On Wednesday, the Biden-Harris administration announced new rules to protect consumers from “surprise” airline fees. It comes as part of a wider initiative to expand consumer protections in air travel.
The new initiative is estimated to save consumers over half a billion dollars every year in “hidden and surprise junk fees.” The press release issued by the US Department of Transportation (USDOT) explained:
“The rule requires airlines and ticket agents to tell consumers upfront what fees they charge for a first or second checked bag, a carry-on bag, and for cancelling or changing a reservation. This will help consumers avoid unneeded or unexpected fees that can increase quickly and add significant cost to what may, at first, look like a less expensive ticket.”
As the industry recovered from the pandemic, ancillary sales helped to grow revenue and these “a la carte” extras have since become a key part of strategy for many airlines. Last year, airline ancillary revenue reached a record high at $117.9b worldwide with popular ancillaries including seat selection, extra baggage, and insurance.
Amongst other specifications, the new rules brought in by the USDOT now require airline and ticket agents to follow these steps:
Disclose critical extra fees upfront
Explain critical extra fee policies prior to purchase: To help consumers figure out whether they want to purchase a critical extra service, the rule requires airlines and ticket agents to explain the airline’s baggage, change, and cancellation policies before ticket purchase. For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose.
Inform consumers that seats are guaranteed: To help consumers avoid unneeded seat selection fees, airlines and ticket agents must tell consumers that seats are guaranteed and that they are not required to pay extra. Prior to offering seat selection for purchase, they must provide the following notice: “A seat is included in your fare. You are not required to purchase a seat assignment to travel. If you decide to purchase a ticket and do not select a seat prior to purchase, a seat will be provided to you without additional charge when you travel.”
Discussing the changes, U.S. Transportation Secretary Pete Buttigieg explained:
“Airlines should compete with one another to secure passengers’ business—not to see who can charge the most in surprise fees”
Although these new rules are intended to protect passengers from unnecessary additional charges, they may also impact airlines that rely heavily on ancillary revenue streams. Do you think we will see a change in airlines’ ancillary strategy following these events?
With United and American already progressing along their NDC journeys, Delta Air Lines has finally shared their strategy.
At the airline’s spring business showcase, Sara Reid, Managing Director of Sales Technology and Global Sales Support shared some insight. Delta reportedly plans to roll out some of its milestone releases in late 2024, with more integrations and new products scheduled for 2025. According to BTN however, it will not be until later into 2025 that the airline will be enabling omnichannel servicing at scale.
The airline shared that they will be differentiating themselves from others by avoiding GDS surcharges and not removing content from the GDSs. Phocuswire reported Reid saying:
“We have no plans to follow other carriers’ strategies where they’re taking forceful approaches to implement certain charges and to remove content […] We believe that customers will want to use our NDC solution because it’s going to create value for them. And so that is what we’re focused on: Unlocking value and driving adoption by creating better products, better merchandising and better servicing.”
Reid also described corporate and business travellers as a “priority,” indicating that serving this segment will be an important part of the strategy moving forward.
To make this transition happen, Delta will be collaborating with several key industry players including Google, IATA, Airlines Reporting Corp., and Accelya. BTN shared that Google will “optimise the offers [Delta] provides across all channels,” and that the airline is still building towards the IATA 21.3 schema.
In a press release highlighting Accelya’s new partnership with Delta for the provision of NDC, it was announced the airline will be using the Accelya FLX Platform, leveraging its modular approach to deliver personalised offers across multiple channels. Reid commented:
“Delta’s partnership with Accelya is part of our long-term Distribution strategy to provide better products, better merchandizing and better servicing for customers. We’re excited to partner with experts like Accelya to leverage technology and enable an elevated experience, which is key to bringing our multi-year innovation roadmap to life.”
Delta’s NDC strategy is built around transparency, continuous improvement, and a collaborative approach to industry partners with a prioritisation of corporate and business travel. How do you think the airline’s strategy compares to others?
Yesterday, Detroit Metropolitan Wayne County Airport (DTW) launched its new loyalty program, DTW Rewards. The free program entices members with perks including gift cards, airline miles, and cashback.
Fully open to the travelling public, airports employees, and DTW Destination Pass holders, enrolling is as simple as visiting the website or connecting to airport Wi-Fi and linking a credit or debit card account.
In addition to building loyalty with customers, the initiative will help to enhance the overall airport experience with the collection of real-time insights through the partnership with Thanks Again, LLC and its GlidePathCX platform. This data can shed light on travellers’ experiences as they move through the airport, broadening the understanding of customer preferences and pain points.
Chad Newton, CEO, Wayne County Airport Authority said:
“DTW Rewards will give our customers another reason to enjoy our nearly 100 shops and restaurants at the number one ranked mega airport in North America […] We pride ourselves on delivering an excellent customer experience at DTW. This program will provide us with data to help make our airport even better.”
Other airport loyalty programs include London Heathrow, Charles de Gaulle, Milan Malpensa, Auckland Airport, and Singapore’s Changi Airport. These programs can help to develop the relationship between an airport and its customers, providing insight into passengers, and helping shape their journey.
At Aviation Festival Asia, Chris Branagan, CTO, IBS Software joined for a five minute discussion into the role of AI in shaping airline retailing.
The conversation touched on expectations of next-gen travellers, the rapid evolution of AI, and key challenges to its integration into the industry.
Looking at how the retail landscape is evolving, Branagan explained:
“Airline retailing is changing significantly, particularly with the emergence of the offer and order drive. Airline retailing is no longer going to be traditionally driven through the GDSs. And so, there will be a lot more offers available to customers. Using gen AI we can be a lot more personal about what we offer people and how we present those offers. I think what you’ll see is, there will be a lot more rich content provided to the individual, which will be a much more engaging experience.”
Noting hyper-personalisation and tailor made ad campaigns, Branagan highlighted key opportunities for emerging technology to meet the evolving expectations of travellers. Conscious of the challenges of integrating AI into the industry, Branagan also shared his simple advice to his team, “fail fast.”
For the full discussion including a timeline for fully leveraging AI’s potential, being mindful of future developments, and more watch the full interview below.
Questions included:
Do you foresee AI being one of the dominant forces in shaping the landscape of airline retailing in the years to come?
How does technology bring the industry closer to meeting rapidly evolving customer expectations?
What are the key challenges to AI’s integration into the industry, and how are you proactively addressing these?
With technology rapidly developing, the airline industry is transitioning into an era of unparalleled opportunities. At Aviation Festival Asia, Surain Adyanthaya, President, Travel at PROS joined for a five-minute interview exploring the factors which have primed the industry to deliver on personalisation levels that airlines and customers have wanted for years.
Explaining how emerging technology plays a key role in enabling airlines to meet evolving customer expectations, PROS President Surain Adyanthaya said:
“The consumer expects the seller to know who they are, what their interests are, and to allow them to efficiently find what they want. We have seen studies where you have three seconds or less to present a consumable offer [to the customer], and the legacy technologies were not able to do that. However, with this new offer and order technology, it is possible. So this hyper-personalised offer world is here today, and it’s all driven by AI, which is the secret sauce.”
Further discussing the value of customer insights, Adyanthaya demonstrated how airlines can strategically apply this data to tailor their services while enhancing overall operational efficiency. To learn how PROS are working with key customers to innovate moving forward, watch the full interview below.
Questions asked include:
Firstly, could you map out the landscape when it comes to Offer & Order Management? What changes are coming and how must airlines prepare?
What emerging customer expectations are we seeing shape the future of airline retailing?
How are you working with key customers to innovate in this journey?
Observers of the air travel distribution landscape have noticed an evolution in the past ten years since, in 2014, the NDC standard was approved by the US Department of Transportation. The destination of the changes is called Airline Retailing in reference to digital retailers that provide a seamless experience and personalize offers, among other benefits to consumers. What are the drivers of this evolution? What is the current state of the journey? What does the road ahead look like?
The drivers of airline retailing
The immediate, primary driver is the set of IATA standards, including process flows and data models, that describe the way to shop for air travel using modern technologies.
The root cause behind these standards is the airlines’ need to generate more revenue per seat or per passenger, to showcase the value of premium products and to better serve customers during their trip, among other benefits.
The real driver behind airlines’ needs is the evolving expectations of customers, combining the new generation of digital natives with the public who embraced digital services during the COVID pandemic. The cost to airlines of doing nothing is the lack of relevance to their customers.
Overall, the combination of consumer, airline and technology trends drives the evolution of air travel distribution into “retailing”. Low-cost carriers paved the way to digital retailing thanks to their simpler operating model: point-to-point flights, single cabin, no tickets, direct sales only, etc. Full-service carriers competed on their direct sales but had an additional challenge in their indirect channel, where travel agents sell air travel services using legacy third-party technology.
The state of airline retailing
Airlines, travel sellers, technology providers and corporate buyers are in the same boat for this transition.
On the corporate customer side, the most sophisticated buyers look for innovations that meet their needs. For example, they value tailored offers that include benefits for their travelers, or specific information about CO2 emission per flight. Most buyers are waiting for their travel management company to upgrade their solutions and are not curious about the technology used to source content.
On the airline side, the most advanced airlines have set their own deadline for 100% offers and orders, which happens between 2025 and 2028. The majority of airlines (by volume) has embarked into the journey, started by creating a new distribution channel based on an API. Interestingly 2024 is the year when starting a new airline does not require to implement any legacy process or system for global distribution.
On the travel seller side, the most advanced companies have built their sourcing technology to consumer air travel APIs. Most travel sellers are waiting for their technology provider to upgrade their solutions and source rich and dynamic content.
On the technology provider side, the three Western GDSs have implemented and are rolling out API connectivity, while new entrants, known as NDC aggregators, provide rich and dynamic content combined to innovative commercial models. The traditional corporate booking tools may be the last piece to embrace new technologies regardless of the potential benefits for corporate users, which opens the door to new solution providers.
There are many more facets of the retailing transition that deserve attention: loyalty, payment, settlement, identity management, revenue management, airport operations, etc. There is merit in covering them in a longer version of this article.
Overall, the air travel distribution value chain is about half-way through the journey to airline retailing, which started in 2014 and may end around 2030. Does this mean that the previous journey, known as automation of travel distribution (CRS, PSS, GDS, ET, EMD, etc.), will have lasted from 1960 to 2030? The next question is: what to expect at the end of this journey?
The road ahead
The simple vision is that an old protocol, EDIFACT, is replaced by a modern technology, API. Whether technology providers invent smarter proprietary APIs or default to a standard one, called NDC, is secondary. What matters is connectivity and reach.
A broader ambition is to phase out all legacy processes and systems: PNR, tickets, EMD, booking classes (RBD), fare filing, etc. They are replaced by Offers and Orders accessible via API. Airlines will compete in providing a better customer value proposition by dynamically creating relevant offers and in consistently fulfilling orders.
The real success, however, is that the “digital airlines” become customer-centric retailers. The guiding principle should be: design a smooth customer experience and build efficient processes behind it, rather than: build convenient processes from an airline perspective and find out how to get customers around them.
A vivid and visual example of this approach is the Apple Store, where customers stand in the middle of the store while Apple staff gravitate around them for advice, for product demos, for payment and for delivery. This customer-centric experience contrasts with the regular experience whereby the passenger moves around and find their way to check-in, drop a bag, verify their travel document or else.
Ultimately, airlines will aggregate demand and build dynamic supply, like Uber, rather than building supply (namely airport to airport capacity) and looking for demand.
Stay connected
The world of airline retailing is changing fast. Stay connected.
Disclaimer: the author of this article worked at IATA between 2005 and 2020 and launched the NDC program, now known as Modern Airline Retailing.
Plusgrade and Citilink collaborate to enhance air travel with personalized experiences, focusing on maximizing ancillary revenue opportunities for the airline.
Citilink passengers will soon have the option to bid on upgrades, enhancing passenger choice and comfort in the Asia-Pacific region.
With this partnership, Plusgrade further solidifies its global leadership in ancillary revenue solutions, enhancing passenger experiences for airlines and travel companies worldwide.
Plusgrade, a global leader powering ancillary revenue solutions for the travel industry, is thrilled to announce its partnership with Citilink, a leading Indonesian low-cost carrier. Unveiled today in Singapore at the Aviation Festival Asia, the collaboration aims to enhance the passenger experience, seamlessly integrating technology, passenger personalization, and ancillary revenue optimization.
Citilink will soon launch the GreenUp program that allows passengers to bid on upgrades to exclusive Green Zone seats, setting a new standard in the Asia-Pacific region for enhanced choice and comfort. These upgrades give access to added benefits like front of cabin, priority deboarding, priority baggage space or priority access to the overhead compartment, extra legroom, and free mineral water. The collaboration reinforces Plusgrade’s global standing as the preferred ancillary revenue partner for airlines, empowering them to maximize revenue streams and elevate customer satisfaction.
“Our partnership with Citilink reflects the global travel industry’s collective push towards elevating the passenger travel experience,” said Ken Harris, Founder and CEO of Plusgrade. “Plusgrade is proud to be leading the way, crafting customizable solutions at the intersection of technology and passenger-centricity.”
In the ever-evolving landscape of the travel industry, where passenger preferences and ancillary revenue strategies play pivotal roles, Citilink’s collaboration with Plusgrade as its technology partner underscores a commitment to innovation and meeting the dynamic needs of today’s travelers. The enhanced upgrade program reflects a broader industry trend towards enhancing passenger comfort and experience and maximizing revenue streams.
“We are thrilled to partner with Plusgrade and deliver the innovative “GreenUp” upgrade program for our passengers that allows them to tailor their travel experience,” said Mr. Ichwan Agus, Chief Commercial Officer, