“Consumers should not be held hostage to old tech.” American responds to ASTA’s complaint on NDC journey

“Consumers should not be held hostage to old tech.” American responds to ASTA’s complaint on NDC journey

Earlier this year, the American Society of Travel Advisors (ASTA)’s submitted a complaint to the US Department of Transportation (DOT) alleging American Airlines’ implementation of New Distribution Capability (NDC) technology “constitutes an unfair trade practice warranting immediate action by DOT.”

This Tuesday, American filed its response reportedly saying that “consumers should not be held hostage to old technology by those agencies that are choosing not to make that investment.”

The airline further argued that NDC, “makes it possible for American to offer more options to consumers at lower prices and with better service,” and that its success is “driving other U.S. airlines to also adopt NDC-based technologies.”

Comparing the response to other countries that have adopted NDC technology like Lufthansa, British Airways, Iberia, Finnair, Singapore Airlines, Malaysia Airlines, Air France, and Etihad, American noted “A number of travel agencies already use NDC outside the United States but Edifact within the United States. Why they have chosen not to bring the benefits of NDC to US consumers is unclear.”

The DOT will review the response and may take further action that could influence the next steps of airline distribution. As the industry progresses with its NDC journey, it remains to be seen how regulatory decisions will shape the landscape.

 

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“The more you understand your customer, the more you can innovate.” Andrew Ward, VP Marketing & Customer Experience, Jazeera Airways

“The more you understand your customer, the more you can innovate.” Andrew Ward, VP Marketing & Customer Experience, Jazeera Airways

In advance of Aviation Festival Asia in February, Andrew Ward, VP Marketing & Customer Experience, Jazeera Airways joined for a brief interview. The conversation explored how the airline is using data analytics, tech adoption, and customer insights to inform marketing decisions and improve customer experience.

Andrew explained simply, “The more you understand your customer, the more you can innovate.” During the discussion, Jazeera Airways’ VP Marketing & Customer Experience demonstrated how a nuanced understanding of customers and their behaviours can be translated into commercial gain.

In the second half of the conversation, Andrew looked closer at some of the emerging tech the airline is embracing as well as exploring how Jazeera Airways is leveraging data and insights to manage its reputation.

 

 

At Aviation Festival Asia, Andrew will be speaking on how airlines leverage data analytics to create customer segmentation tools for commercial success, and participating in a panel looking at the emerging technologies being leveraged in digital marketing to optimise customer experience, interest, and relations. Book you ticket now to avoid missing out.

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“Seamless payments workflow” with new Tap to Pay on iPhone

“Seamless payments workflow” with new Tap to Pay on iPhone

Alaska Airlines is the first to offer Tap to Pay on iPhone. In partnership with Stripe, a financial infrastructure platform for business, the airline has announced this will now be the primary checkout option for inflight payments.

Charu Jain, Senior Vice President of Innovation and Merchandising said:

“We’re constantly innovating to give our guests the most seamless and caring experience possible. We’re proud to partner with Stripe to be the first airline to bring Apple’s Tap to Pay on iPhone technology to flight.”

Patrick O’Brien, Managing Director of Product Development at Alaska Airlines also explained:

“Instead of navigating complex tech, [our employees] are able to focus on providing the most caring experience for our guests. Transitioning to Tap to Pay on iPhone with the help of Stripe is creating a more seamless payments workflow—with no new devices required and an easy-to-use setup for our crew.”

The innovative tech uses secure NFC technology to take contactless payments from iPhone, Apple Watch, or another compatible smartphone. Passengers can seamlessly complete purchases using their preferred digital wallet, or can select to pay with any contactless debit or credit card.

Alaska will be the first airline to launch this across an entire fleet.

 

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“Nothing is the same as before.” Snowfall on intermodal travel and passenger behaviours

“Nothing is the same as before.” Snowfall on intermodal travel and passenger behaviours

Ron Glickman, VP of North America, Snowfall joined to discuss the evolution of passenger preferences, the strategic use of data to deliver personalised experiences, and the important connection between intermodal travel and sustainability.

As we unpacked the impact of the pandemic on passenger behaviours, Ron explained, “Nothing is the same as before.” Expanding on this, Ron compared the United States, Asia, Europe, and Latin America, highlighting geographical variation in how journey planning has changed. Characterising the current state as ever-changing, Snowfall’s VP of North America suggested that next year will be a significant indicator of how travel behaviours begin to settle.

Looking at tech and data, Ron pointed out the importance of data privacy regulations and the challenges they pose to offering a personalised experience. The conversation also touched on intermodal travel’s role in an increasingly eco-conscious world.

To hear all this and more, watch the full interview.

 

 

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Modern retailing at Emirates: The future of offer and order

Modern retailing at Emirates: The future of offer and order

At World Aviation Festival, Anand Lakshminarayanan, Senior Vice President – Revenue Management & Airline Partnerships, Emirates Airline joined Henry Harteveldt. The fifteen-minute interview looked at the transformation of digital retailing and the evolving landscape of offer and order.

Anand explained the world renowned airline’s offer and order journey to date, detailing the effort entailed in shifting to full digital retailing. Here, the benefits of Emirates Gateway were highlighted and the challenges shifting from a legacy EDIFACT system explained. Through the conversation, Anand also conveyed the airline is now able to best present their products and services to the end customer.

Additionally, discussion looked at how customer behaviour has changed, touching on the host of changes related to booking, buying, and ancillaries since the pandemic and how changes at Emirates are catering to these new expectations.

To watch the full session exploring IT infrastructure, data, AI/ML, and more watch the full interview below.

 

 

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From picking a destination to where you sit on the plane, here’s how Amadeus sees travel changing in 2024

From picking a destination to where you sit on the plane, here’s how Amadeus sees travel changing in 2024

As an ever-evolving industry, it is important to stay at the forefront of change.

So, with 2023 starting to draw to a close, Amadeus has leveraged its propriety data and expert analysis to answer the question, “How will we travel next year?” Here are five developments Amadeus are predicting for next year – one or two might even surprise you.

Daniel Batchelor, Vice President, Global Corporate Marketing & Communications at Amadeus, expressed: 

“After a period of recalibration and reassessment over the past few years, we are beginning to see a host of new ideas bear fruit across our industry. 

