Someone introduced me to the saying ‘you can’t make a silk purse from a sow’s ear’. At the time the expression struck me as odd. It describes the futility in turning something underwhelming into something prized. But it’s a proverb that got me thinking that it might just apply to certain airline IT leaders who are finding creative ways to supplement legacy technology with new generation offer engines. Purpose-built for modern retailing, these engines sit on top of a legacy technology stack to enable the digital transformation of air commerce. In this context, perhaps the saying should be ‘you CAN make a silk purse from a sow’s ear’.
It’s hard to believe now, but in not so distant times many said to me that NDC would never take off. These naysayers said that airlines wouldn’t be able to handle the enormous volume of data associated with creating and controlling the offer in real-time. It was inconceivable that airline systems would cope with such a data tsunami. With NDC entering the mainstream, it’s true that traditional technology stacks struggle. But it’s not only NDC shopping that is applying pressure. It’s exponentially rising search volumes, dynamic pricing, and the demands of today’s hyperconnected customers. And what of the future? Very soon we will see airline commerce apply Artificial Intelligence (AI) and Machine Learning (ML) algorithms to data sets to create and optimize all offers in all channels. In fact, Farelogix has partnered with Florida International University (FIU) and is growing a Data Science team to enable it. But data demands performance that some systems cannot deliver.
The inability for airline commerce technology to meet these demands is untenable. We have entered the “zettabyte era” where analysts predict that annual global IP traffic will reach 3.3 ZB per year by 2021. Take for example connected cars that crank up to 25 GB of data per hour. That’s the equivalent of nearly 30 hours of HD video playback and more than a month’s worth of 24-hour music streaming. No one is afraid that the car company will drown in data but we all fear for traditional airline commerce systems.
Here are some of the risks associated with modern commerce on the airline business:
- Performance constraints and timeouts
- Inability to handle high search volumes
- Cost-prohibitive scan and look to book charges
- Limitations of 26 RBDs and reliance on ATPCO fare filing
- No support for dynamic offers
Growing Airline Frustration
More often than not, traditional airline technology stacks – many of which are powered by PSS vendors – are plagued with the above problems. In this regard, the airlines we speak to are clearly frustrated with the PSS’ retailing abilities. At our FLX-Disrupt 2018 conference, only 3% of delegates thought their PSS did an ‘excellent’ job at digital retailing, while 47% rated their PSS poor.
Poll taken at FLX-Disrupt 2018
Technical weakness is only part of the picture. There is also the matter of control. Airline commerce needs to own its most valued asset – the air offer. That’s the very thing that connects you to the customer and to revenue. If you outsource your offer technology to a PSS vendor, might your airline be forced into taking a route that does not align with your distribution strategy? How the airline formulates, delivers, and distributes the offer is the airline’s ‘secret sauce’ that should never be given over to a third-party. What happens to your ‘sauce’ if the partnership breaks up in a messy divorce? The offer is like self respect. It’s everything.
Ask for less, and find more
The good news is that you don’t need a wholesale technology swap out. A growing number of airline leaders are instead choosing to just scale back what is asked of existing systems, including PSS providers, and then invest in next generation offer engines that the airline can fully control. This enables airlines to engage in a digital transformation to meet current and future retailing demands, cost-effectively and with ease. There aren’t many of us offer engine vendors out there, but we do exist and we are happy to compete on functionality. But the airline needs to choose who will power, not own, the offer.
What can new offer engines do?
By working alongside your existing technology stack, new generation offer engines can fuel the digital transformation of air commerce. You’ll benefit from:
- Ancillary Merchandising: A la carte, personalized bundles, fare families
- Dynamic Pricing: Flights and ancillaries
- Shop & Price: Large date range calendar shopping, affinity and attribute shopping
- Lightning fast response times
- Lowest cost of technology ownership
- Total airline control across all channels
So, as you can see, the century’s old proverb “you can’t make a silk purse with a sow’s ear” doesn’t always hold true. Savvy airline IT leaders are doing just that. That’s OK with us at Farelogix. I invite you to get in contact with the Farelogix commercial team to discuss digital transformation with new generation offer engines. That way you'll ensure your retailing strategy runs as smooth as silk and makes a positive impact on your airline’s purse.