Tag: merchandising

One Order: The proof of the pudding is in the eating

NDC has transformed airline distribution. Well, while that particular statement can be debated for many hours, one thing that can be said is that it has changed the vocabulary of airline distribution. The mindset of airline distribution has genuinely been transformed to think in terms of “offers” and “orders”, about APIs and dynamic bundles and so on. Indeed, many airlines are implementing these concepts in their distribution landscape.

But what has really changed, beyond some terminology? Well, for certain, airlines are thinking much more like retailers. They are thinking about the customer (purchasing) experience, products, bundles, segmentation, and they are thinking about how to get these into their distribution channels as offers – through NDC and their digital direct channels. The transformation of an offer into a sale of products is resulting in the creation of orders. However, most orders still rely on a system which also uses legacy artefacts such as PNRs, tickets and EMDs.

As airlines become more retail-focussed, more confident in their capabilities as retailers and more well-equipped with tools to enable this, the more creative and ambitious airlines will become. More products in bundles, different products in different markets, integrations with providers of travel-related services that see the market developing as the technical obstacles of legacy artefacts are steadily removed from the equation. This gentle transformation is also driving changes elsewhere throughout airline organisations, as the knock-on effects of these begin to be noticed. Orders created within an order management system provide a vehicle for simplified settlement processes between sales channels (retailers) and the airlines as sellers. While the full complexity of airline revenue accounting, proration, BSP and other settlement flows cannot be eliminated overnight, the ONE Order accounting standards are enabling change. As the maturity of NDC distribution increases and orders become more prevalent, airline IT providers are presented with opportunities to bring further simplification, leveraging NDC and ONE Order. Providers of Order Management Systems (OMS) are now able to integrate directly with airline accounting systems in real-time, bypassing much of the legacy complexity associated with PNRs, tickets and EMDs.

However, there is more to being a successful airline retailer than creating offers, converting them into orders and feeding the fruits of these sales into the airline’s financial systems. At some point in time, there will be a customer who has expectations based on their wider retail experiences. The retail possibilities that airlines are now becoming exposed to go far beyond their own domain. While the additional bag will (hopefully) be visible at the time of check-in, and the lounge may be run by the airline, what about the pre-booked parking, fast-track security or the express train to the airport? The airline is unlikely to be the entity responsible for delivering the service in these cases, but the expectations of the customer are the same as when they present at the desk to drop off their bag – it should just work. However, interacting with all these new parties to ensure “it just works” is unchartered territory for many airlines. More and more, this involves pushing an order notification to the external service provider via the OMS to fulfil a service. Interactive two-way messaging related to order fulfilment is new. And, in the envisaged world where the PNR and ticket are superfluous, even the interactions with the check-in providers need to be brought into the era of APIs and open integration standards.

In conjunction with airlines, vendors and other industry stakeholders, IATA has anticipated this and has developed a set of standards within the ONE Order framework to enable the delivery of services using orders. These messages can be used by an OMS to trigger the delivery by pushing information to the responsible party or can be used by delivery providers to pull the necessary information proactively. They can track consumption of services as well, which is key to triggering accounting and settlement processes. However, certification for ONE Order capabilities is still very light compared to NDC. While the certifications only may only be taken as a loose measure of maturity, it would appear that there may be a vast gap between what airlines can now sell and what (or rather how) they can deliver.

The reasons for this apparent mismatch are manifold and varied in their nature (technical, process-related, commercial), and some may be easier to resolve than others. What is more concerning though is the apparent lack of awareness of this mismatch among the broader industry. Great focus has been placed on promoting the need for modernisation in how airlines define and sell their products and services. However, there is still one key component that will become a challenge sooner rather than later – where the customer gets to seamlessly experience all those products and services that the airline invested so much effort in to get the customer to purchase.

The collaboration between airlines and their OMS partners is, generally speaking, mature, collaborative and based on a common understanding of business value and goals. The relationship between airlines and their ground handling partners is of a very different, operational nature and is often very cost-driven to extract the maximum value at the lowest cost. On the other hand, the relationship between OMS providers and ground handlers is non-existent in most cases.

Planning and executing the smooth delivery of products is key to being a successful retailer. Achieving this requires close alignment between all stakeholders: airlines, their OMS providers and crucially, the ground handlers and other partners, in and around the airport, in the air or wherever else they may be. So far, the focus has been on the selling aspect of retailing and increasing revenue and airline wallet share. However, if airlines are really to succeed as retailers, customer satisfaction will be determined by what, and how, they deliver. The proof of the pudding is in the eating.

This post has been published in collaboration with Terrapinn.

(Nick Stott, 7. June 2022)

If you are interested in a deeper discussion about this topic: Listen to our latest TiMCAST 15 on 15 where Jost Daft of LH Group shares his views on the subject.

 

Putting the (NDC) cart before the (distribution) horse

Even though NDC has been around for several years, there are still many airlines either planning an implementation, just starting an implementation, or expanding a basic implementation to a higher level of functional maturity. NDC can change an airline’s distribution opportunities considerably and is much more than a technology project around API integration. It is very much about the opportunity to make relevant offers to the customers, sell more and better-suited ancillaries, potentially implement new pricing concepts in the indirect channel and controlling the offer and the order.

A common criticism, especially from travel agencies, is that NDC provides no added value and differentiation, but rather only leads to higher complexity. This criticism is fair in some cases, as a lot of airlines still barely differentiate the content distributed via NDC, providing largely the same products and services to the same conditions as in traditional GDS distribution. There are basically three reasons why that may be the case; it could be that the airline lacks a clear strategy on how to serve the NDC channel, the airline is constrained in their distribution via NDC by existing distribution contracts, or they may have a strategy, however, do not yet have the necessary systems and business process in place to execute the strategy. In many cases, it is a combination of all of them.

When an airline goes down the NDC route, its GDS contracts are often neglected, as is the overarching distribution strategy. The effects that these both have on an airline’s NDC strategy and the underlying system capabilities to fulfil the strategy is, however, critical. It is strongly recommended to not look at these in isolation, but with a holistic view on distribution, optimally combined with the direct distribution strategy as well. Often, NDC is implemented without much thought of the GDS contracts and the airline’s ecommerce strategy. This will typically not lead to a satisfying level of NDC adoption nor to happy agencies, as the content or functionality will not meet their expectations.

The challenge with all of this is that the GDS contracts are often dated, complex and difficult to understand. They are managed in a different department or have been recently renewed in a disconnect from the NDC team and cannot be changed in the short term. Often however, the GDS distribution contracts are simply not considered when creating an NDC strategy. In fact, airlines have in some cases implemented NDC with no holistic strategy at all, focusing on an initial technical implementation first with the idea to align it to distribution at a later stage.

Based on our experience working with airlines on distribution strategy and negotiation, as well as the NDC adoption engagements, we believe that it is key to view distribution as the combination of all channels, considering the constraints, opportunities, strengths, and weaknesses of each one of these channels. As a first step, the overall distribution strategy must be reviewed and potentially adapted to the new situation and capabilities that NDC has to offer. Then, it is key that the existing distribution contracts (primarily including the airline’s GDS contracts) be taken into consideration. The key elements in the contracts to be reviewed in this context are:

  • The definition of content and the differentiation between legacy or traditional content versus NDC technology or NDC content
  • The definition of channels, and potential differentiation of definition of these channels between home markets and other markets
  • The permitted freedom (or lack thereof) to vary content depending on distribution technology, distribution channel – and all of this potentially by market
  • The definition and scope of parity and non-discrimination commitments, and what this means for distribution via NDC based on the topics outlined in the bullets above
  • The contract language related to the provision of technology solutions and who is responsible for these. Additionally, if there are additional costs and responsibilities on the airline to ensure the GDS is technologically capable of a given distribution technology. In this context, it is suggested to also review the lead times for the implementation of new features and functions, and any restrictions related thereto.

In summary, it must be said that an airline’s approach to NDC, be it with a full-blown NDC strategy or merely with a plan to implement basic NDC, should always be planned with full knowledge of the airline’s obligations and freedoms in its GDS contracts, including any required changes for the next round of GDS negotiations. Optimally, the airline will carefully analyse the existing distribution contracts for any restrictions or opportunities to be exploited. For each contract, all key characteristics must be compared to each other to identify the most restrictive paragraphs in each, and the effect these will have on the NDC strategy. Just as important however, when renegotiating GDS contracts, is ensuring that NDC is an integral part of those considerations. Creating a negotiation strategy or approach for the distribution contracts can help, even if these are not yet up for renewal. Defining what the airline should and could do in the future to ensure these two distribution paths share common goals and enable the airline to meet the needs of the agencies as well as the airline’s own distribution needs.

Putting the distribution horse in front of the NDC cart will enable an airline to reach higher levels of NDC adoption, have more distribution freedom and address the travel agency, travel management company and corporate buyer needs better.

This post has been published in collaboration with Terrapinn.

(Daniel Friedli, 5. May 2022 *  Photo by Erik Odiin via Unsplash)

If you are interested in a deeper discussion about this topic: Listen to our latest TiMCAST 15 on 15 further reviewing on how to embed NDC into an overall distribution strategy.

 

See you at the Aviation Festival Asia

Travel in Motion and Oystin are privileged to have strong relationships with Asian airlines. Therefore, we are happy to meet many of our partners and customers at the Aviation Festival Asia, which will take place 14 and 15 June in Singapore. Daniel Friedli and Boris Padovan will be on site and are looking forward to meeting you.

In addition Daniel will moderate the panel “Airlines as a data-driven transportation ecosystem” on 15 June at 11:10 a.m.

We welcome Larissa Höcklin to the team

The Oystin and Travel in Motion team is growing. Our joint knowledge resulting in a broader spectrum of services not only received great feedback from our customers which have benefited from the partnership, but we have also expanded the team.
We are proud to announce that as of April, Larissa Höcklin has joined the Oystin team. Larissa is located in Frankfurt, Germany and has a consulting backgound in Airline Distribution and IT Strategy, Airline Commercial Due Diligence, as well as in Airport Commissioning. We welcome Larissa to the team.

Meet Daniel Friedli and Marc Rosenberg at the Aviation Festival Americas, June 7-8

Daniel Friedli and Marc Rosenberg of our strategic partner Oystin Partners will play an active role in the Aviation Festival Americas.

Daniel will host the session “Personalization and Segmentation: How much is too much?” on June 8. Marc will run the panels “Alternative  Ancillaries: How are airlines getting a greater share of travel wallet” and “Modern Distribution: From NDC to GDS and What is the best distribution mix for you and your customers”, both on June 7. So register and participate. We are looking forward to your contribution to the discussions.

 

Long Time No See – Meet us at one of these upcoming industry events!

After a long period of limited personal exchange we are looking forward to the upcoming industry events where Travel in Motion will be present, such as IATA’s Digital, Data and Retailing Symposium in Madrid from 26th till 28th October, PROS Outperfom Virtual Conference which will take place from 16th till 18th November and  the World Aviation Festival on 1st and 2nd December in London. Please reach out to us to personally reconvene. See you soon!

 

Season Break and new Co-Owners of TiM

Dear partners and friends

2020 has been a very challenging year for all of us. Our industry went through the worst crisis ever, with many airlines being forced to cease operations and countless people losing their jobs. However, much more importantly, some of us lost loved ones due to the pandemic. We cannot end this year without remembering them.

In crises and difficult times, it’s easy to tell who your true partners and friends are. It has been an invaluable and enriching experience for us at Travel in Motion in 2020. Although our business was also rather challenged, we still managed to have excellent exchanges, discussions and interesting projects with many of you – we were not let down, and we want to thank you all for this.

The new year is starting to look more promising: vaccinations might lead to an easing of the crisis, and we have good reason to believe that a recovery will come. We at TiM are looking forward to 2021, as we are convinced that aviation will remain one of the key industries in our global economy. This crisis has forced our industry to become more digital, agile and interconnected – attributes which are also the focus of our work. Thus, we’re already looking forward to working with as many of you as possible next year in whatever capacity we can support you.

As we are optimistic for the next year, and many to come, we have decided to set up Travel in Motion GmbH a little differently. We are proud to announce that Andrea Riesen and Boris Padovan have become co-owners of Travel in Motion, as they both share our long term vision and goals. As we continue to remain busy, having Andrea and Boris on board not only as team members but also as owners, shows our commitment and belief in our industry.
With these mixed emotions, the whole Travel in Motion team would like to thank you again for 2020 and wish you, your families, friends and colleagues a happy Season Break and a healthy, safe and prosperous New Year!

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Airline Digital Retail – Vendors’ View on Challenges and Opportunities of the COVID Crisis

September 2020 – The airline industry has been hard hit by the global Covid-19 pandemic. Airlines have grounded their fleets, or reduced their capacity by 60, 70% or more. Since March 2020, travel has drastically changed, and the market is very slow to recover. At the time of this blog post at the end of September 2020, we are seeing a very slow recovery in the global air transportation market. For some domestic markets, things look a lot better, especially for China where domestic travel is at over 90% of the capacity it was one year ago, thanks in large parts to their effective management of the pandemic as well as government stimulus to travel.

Basically, the airlines’ opportunity to sell travel and related ancillary services has become almost impossible. However, it is not yet time to give up. Governments have been helping airlines through loans, while the airlines themselves have been streamlining their operations and reducing their fixed costs and their fleets. They are also becomming innovative and creative, offering products which are pandemic-compliant, giving customers the opportunity to travel more safely, rebook when necessary and protecting their staff from direct interaction with customers where there are other possibilities. Two such examples are the sales of free middle seats and a charge for checking in in person at the airport. Now, while neither is new, both of these product have been given considerable boosts through the pandemic, and more airlines have decided to offer these as a result of Covid-19. Supporting the airlines through the crisis are also the technology solution providers. They too are suffering from the loss of key revenue streams, however, have an invested interest in supporting their airline customers in the recovery.

Travel in Motion took this opportunity to talk to five of the leading airline digital retailers to gain an understanding of how this pandemic is affecting them, and how they are helping their airline customers get through this. We also heard a lot of considerations around how this is affecting their own companies and their respective strategies and key learnings. Except for the last podcast, which was moderated by Boris Padovan, Principal Consultant at TiM, the interviews were conducted by Daniel Friedli, Managing Director of Travel in Motion.

A final session with all five participants will close this series of TiM’s podcasts. In this 45 minute “virtual” panel we will jointly reflect on the consequences of this global disruption and discuss learnings for the overall aviation industry. This podcast will be conducted after the five individual interviews have been published.

We kicked off our discussion with Jim Davidson, Chief Product Officer at Accelya. After the acquisition of Farelogix through Accelya, Jim has taken the challenge to work on setting up Accelya to offer end-to-end retailing, from offers to selling, delivery to settlement.
Our favourite quote from Jim: The concept of retailing is proven to be resistant even to the pandemic… the concept is still trying to match those services that are best equipped to the needs of the flying customer.” Listen to our interview with Jim.

In the second podcast, we discussed these topics with Sean Corkery, CEO of Datalex. Having gone through a large transformation programme in 2019, they had already set themselves up to be very efficient and delivery focused.
Our favourite quote from Sean:This is not a time for gain, this is a time for really underlining your value-add to your customers.Listen to our interview with Sean.

The third interview was with Bryan Porter, Chief Commercial Officer of OpenJaw Technologies. OpenJaw is in the privileged situation to have a considerable part of their business in China, in which the domestic market is recovering faster than anywhere else in the world.
Our favourite quote from Bryan: Reassurance has become the watch-word for recovery.Listen to our interview with Bryan.

PROSSurain Adyanthaya was our fourth guest. With PROS’ growing ecosystem from revenue management to airline digital retailing solutions, their view on the market, especially with the insights into their customers’ revenue management strategies, was very interesting.
Our favourite quote from Surain: The key to success for airlines is to be nimble and flexible. Things happen!

Finally, we spoke with Andy Kidd from SAP. Andy outlined how airlines, especially in Asia, have circled toward digital, and how this will benefit them in these challenging times. He further elaborates on how the customer experience is affected and can be improved with ONE Order.
Our favourite quote from Andy: The majority, if not all airlines, have a digital transformation programme but what we’ve seen in retail is that some companies have accelerated what was years into months…

For the final session we are looking forward to hosting Jim, Sean, Bryan, Surain and Andy. It will certainly be an interesting discussion and we hope that it will gain more insights for our industry community.

These podcasts will be released in the upcoming weeks, one per week, on Mondays. The first podcast will be released on Monday, 5 October. Each subsequent release will be available on the Travel in Motion website. If you would like to be notified of each podcast, subscribe to our newsletter here.

Airline PSS Decisions – Challenge and Opportunity!

PSS Decisions Airlines need to take

There is no airline which has not been hit hard by the current global health crisis. The results for the airlines are challenging and in many cases devastating. Based on all the challenges, it probably is not at the front of the CCO’s mind to think about the Passenger Service System (PSS) right now. Or, maybe for some it is. In many cases, stakeholders are now thinking about how they can make the airline more efficient and, amongst other things, automate more processes to cope with these kinds of situations and reduce costs. Also, with much of the initial hectic related to rebooking and refunds, alongside figuring out where the fleet is and should be going (and not going) now behind us, thoughts must be focused on the future of the airline.

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