Music tourism

Amadeus research has shown that music will continue to drive tourism in various regions next year – from Coldplay 2024 concert dates increasing searching volumes in Romania (91 per cent) and Greece (62 per cent), to Taylor Swift’s tour influencing booking patterns in the APAC region.

Agents of influence

The rise of tech enabling influencers using Instagram, YouTube and TikTok, for example, to share a booking link directly on their profile page and process payments is seeing influencers evolve from a powerful source of inspiration to facilitators of direct bookings.

Electric skyways

Next year is anticipated to be a big year for electric vertical take-off and landing (eVTOL) aircraft. With German aircraft manufacturer Volocopter planning to provide a fleet of electric VoloCity eVTOL for the Paris Olympics in 2024 and Toff Mobility, the first electric air company in Asia, working towards debuting electric aircraft in 2024 in South Korea. Further green, electricity-based developments are also predicted, including a planned electric airline debut from Ecocity in the UK and hydrogen-electric engines for seaplanes in the Canary Islands.

Intelligent concierge

Developments in generative AI have dominated conversation across industries this year and in 2024 we can expect to see its value to the travel industry go from strength to strength. The technology is already influencing the way people search for travel, but Amadeus predicts, “the next generation of generative AI powered customer service will be delivered with greater patience and empathy.”

Business luxe-lite

Responding to a rise in passengers wanting premium travel without the full fan-fare, airlines have started unbundling business, making it more accessible. With many airlines already adapting fare options to cater to this desire, the trend is projected to continue into 2024.

 

What are your 2024 travel predictions?

 

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Air India enters intermodal agreement offering 5,600 stations on a single ticket

Air India enters intermodal agreement offering 5,600 stations on a single ticket

On Thursday, Air India announced new intermodal interline agreement with WorldTicket, the distributor for Europe’s largest railway operator, Deutsche Bahn. This will allow Air India customers to include train connections across 5,600 stations on a single ticket.

Nipun Aggarwal, Chief Commercial & Transformation Officer, Air Indiasaid:

“While we continue to expand our own route network globally, such partnerships help us to provide an extended network to our guests, and make journeys to their final destinations more convenient. We observe substantial passenger traffic on our Frankfurt flights that further connects to and from other German cities and towns, and this partnership addresses the needs of an increasing number of such guests.”

Making the journey as seamless as possible, passengers will have the same baggage allowance on chosen rail routes as offered by Air India on its flights. The advantages of this partnership also extend beyond Germany as travellers with be able to access train connections on Deutsche Bahn to and from Amsterdam, Brussels, and Zurich via Air India’s Frankfurt gateway.

As the industry strives to offer the ultimate convenient travel experience, we expect to see more customer-centric collaboration emerging, showing an awareness of evolving passenger needs.

 

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“You need to change the mindset as well, it’s not just about changing the technology.” Branchspace on innovating digital airline retailing

“You need to change the mindset as well, it’s not just about changing the technology.” Branchspace on innovating digital airline retailing

At World Aviation Festival, Michael Huynh, Founder, Branchspace, and Ursula Silling, CEO, Branchspace joined for a discussion around innovation in digital airline retailing.

Firstly, conversation covered how Gresham House Ventures’ £5m investment into Branchspace will be used to meet the evolving needs of airline customers in a post-pandemic world. Here, Michael touched on accelerating digital offerings, responding to changing passenger behaviours, and elevating dynamic retailing capabilities, looking at how the investment can “help airlines to be the best retailers they can be.” Building on this, Michael also highlighted how data and insights can be leveraged in the future using machine learning (ML) to optimise outcomes for airlines.

Looking at the industry’s transition more broadly, Ursula explored how digital transformation can make a tangible differences to passengers as well as  the challenges that come with this shift. Here, Branchspace’s CEO explained:

“It’s not just about changing the technology. You need to get this mindset of what is retailing? What is customer focus really? And even the mindset to experiment to have the courage to say this one maybe didn’t work but the next will make a big difference.” 

To hear the CEO and Founder of Branchspace speak on all this and more, watch the full interview below.

 

 

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Inside Changi’s recently opened T2

Inside Changi’s recently opened T2

After three and a half years of engineering and expansion works, Singapore’s Changi Airport has fully reopened Terminal 2 (T2). Adding an extra five million passengers per annum (mppa) to the airport’s capacity, the terminal opened ahead of schedule ready to embrace the full global travel recovery of 2024.

Mr Tan Lye Teck, CAG’s Programme Director for the Terminal 2 Expansion Project, said,

“Changi Airport has always been pushing the boundaries of airport service and innovation, while staying ahead of the latest trends in digital as well as retail and dining offerings. With T2, we sought to enhance the passenger experience, bringing together a modern terminal inspired by nature, with immersive digital experiences, innovative technology, as well as transformative retail and dining concepts that create a sense of place. 

 

Dreamscape

Image credit: Changi Airport Group

 

Wonderfall

Image credit: Changi Airport Group

 

In addition to the breath-taking scenery of the new terminal, Changi is doubling down on technology to enhance the customer experience:

  • The number of automated check-in kiosks and bag drop machines have almost double.
  • Immigration halls have been expanded to support additional automated immigration lanes allowing more passengers to be served at any time.
  • A new early baggage storage system has also been installed that is fully automated with the capacity to handle up to 2,400 bags.
  • T2 will be the first terminal in Changi to have automated Special Assistance Lanes for persons with disabilities and young children at both arrival and departure immigration.
  • Passengers can even get a drink served to them by their first-in-airport robot bartender Toni.

In keeping with its reputation to excellence and awe-inspiring landscapes, Changi’s T2 blends state-of-the-art facilities and cutting-edge technology with nature-inspired beauty. Will you be visiting T2 soon?

 

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“It’s a big challenge but I’m confident this time we should get it right.” Tamur Goudarzi Pour on the transition to modern airline retailing

“It’s a big challenge but I’m confident this time we should get it right.” Tamur Goudarzi Pour on the transition to modern airline retailing

At World Aviation Festival, Tamur Goudarzi Pour, Chief Commercial Officer (CCO) & Member of the Board, Swiss International Air Lines joined to discuss modern airline retailing, with a particular focus on NDC (New Distribution Capability) adoption.

