toed bunny PJs, microwaved some popcorn, and curled up with my laptop to watch a rerun stream of a panel about airline distribution that was held just a day before in Beijing, China during the annual IATA conference.

http://www.iata.org/events/agm/2012/Pages/panel-airline-distribution.aspx

The panel included a full stage of industry execs from airlines, GDSs, and Google. Oh this is gonna be good….some notable heavyweights in the industry are poised to get it on! And get it on they did…in the form of a thought-provoking discussion focused largely on the 60 percent of airline distribution that goes through the travel agency channel. I thought I would attempt to characterize and share with you some major takeaways after 59 minutes. Here we go. Read the rest of this entry »

This is not a question. It’s a statement of reality. The concept of personalization exists in our daily lives because we, as consumers, demand it and will continue to demand even more of it. Why? Because it creates a better customer experience whether we are buying books, a car, or travel. In the travel space (with the notable exception of the airlines), personalization has been with us for years—well before the Internet.

© moneymaker11 - Fotolia.com

Way back when, we used to order up a hotel room by contacting the hotel reservations center using an analog voice transmitter (a phone, I think it’s called), and we experienced personalization. We entered into an analog dialogue and were offered choices: a king bed or two queens, smoking or non-smoking, breakfast included or not. Not necessarily the most efficient process, but there it was—personalization, plain and simple. The Internet hasn’t given us personalization; it’s just made it cooler, easier, and much more sophisticated. Hold on to your hats, but thanks to robust databases, user profiles, and CRM, we have evolved into the era of the digital dialogue between buyer and seller. We now get to see the 360 poolside room view before we buy and we are electronically offered a variety of packages and services based who we are, what we want, and dynamic product availability. Read the rest of this entry »

During the Innovation in Airline Distribution 2012 conference I had the pleasure of listening to a couple of lawyers talk about the ongoing litigation between the airlines and the GDSs, and I didn’t even have to pay for it. It was great, and it actually led to a bona fide epiphany. Here’s how it went down:

One of the attorneys was making a general reference to the competiveness of the GDS industry and commented that “the GDSs do compete very aggressively against one another by spending millions on agency incentives.” An innocuous and no doubt accurate statement, right? The GDSs spend millions of dollars (of the billions of dollars they collect in distribution fees from the airlines each year) to allegedly compete against each other. Big deal. But then it hit me like a 2,000 page legal brief.

 

© Steven Pepple - Fotolia.com

If the GDS spend all this money competing against each other for travel agency business, then how much do the GDSs spend competing for airline distribution business?

This question now haunts me. I am sure it will consume most of your waking hours just as it does mine. So let’s try to answer the question. Hmmmmm… better get out the abacus for this calculation. Read the rest of this entry »

Last week, I decided that I really needed a 3D television and, of course, all the trimmings to go with it to make it a total sensory experience – funny 3D glasses, a new 3D surround-sound system, and, of course, the smell-o-vision option. With the holidays closing in, I had my perfect cover – The Family Gift. They would love it. What would be better than the family sitting around the new 75-incher, basking in its warm glow while watching and smelling Harry Potter 12? Ah, I love the holidays.

Since I really despise actually going into a store, I decided to make my Family Gift selection online. As I began my search, I came across a number of aggregation sites that displayed price ranges for certain brands and models, but honestly, those sites weren’t of much help. I mean, telling me that the Mitsubishi TV is $4,140 – $6,000 isn’t terribly helpful. And those sites certainly didn’t take into account any personalization like my favorite places to shop online for electronics, and that I am a Costco member, and a Best Buy Rewards geek, and that I have a Fry’s credit card. But how could they? These aggregation sites know nothing about me. So naturally all they can serve up is a very generic display of something I may or may not want – the same display they provide to every other shopper looking for the same thing.

© Ali Ender Birer - Fotolia.com

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Did you see Friday’s Beat commentary by Joe Da Rosa from Balboa Travel, in which Joe voiced his strong opposition to the commoditization of travel agency services?

Now I’ve known Joe for ages—all the way back to my System One and Amadeus days. Anyone who meets Joe instantly knows he is a professional, a gentleman, and a leader… and from what I know of Joe, it takes quite a bit for him to “get his dander up.” So, knowing Joe, his agitation must be justified, and, in this case, I think he’s absolutely right.

Travel agencies invest in people and resources. They work very hard to compete for their business, and the last thing they need is for anyone to view their products and services as commodities. It is absurd, preposterous, outrageous… and if the holidays weren’t upon us, I would really go off here.

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