Written by Marisa Garcia – Flightchic.com
We spoke with Elena Avila, Head of Airlines for Amadeus, to discuss airlines’ digital innovation priorities for 2019 and beyond. She shared her views on customer-centric digital design, the progress of NDC, and the value of distributed development.
“I don’t call it digital transformation any more because I think everybody talks about digital transformation and nobody really knows what it’s about. But certainly there is a completely different focus of the airlines to think: ‘How can we differentiate ourselves and put our customers first? How can we build offers that are relevant to them? And, in doing so, how do we approach them in a consistent manner through the different channels?’ That’s where the digital piece comes in.”
“Every single airline is thinking really hard about that, what their strategies are for being customer-centric and how they use digital assets in a different way. That, obviously, gives a lot of opportunities to IT providers. Clearly, Amadeus is one of them, and we have investing in a large part of our portfolio every year, going into the digital space.”
What are the priorities for airlines moving towards customer-centric digital design?
“Again, it’s a broad term, but we’re talking about merchandising and personalization techniques. This is determining what are the best offers that you can put out to your different customer sets. It’s important to also differentiate, and to be aware that it’s not personalization one to one. That’s not efficient and it’s not going to happen any time soon. Airlines, what they need to do, is understand what their customer base looks like; try to find different personas, different groups of customers, based on their travel patterns and needs. Then you can think through what is the right offer for these groups of people. At what time of the year, at what point in their shopping experience, do you push certain offers? As you can imagine, that is easier said than done. There’s a lot of sophisticated technology that has to play into such a strategy, but also there is also a lot of transformation within the airline organization needed to make that happen.”
Where does progress stand on NDC?
“NDC is finally becoming a reality. All of us in the industry have been working really hard to make it happen. We feel that 2019 will be the year when NDC really starts being implemented.”
“We see it as an enabler, a tool for offer management, allowing airlines to push out offers that are much more personalized—and thought through stragically. It’s at an inflection point, right now, where airlines are most needing discussions with their partners.”
Is the NDC goal of 20% of volume by 2020 for the NDC leaderboard airlines achievable?
“It’s hard to say. Potentially, for the top 21 airlines. Obviously, this is not an industry-wide initiative. Some of them are well above that, or well on track..but some may not get there. However, we do believe that, by 2020, we will collectively, as an industry, be able to claim success; because to some extent it is being industrialized.”
“The conversation that we are having throughout the industry—and not just we the airlines, but including the travel channels, travel agencies, TMCs, and others—that conversation has turned around from one of ‘I don’t know. It’s too complex. Why would we do that? What’s in it for us?’ to one of ‘Yes, let’s do it. I can see the value and I can see that this is a trend that’s going to happen, so let’s work together.’ That, in itself is a huge thing. Nothing happens unless every party is aligned. That, in itself, is a huge win.”
“We are seeing, in 2019, that we will be implementing and we will be testing the NDC standard itself. It is much more stable. It continues to evolve, but it is stable. We can do something with it. There are more standards and more certifications coming our way, which are looking into how do we make this big how do we industrialize it, what about scaleability and, therefore, the stability of the system. That’s very important. We are thinking about performance.”
“Those conversations really show us that NDC is a success and it will be implemented successfully this year. And 2020 is about ramping up volumes. Whether it’s 20%, a little more or a little less, we feel that it’s a success. Really, this is just the beginning. It’s like the foundation of so much more to come which will be enabled through NDC. We are actually quite excited about it.
How is NDC shaping airlines’ business strategies?
“It’s not just the IT piece of it but also the internal transformation that airlines need to handle. It is going to take some time and not every airline will be successful in the same time frame. It may take some a bit longer.”
“Again, there the conversation has changed. We can see that in many airlines. It is a beginning. The mindset, particularly, is changing. If you combine [internal transformation] with the right IT system, it’s likely to be quite successful. But It’s only the beginning.”
“When we talk about offer management, it is much more than just merchandising. It also includes deciding how revenue management operates in this environment. How do you price your offers? We’re talking about dynamic pricing, which is also a big part of the discussions on offer management. It basically throws any kind of older revenue-management techniques out the window and looks into something completely different.”
“That can be a hard change to implement. But the conversation, and the mindset, and the different steps that different airlines are taking—we feel the dynamics are going in the right direction.”
What role can AI and other emerging technologies play in this digital evolution at airlines and at Amadeus?
“With AI and innovative technologies, we have been testing and analyzing those in various ways. We have specific innovation teams, but this is also a transversal activity. Most of our R&D and solutions teams are looking into how to apply different pieces of AI in our different solutions in our portfolio.”
“There is huge potential in the revenue management space. We have already started to implement that in some cases. It’s more about machine learning, which is one form of using AI. That’s already being implemented in our revenue management system. But it’s only the tip of the iceberg.”
“We see huge potential there and so do our customers. Whenever we share our vision, they get really excited and they do share most of our thoughts and views in this space.”
“The same applies to personalization. We are a little more cautious, and looking at how to apply AI to that, because it is a lot closer to the customer—the end consumer. We need to make sure that the markets are comfortable with that and that it is applied correctly.“
How is Amadeus adapting as airlines adopt stronger digital strategies?
“We have been investing a lot in our systems, to make them open and really accessible; serviceable, I guess it’s the technical word. That means that our customers can take our APIs, take our systems, and play around with them. We enable to them, and also to third parties, trying to create a platform based on our applications and our systems. This allows them to really innovate.”
“We are looking for distributed innovation. We are certainly investing in innovation ourselves, and trying to apply it to our solutions, but we are also trying to give the keys of the car to our customers so that they can utilize the power of our system, so that there is distributed innovation in the ecosystem and so that we can accelerate time to market and be a lot more responsive to industry strategy. We don’t want to be a bottleneck to any innovation, so we are providing our customers with a platform that has access to sufficient services and functionality within our system that they can build on top of.”
So what can we expect from 2019?
“Everything takes a number of years, but there is open discussion of and potentially pilots for many use cases, many possibilities. In 2019, we will see more tangible examples.”
This interview was edited for clarity and brevity.