Building on an a discussion earlier in the year regarding generative AI, modern airline retailing, and NDC, Tamur defined some of the greatest obstacles to NDC’s widespread adoption and described it as a “starting point” in the wider modern airline retailing journey. Although the SWISS CCO acknowledged the extent of the task at hand, including replacing old technology and processes step by step, he ultimately stated with confidence:

“It’s a big challenge but I’m confident this time we should get it right.”

Watch the full interview below.

 

 

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Sustainable Aviation – challenges for airline distribution?

Sustainable Aviation – challenges for airline distribution?

It began, like many discussions in our family, during a joint family dinner. One of my sons, then still a teenager, politically very active and vocal (maybe not for the right side, in his father’s opinion!) announced to all of us that he will never fly again – because of global warming and the contribution aviation makes to it. As an experienced father of three I immediately decided not to enter into a discussion, simply because his siblings would take side with him against their parents, so instead I proposed to look at the facts.

The facts are of course that civil aviation does indeed contribute to global warming – what doesn’t? McKinsey, among numerous others, has recently published an article about decarbonizing aviation that provides an excellent introduction to the subject.[1] It is summarized that pre-pandemic about 2.5% of the total global CO2 emissions were caused by aviation. Therefore, I think it is fair to state that our industry is not the main problem, although we all are fully aware that every ton of CO2 counts and that the predicted growth of air traffic will further increase the need to act. It is also necessary to mention that recent research work sees that non-CO2 effects should not be underestimated in this context,[2] but this research work is still in a nascent stage.

As a result of the increasing need to take action, the aviation industry has committed to become net-zero by 2050. Numerous activities need to contribute to achieving this target, such as more efficient fleets on numerous levels, from better operations and individual flight planning to common airspace control, sustainable aviation fuels (SAF) and carbon offsetting. McKinsey estimates that a fuel efficiency improvement of 39% has been achieved between 2005 and 2019, and McKinsey’s work further quantifies each of the aforementioned activities in relation to a projected global 2030 view.

All that said, in my view two facts need to be highlighted:

  • net-zero aviation cannot be achieved immediately, especially as a lot of the described activities take time to be implemented, such as fleet renewals or moving to a Single European Sky (we don’t even have a single European power plug yet, by the way!)
  • it will lead to higher ticket prices for the passengers.

Still, we can already act now, mainly by offsetting CO2 emissions and further pushing for SAF. Many airlines have taken action and offer CO2 neutral flights. In some cases, CO2 neutral flights are offered by airlines as a special fare family or product bundle. For instance, the Lufthansa Group offers “green fares” for all intra-European flights, with the fare uplift covering 20% CO2 reduction through the usage of SAF and 80% of CO2 reduction by offsetting. This offer is currently not available for intercontinental flights, although this is most likely just a matter of time, either for LHG or others. Indeed, many other airlines also offer CO2 neutrality as an optional ancillary product available to purchase, very often based purely on CO2 offsetting.

Both ways of reducing CO2 (SAF and offsetting) can be integrated and embedded into distribution processes with relative ease. Third-party service providers such as Berlin-based start-up Sqake offer highly sophisticated and automated tools to exactly calculate the amount of CO2 emitted by travel on a specific route and cabin class, as well as executing the CO2 neutrality through SAF, climate projects on behalf of the airlines or a mixture of both. Assuming that airlines will not revenue manage the price of CO2 neutrality, a cost-based price can be provided to the traveller. And even if the airline is not able to provide such seamless methods as special fare brands or ancillary services, travellers can still compensate emissions by offsetting these through stand-alone methods such as those provided by companies or foundations like Switzerland-based myclimate.org.

In essence, reaching CO2 neutrality when flying is already possible today, either through a service, provided by the airline or by offsetting through independent providers (although not all CO2 offsetting projects are equal and attention should be paid to where contributions really go!). But reaching CO2 neutrality comes at a cost, and in the end travellers will have to cover them, either directly or indirectly. And this point is where I see the paradox. While 56% of travellers worry about climate change, less than 3% of them currently travel CO2-neutral.[3] Or in other words, most travellers recognise the problem and the mechanisms to achieve individual travel that is CO2-neutral are available, but very few really “walk the walk.” Therefore, blaming (or even financially punishing) airlines for CO2 emissions is not very helpful as long as travellers are not willing to cover the additional efforts of the airlines in the form of higher ticket prices.

It was again during one of our family dinners where spoke about our travel plans for 2024. After taking trains and ferries for the last couple of vacations, all family members are back to flying – although this is not necessarily a contradiction to the dinner conversation mentioned at the beginning of this blog. It is about flying in a responsible way by also compensating for our leisure travel. Travellers can already help our industry to accelerate the journey to achieving CO2 neutrality and (if they travel on business) also help their companies reach their ESG targets. More and more companies have committed to reaching ESG targets and CO2 reduction down to CO2 neutrality is a key pillar. Thus, we see growing demand for CO2 neutral flight products and airlines need to find ways to offer and to deliver them. NDC could also act here as an enabler, if all parts of the distribution chain agree to support this.

Of course, CO2 offset does not equal CO2 prevention, but every little helps, and it is a big step forward. Travel in Motion has compensated all of our air travel for many years, and when we entered into our strategic partnership with Oystin Advisory our wish that they also start compensating was immediately accepted. We now strive to become a CO2-neutral company, and soon hope to be able to offset all emissions from heating the home office, hotel stays and public transport to the cups of coffee we drink and meals we take.

 


Article by Boris Padovan, Travel in Motion AG

[1] The following data has been taken from McKinsey’s article Decarbonizing aviation: Executing on net-zero goals

[2] Climate-neutral air travel: Is it possible?

[3] Can Aviation Ever Be Sustainable?

 

“The move is inevitable.” Jitendra Sindhwani, IBS Software on the transition to modern airline retailing

“The move is inevitable.” Jitendra Sindhwani, IBS Software on the transition to modern airline retailing

At World Aviation Festival, Jitendra Sindhwani, President, Global Sales and Marketing at IBS Software joined for a brief interview exploring the challenges and opportunities in transitioning to Offers and Orders based airline retailing.

Acknowledging that the industry has so far not kept pace with travellers expectations due to dated technology and processes, Jitendra set out three broad categories of change that the industry will need to overcome in the move to modern retailing.

Looking forward, Jitendra sees positive change on the horizon with some airlines taking steps to prepare for the significant shift. Discussing the potential of technology, IBS Software’s President of Global Sales and Marketing also cited AI and ML at the centre of the change, shaping the future of travel and delivering an enhanced overall experience.

To hear all this and more watch the full interview below.

 

 

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CarTrawler forecasts a record-breaking $117.9 billion in worldwide ancillary revenue for 2023

CarTrawler forecasts a record-breaking $117.9 billion in worldwide ancillary revenue for 2023

CarTrawler and IdeaWorksCompany, the foremost consultant on ancillary revenue, have released the CarTrawler Worldwide Estimate of Ancillary Revenue.

The report defines ancillary revenue as:

“Revenue generated by activities and services that yield cashflow beyond the transportation of customers from A to B. This wide range of activities includes commissions gained from hotel bookings, the sale of frequent flyer miles to partners, and a la carte services. It’s the a la carte portion, which includes baggage and seat assignment fees, that represents the share directly paid by consumers.

One headline finding predicts a substantial increase in airline ancillary revenue, projecting it to reach an impressive $117.9 billion worldwide for 2023; a 7.7 per cent increase above the previous record of $109.5 billion record in 2019 and surpassing last year’s total of $102.8 billion for 2022. Chief Commercial Officer of CarTrawler, Aileen McCormack suggested the figures the need for airlines to identify additional revenue streams post pandemic.

Looking at the which airlines are maximising ancillary revenue, the report also shows low-cost carriers (LCCs) accounting for 31 per cent of market share. It further notes that US airlines are increasingly gaining momentum with the successful roll out of loyalty programmes and frequent flyer benefits.

 

 

While the industry’s complete recovery is not expected until 2024, the projected recovery in ancillary revenue for this year underscores its significance to future strategy. Read the full report for more detail.

 

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Smart airline retailing: The new merchandising and revenue frontier

Smart airline retailing: The new merchandising and revenue frontier

During the pandemic, when air passenger traffic was at an all-time low, a few smart airlines demonstrated record-breaking sales by earning even more than 50% of their revenue from their ancillary products and services. Indeed, ancillary sales revenue is no longer seen as an airline’s secondary option. Instead, it has now taken a front seat in the airline business model.

In this context, we need to note that the traditional way of retailing does not cater to today’s tech-savvy customer who is information-rich but time-poor. In the current era of disruptive technological changes and a highly commoditized travel world, airlines have a cut-throat competition where products and services that may be cutting edge today can become outdated soon.

Adopting the advanced retailing concept in the airline industry is going to be one of the biggest transformations in the industry.

Customer loyalty is not what it used to be. With increased transparency on comparative prices and easier access to booking tools, travelers are increasingly loyal to those that provide the best prices and experiences. These fluctuating trends and rising consumer expectations make it challenging for airlines to keep up with the changing times.

The USP in this competition is the outstanding customer experience that revolves around a customer-centric approach. This allows an airline to deliver a positive and personalized experience at every stage of its customer journey. They can interact with customers based on their needs, adopt a fact-based approach to decisions using customer data as a primary source of insight, and embrace new channels to build a customer-focused culture, creating value across the way.

Many forward-thinking airlines have already embarked on adopting smart merchandising strategies to deliver a tailored, personalized, and seamless experience to individual travelers.

airline merchandising blog _rules engine

Smart merchandising strategies driven by an AI-based retail rule engine

 

In this blog, we will attempt to explore various best practices, frameworks, strategies, and techniques for an airline to deploy a successful merchandising strategy. This strategy will deliver exceptional customer experiences along with higher conversion rates.

The mantra behind successful merchandising revolves around five key areas, and they are:

  • Identify the right personas for your travelers
  • Contextualize your offer in real-time
  • Deploying the best packaging techniques
  • Target the right time and stage of the journey
  • Deliver a seamless digital experience

 

1.    Define the right persona for your travelers

An airline caters to millions of passengers in a year. Every customer has unique needs and has a different perception of products and service values. If you understand those differences and are flexible in how you offer the services they need, you can gain a competitive advantage.Customer segmentation is a strategy to divide customers into various groups or personas having similar characteristics, wants, and needs.

Traditionally, airlines used to segment customers based on the booking class, which today holds limited relevance and doesn’t reflect complex passenger behavior. To overcome this challenge, airlines can leverage technologies like artificial intelligence and machine learning to develop self-learning models which analyze the below-listed factors and self-calibrate to optimize the personas.

  • Geographical: Country, state, climate, food habits, etc.
  • Demographic: Age, gender, marital status, family size, nationality, ethnicity
  • Behavioral: Spending pattern, price sensitivity, need for flexibility, loyalty index, CLI
  • Psychographic: Personality traits, activities, interest

At the same time, each persona defined by the airline must be:

  • Measurable: In terms of volume, purchasing power, and other characteristics, an airline can predict as well as target the revenue and profit a segment can make.
  • Accessible: The persona is easily accessible so that the airline can approach them.
  • Differentiable: Each persona must be unique and reacts differently to the market mix.
  • Actionable: Airlines be able to provide value to the segment.

A good segmentation strategy should have a persona for each passenger category and reveal underserved segments. For example, an airline receives most of its bookings from guest users, and the airline does not possess any historical data individually for these customers. But, by using engaging factors like demographical and geographical, airlines can achieve segmentation. In a recent survey conducted with an airline, it was discovered that young travelers between the age of 18-35 going from Oslo to Switzerland during winter had shown an affinity towards XL baggage for carrying their skiing kits. So, using such insights, airlines can target customers with similar personas to elevate sales.

 

2.    Contextualize your offer in real-time

Now that we know each traveler’s persona has specific needs, the second step is to set the right context so that the customer understands the value that a recommended ancillary is going to deliver. For example, a business executive taking an early morning flight from an airport that experiences a high passenger load around the time of departure can open an opportunity to sell fast-track ancillary.

Contextualizing helps the traveler understand the benefits of the offer then and there.

Airlines can tap into such opportunities by leveraging an intelligent merchandising engine. These build a knowledge graph for each persona to understand their affinities towards ancillaries. They then evaluate it with real-time contexts like load factors, routes, flight duration, and peak hours through a robust scoring algorithm for ancillary recommendation across various stages of the travel lifecycle. Doing so significantly improves the likelihood of making a purchase hence, delivering a higher conversion rate.

 

3.    Deploy the best packaging techniques

Airlines use various offer creation and packaging techniques like bundled ancillaries, unbundled ancillaries, and hybrid bundling (branded fares) to personalize an offer. Each of these techniques plays a role when targeted to the right customer. Branded fares or bundled ancillaries deliver a simple approach to building an all-inclusive fare, reducing the complexity of choice and making comparison and purchase decisions easier for passengers. But at the same time, with evolving customer expectations, it is a huge challenge for an airline to decide which ancillary items to bundle and which items to offer separately.

The best-fit package results in value to the customer and higher per-passenger revenue for the airline.

Deploying an intelligent merchandising engine that can generate multidimensional insights on ancillary sales performance across all channels and travel lifecycles can help revenue managers optimize their packaging techniques or even take a step ahead to tailor the bundles in real-time for a customer.

 

4.    Target the right time and stage of the journey

Airlines can maximize their ancillary sales by encouraging customers at various stages of their travel lifecycle, beginning from the inspiration that starts the planning in the first place, all the way through the booking process, to pre-and post-trip engagement. Each stage offers a unique upsell or cross-sell opportunity that a traveler may consider.

The most important thing that airlines need to keep in mind here is to offer the customer the right product at the right time.

Not everything can be sold during the booking; travelers develop their needs as they proceed. Airlines can use their data to understand customers’ specific needs to determine the behavioral factors, purchasing patterns, and affinity factors for each persona.

The choice of the product can be determined by the customer persona and contextualization. In contrast, the stage of the journey should be targeted, considering when it will be needed the most. On the other hand, the choice of the channel can be determined by the accessibility factors, and the price should prove to be a good value to the customer – it should neither be too high nor too less.

For instance, a family of four going for a week-long summer vacation would be interested in booking a hotel room at the time of flight booking. A few days before departure, when they start packing, they might opt for extra luggage and finally may need a taxi on the day of departure. Whereas a backpacker who is a price-sensitive traveler may look for a cozy hostel room at the time of booking and may be interested in some good adventure deals as per destination.

 

5.    Deliver a seamless digital experience

Delivering a one-click buying experience that enables customers to make informed purchases can be a differentiator among competitors. Along with the perfect offer, an airline should focus on the user experience they deliver to the customer.

The user experience should be fast, easy, and intuitive so that a customer can easily navigate to buy and manage their purchases.

An average user experience can easily make customers disinterested, even if they see a good offer. On the other hand, a good user experience delivers high-quality content and information about a product, which in turn converts lookers into bookers.

Airlines need to understand the challenges associated with different distribution channels, primarily indirect and direct.

  • Indirect channels

From a customer perspective, shopping through an indirect channel provides a disjointed user experience where they are not presented with personalized offers and don’t have access to the products they could purchase from an airline. From the airline’s perspective, they have to manage multiple EMDs for the ancillary purchase per ticket while distributing via a GDS channel.

  • Direct channels

To overcome these challenges, digitally matured airlines have adopted IATA standards such as New Distribution Capability (NDC) and ONE Order to modernize their product retailing and create a transparent shopping experience. NDC allows airlines to easily sell ancillary along with rich content directly to aggregators like OTA and GDS via a set of standard XML APIs (which was not possible earlier) and get away with the challenges of EMD issuance for ancillary purchases.

The capabilities of NDC clubbed with AI models can help airlines build a smart & advanced retailing system that offers customers a better product and more value. NDC enables airlines to sell flights and ancillaries the retail way, and AI-based technologies enable the airlines to add a personalized and contextual wrapper, so you are selling the right thing and have a higher look-to-book ratio. This enables the airline to transition from non-personal selling to retail-driven personalized selling.

 

Conclusion

The power of digital airline retailing is no more a secret. Revenue managers have identified its real potential and are leveraging it to target more sales. As we enter the digital revolution, the right set of techniques along with technologies like AI/ ML and big data could be the first step towards deploying successful merchandising strategies towards building a great customer experience and path to profitability.

 


Article by Nagarro

 

Dublin Airport opens AI-operated checkout-free retail experience

Dublin Airport opens AI-operated checkout-free retail experience

Dublin Airport is reshaping the retail experience with the opening of its new concept store. The shop, “Dublin Town To Go” is the first of its kind to be opened in Ireland and will create a seamless retail experience for passengers.

Designed to give passengers the most convenient experience, the store uses a combination of camera tech and weight-sensor-enabled shelving to allow customer to simply scan their card on entry and leave with the desired products making the experience checkout-free.

Situated in Terminal 1 Arrivals at Dublin Airport, the store has been created in partnership with SSP and uses innovative AI technology.

Vincent Harrison, Chief Commercial and Development Officer at Dublin Airport said:

“The opening of a checkout-free store in the airport is something completely new and different for passengers and we think they are going to love it. Dublin Airport is excited to be the home of the first concept store of this kind to be opened in Ireland. Whether passengers want to pick up a pre-flight sandwich and coffee, or essentials such as milk and cereal after arriving back into Dublin Airport, the technology deployed in “Dublin Town To Go” means they can do it quickly and in a hassle-free manner. We can’t wait for passengers to try out the new store for themselves.”

The store marks another step in transforming the retail experience for passengers and sets a new standard at the airport for prioritising customer convenience across the travel journey.

 

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Revolutionising travel planning: Skyscanner’s generative AI tool

Revolutionising travel planning: Skyscanner’s generative AI tool

Last week, global travel marketplace Skyscanner launched a new discovery and inspiration tool powered by ChatGPT. “Dream and discover with AI,” is the product of Skyscanner’s collaboration with OpenAI and the feature leverages the company’s headline-making technology to get people searching for travel destinations and flights in a new and innovative way.

When using the function, travellers can type in open-ended statements and questions like, “Best cities for cultural tours,” “Short flights next weekend,” “What are some hidden gems in Europe?” or “Foodie city breaks.”

The technology then generates recommendations followed by three destination suggestions with flight links for each.

Piero Sierra, Chief Product Officer at Skyscanner, said:

“Generative AI is such an exciting technology that we as a travel industry are only just beginning to apply. 56% of travellers are coming to Skyscanner for inspiration, so with this beta launch, we are looking to understand how it might help travellers in the discovery phases of the travel planning journey, and importantly how they engage with the technology versus existing tools. This is one of many experiments we are running to see how generative AI can be incorporated into the core Skyscanner proposition—helping travellers plan and book their trip with ease and confidence—in the future.”

With much talk around what generative AI will mean in practical terms for the industry, Skyscanner’s  latest tool shows how the technology is positioned to revolutionise the way passengers plan their trips. The seamless integration with flight search presents airlines with a potential competitive advantage and increased visibility, something airlines may need to capitalise on moving forward.

Initially, the “Dream and discover with AI” feature will only be launched in beta in Australia, India, and Singapore, using this to test traveller behaviour, levels of engagement, and conversion data for the future development of the product.

 

For more like this see:

 

How IT Innovations Propel Airlines Towards Net Zero Carbon Emissions by 2050

How IT Innovations Propel Airlines Towards Net Zero Carbon Emissions by 2050

The aviation industry’s commitment to achieving net zero carbon emissions by 2050 is an ambitious yet crucial endeavour in the fight against climate change. While this monumental shift requires comprehensive efforts across the board, how will the integration of IT innovations drive force in helping airlines make this commitment a reality?

 

Dynamic Ret[AI]l: Say Goodbye to Generic Flying

Dynamic Retail, powered by AI is reshaping the in-flight experience and has emerged as a game-changer for both airlines’ onboard services and supply-chain management. Leveraging AI, this tailors the shopping experience to individual passenger preferences, and generates retail offerings. By analysing passenger data and behaviour, Dynamic Ret[AI]l significantly reduces excess inventory, waste, and associated emissions. Airlines can now stock precisely what passengers desire, minimising onboard weight carried through bar sets, and optimising space, thereby contributing to their carbon reduction goals.

 

AI-Driven Inventory Management: Minimising Waste, Maximising Efficiency

Global AI adoption in the aviation market is expected to increase in value from $152.4 million in 2018 to an estimated $2,222.5 million by 2025. As this continues to reshape the industry, how exactly might AI influence economic growth and contribute to airlines’ global ambition to reduce future emissions?

AI’s analytical capabilities extend to inventory management. Airlines can now predict passenger preferences and consumption patterns, allowing for more accurate stocking decisions. This results in reduced excess inventory, lower fuel consumption due to weight savings, and less waste. As airlines prioritise sustainability, AI-driven inventory management ensures that products onboard align with both passenger desires and emissions reduction objectives.

 

Leveraging Data Integration for Sustainable Aviation

Data integration is the key to airlines’ pursuit of net zero carbon emissions. By combining data from diverse sources, it empowers airlines to optimise fuel usage and data-driven decision making, resulting in several key benefits that fosters efficiency, waste reduction and informed decisions for a greener aviation industry:

  • Integrated data identifies fuel-efficient flight routes, reducing unnecessary emissions.
  • Real-time fuel monitoring ensures timely maintenance and optimal flight paths.
  • Tracking passenger preferences and inventory levels reduces excess weight and waste, cutting emissions.
  • Proactive maintenance, load factor optimisation and collaborating data sharing enhance sustainability efforts.

 

Predictive Analytics for Sustainability: Proactive Emissions Reduction

Predictive analytics powered by AI allow airlines to anticipate trends and take proactive steps to reduce emissions. This includes predicting maintenance needs, optimising flight schedules based on weather patterns, and even predicting passenger demand for sustainability-focused products and services.

 

In Conclusion

IT Innovation and AI are the key enablers in the aviation industry’s journey towards net zero carbon emissions by 2050. These technologies are not only improving operational efficiency but also transforming the passenger experience while reducing the environmental impact of air travel. As airlines continue to invest, the skies are becoming a greener place for us all.

Data Clarity are at the forefront of the IT revolution in aviation. Our solutions enable airlines to harness the power of data and AI innovation through multi-vendor product integration aligned with ClarityIFR, our own leading in-flight retail solution.

By providing comprehensive data integration and analytics tools, we empower our customers to make informed decisions for a greener tomorrow.

 


Article by Data Clarity

How are we paving the way for a greener future? By putting the passengers at the centre and actively working to make flights greener through innovative inflight products and services. Data Clarity leverages its expertise in multi-vendor product integration alongside its industry-leading In-Flight retail solutions, delivering valuable solutions to meet those demands.

 

The growing cost of doing nothing in airline digital retailing

The growing cost of doing nothing in airline digital retailing

As many airlines and most system providers either have implemented a solution or have a plan towards digital retailing, several players have not decided a way forward yet. The main reasons for “doing nothing” about digital retailing include a lack of compelling business case, a lack of funding or simply competing priorities.

 

The business case for the transition to airline digital retailing

The business case for the transition to airline digital retailing is well defined at industry level. The last example comes from IATA who published a document[1] in March 2023. The document covers key findings about potential savings from NDC and ONE Order implementations, as well as the cost of not implementing.

Since 2019 McKinsey published a report on the value of airline retailing, estimated at $40Bn by 2030. They added a new report[2] in 2022 exploring the benefit of payment innovation, to address the $20Bn annual costs of payment.

BCG has published a series of articles about the “Airline retail revolution”. In an October 2022 report[3], they focus on the airline organization required to undertake the transition to digital retailing, around: Revenue Management, Offer Creation, Ancillary Products, and Marketing.

Not only the business case is here but the solutions are here too. In June 2023, Threedot published an article[4] about Order Management Systems available in the market, listing 9 vendors and their respective solutions.

Funding is also here after a profitable year for airlines, as reported[5] by IATA in June 2023. The latest forecast is $9.8Bn for 2023, which is still low compared to revenue but a positive sign of recovery.

If the business case, the solutions and the funding are there, why do some players opt for “doing nothing”? Is there a business case for “Wait & See”?

 

The short-term consequences of inaction

Let’s imagine we had to get a business case approved for the “Wait & See” strategy. The three pillars of this strategy would be:

  • Missed opportunities in ancillary sales
  • Delays and costs in changes and refunds
  • Lack of integration with multimodal partners

Each pillar has small consequences in the beginning, which may justify the inaction. We miss opportunities of selling ancillaries via travel agents, compared to direct sales, but we don’t know how much, so it doesn’t hurt. We have delays in changing booking and refunding customers, but we don’t know how upset customers are and we cannot measure their frustration, or the impact of frustration on lost business. Finally, we cannot do business with rail partners seamlessly, but we don’t measure the impact on our business and our carbon emissions, so it does not matter.

When assessing the short-term consequences of inaction, we can justify “doing nothing” for another year or two.

 

The long-term impact of not-transitioning

As more partners and sellers get on with NDC, the new normal will be API connectivity, somewhere between 2025 and 2030. The cost of “doing nothing” will keep growing and include for example:

  • No personalization of offers
  • Inability to implement continuous pricing and dynamic offers
  • Double cost of infrastructure: Direct + Legacy indirect

The business case of inaction will include the growing complexity of innovating on legacy platforms. Every new requirement for the coming years will be developed on old systems that will be decommissioned soon, meaning that every development will have to be done again. The sooner the transition the cheaper.

In summary, the more the industry will move to digital retailing, the more missed opportunity will pass by.

 

Conclusion

In most cases, the cost of “doing nothing” is not measured, although we can assume that it is growing every year.

The good news for “Wait & See” strategy is that there will always be a bridge to phase out legacy processes and systems. There is no train leaving the station and a risk of missing the train.

Even better, in 2030 (or before) there might be a radical new way of selling airline products which makes NDC obsolete and digital retailing can be leapfrogged (although I cannot imagine yet what this would like, maybe a decentralized platform).

In any case, “doing nothing” when it comes to digital retailing has a cost, a growing cost, and sooner or later, after a system failure, a major business requirement, a cyber-attack or else, the remaining player will embrace the transition and get the benefits of a modern, customer-centric, retailing experience.

 


[1] IATA Modern Airline Retailing – A Business Case: https://www.iata.org/en/publications/newsletters/airline-retailing-hub/modern-airline-retailing—a-business-case/

[2] McKinsey Airline retailing : How payment innovation can improve the bottom line https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/airline-retailing-how-payment-innovation-can-improve-the-bottom-line

[3] BCG Reshaping the Airline Organization for the Future of Retail https://www.bcg.com/publications/2022/airline-retail-revolution-demands-reshaping-airline-organization

[4] Threedot Overview of Airline Order Management Systems https://threedot.io/overview-of-airline-order-management-systems/

[5] IATA Airline Profitability Outlook Strengthens https://www.iata.org/en/pressroom/2023-releases/2023-06-05-01/

 

Multimodal Travel: Aviation Needs to Think Beyond the Flight

Multimodal Travel: Aviation Needs to Think Beyond the Flight

The future of aviation has always seemed like a distant one. But the future we look to today – of flying EVs and net-zero flights – might be out of reach for decades.

Innovation has undeniably been slow. There hasn’t been a quantum leap in ages – only incremental nudges towards better ops, safety and efficiency.

In a sector characterised by intense competition and paper-thin margins, funnelling cash into R&D for technologies that might be a dead end isn’t the smart choice right now.

So what is the smart choice? The answer so far has been ancillaries.

But in the face of mounting environmental awareness and evolving customer expectations, the industry needs to start looking beyond its siloed offering if it wants to stay relevant and keep the cash flowing.

 

Ancillaries – how did we get here?

The concept of ancillary sales in aviation didn’t really exist until low-cost carriers (LCCs) emerged. Up until this point, all-in bundled fares were the norm. But as LCCs started to displace flagship carriers and take more market share, the adoption of product unbundling and ancillary sales became increasingly common.

In 2022, ancillary sales totalled US$102 billion – 15% of total airline revenue. In the US domestic market, seat bookings alone account for more than US$4 billion.

That’ll only continue if passengers keep choosing air travel as their main mode of transport. But today, consumers are hyper-aware of their impact on the climate.

Travellers and governments are pressing aviation to do more to fight global warming.

Ancillaries aren’t going to remain sustainable, unless aviation retailing starts to think beyond the flight.

 

Moving beyond the airline ecosystem

Carbon offsetting isn’t cutting it anymore. People are demanding more action on the environment from aviation.

France announced higher taxes on aviation which will directly fund railway investment, closing the price gap between air and rail. This comes off the back of a ban on short-haul domestic flights.

More could be coming. But the industry can survive this, with multimodal travel.

It offers a life raft, until we get net-zero flights and EVs. It’s an opportunity for airlines to meaningfully reduce their carbon footprint, while shoring up a new kind of ancillary revenue.

Far from competing with airlines, multimodal travel opens new opportunities for ancillary sales, beyond the aircraft and beyond the airport.

Air France, Iberia and Lufthansa have already launched intermodal tickets.

Passengers are increasingly booking direct, too – and this keeps customers in the airline’s ecosystem, where these new ancillaries can be offered meaningfully, in context.

Retailing has always offered relevant products like airport transfers, car hire and hotel for decades. What’s new is the inclusion of modes that would traditionally be seen as eating the aviation industry’s lunch.

The potential opportunity here is staggeringly vast, and this doesn’t even account for cross-border rail travel.

But ultimately, multimodality is better for the customer.

 

Keeping up with customer expectations

Customers want to feel represented by the brands they buy from, including travel brands.

The heightened awareness of environmental impact is being pushed into view by Gen Z, whose purchasing power has come of age, and whose role in businesses is now significant.

Allowing them the flexibility to book air, rail and road transport in a single booking wins you the direct booking and the ancillary revenue, instead of forcing customers to book piecemeal trips – or into the arms of your competitors.

For corporates who’ve got all eyes on their ESG strategies, this kind of tangible reduction in emissions is extremely attractive. This isn’t just a “nice to have” anymore, thanks to the European Union’s Corporate Sustainability Reporting Directive (CSRD).

Multimodal travel will have a profound effect on the outcomes of sustainability reports, and adoption will likely be widespread. But as timely and on-point as it may be culturally, climate action is only a fringe benefit.

Because when the chips are down, most customers are all about convenience.

Visit most airline.com sites, and you’ll only be able to search for airports they fly to – not destinations. Passengers don’t travel to airports; they travel to resorts, hotels and experiences.

Aviation’s missing link is completing the whole journey in a single booking.

Imagine being able to search for a destination, and getting the nearest airport, plus a rail or public transport connection to take you the rest of the way – without having to book anything separately.

Travellers get a better experience. The airline increases ancillary revenue, with higher-quality data on what their customers actually want: data that can be measured against events that impact mass travel – like Taylor Swift’s tour, World Cup matches and festivals.

Multimodality is an affirmation of customer values, in an experience that reflects them as an individual. Facilitating their freedom is precisely what airlines should be doing.

So, how do we get there? Well, the tech to do this already exists.

Because we built it.

 

The road to multimodality

There are several routes into a multimodal future – all riddled with problems.

The travel ecosystem is a fractured, fragmented collection of disparate, often old systems: GDS, EDI/EDIFACT et al.

These can only support a limited number of verticals, like air and hotel – not rail, ferry, ride hailing, or any other modes. Attaching these modes to bookings takes airlines into a further fragmented realm of micro vendors, with literally thousands of APIs and platforms dedicated to single functions.

Airlines could consume multimodal content via all these distinct APIs – but imagine how resource-intensive it would be to integrate each mode, each supplier, each platform.

Even existing aggregators only offer a limited breadth of products, requiring multiple integrations.

Snowfall has created the answer to this, with Junction – our flagship travel technology platform.

 

Discover the tech behind multimodal travel at World Aviation Festival

Come and see the future of aviation for yourself – meet us at stand 1-106 at World Aviation Festival 2023.

Book a meeting with Snowfall at World Aviation Festival 2023

 


Article by Snowfall

 

Offers & Orders; Customer-centric, modern digital retailing as a bridge between today and tomorrow

Offers & Orders; Customer-centric, modern digital retailing as a bridge between today and tomorrow

Offers & Orders is not a new topic within the wider travel industry; but it is an entirely new method of selling products that enables airlines to create and distribute personalised offers to travellers. It’s not surprising that new methods and old habits don’t cohabitate well. As a result of this mismatch the customer experience today is deeply affected by legacy standards, processes, and technology. Airlines in the past have struggled to create and manage the attractiveness of offers, whilst delivering on efficient orders, in addition to keeping the customer at the centre of it all. Some may view Offers and Orders as a challenge to bridge the old and the new and the end customer simply having to deal with the result. The opposite is true however, and instead of the customer being an inconvenient truth, it could be the solution to the very problem.

As an industry, many commentators have been quick to dismiss how imminent such a switch to one single order across the journey is, but research suggests that we are closer than we think. According to Datalex’s research findings outlined in ‘The Digital Airline 2023’, over 9 in 10 (92%) of airlines believe their underlying PSS system is significantly or somewhat hampering the simplification of order management and ease of booking, suggesting that this is a significant headache for airline executives. In addition to this, 60% of airlines surveyed intend to move away from their current PSS provider towards an Offers & Orders enabled technology platform in the next 1-2 years. With just 1% of airlines planning this in the next 5 years or more, and only 8% stating that their PSS does not hamper them at all, it is clear from the majority that they have reason to start this transition sooner rather than later.

By moving to a unified Offers & Orders future, airlines can take back control of what they sell, merchandise and manage in a personalised way. But equally, customer-centricity is crucial for the long-term success in the next phase of airline retailing and should be acknowledged as such. A recent survey by McKinsey indicates the true value of a customer-centric approach, with $40 billion annual value creation opportunity available to airlines.

If airlines chose to ignore this transition, they will be left behind. In order to remain competitive and to future-proof their position in market, airlines must be cognisant of the inevitable move to Offers & Orders. Datalex has cautioned airlines by stating that “the cost of doing nothing cannot be underestimated”, as voiced to by Conor O’Sullivan, Chief Product Officer, when speaking to the course of the transition to Offers & Orders. Not moving may result in losing any competitive edge you had, because while your airline may have a fabulous onboard experience or relatively accessible digital experience by today’s standards, your future customers won’t buy it if you don’t engage them in an advanced digital way.

The moment of truth comes when you stop investing in the past and start investing in the future, and this is true for technology and people. If an airline continues on their current trajectory, they are sustaining costly and outdated systems with less and less people available to attract to work on these systems. This may not be true today but will be true as soon as the transition starts, and the airline will be left behind. While there will be undeniable upfront costs for the transition to take place, the cost of not starting will be much more.

Partners like Datalex are ready for the future with standalone Offer & Order Management but recognises that airlines will exist in a parallel universe in the transition state. We support this, via connection to legacy systems as needed, but there is still huge value to be had in the transition state. AI-based pricing for example can be implemented to reflect real-time price optimisation, fulfilled as a price adjustment if required to conform to existing downstream processes awaiting transformation. Once the initial transition begins, your airline’s roadmap will evolve in the coming years, there is no “end-state”, just a future vision that will be continually optimised.

 


Article by Datalex

At Datalex, we are committed to delivering against its vision for Offers & Orders and has a clear transition path across all phases from initial optimisations for Modern Retailing towards 100% Offers & Orders. To learn more about how airlines can go back to first principles and accelerate value creation through customer-centric modern airline retailing for an Offers & Orders future, download Datalex’s Offers & Orders whitepaper. In addition, visit the Datalex team at booth at World Aviation Festival on 26-28th September in Lisbon to find out more about our progressive airline digital retailing work. Datalex’s Chief Revenue Officer, Bryan Porter, will also be on-stage discussing the steps required to deliver a better and more personalised customer experience through NDC – a key part of the journey to 100% Offers and Orders.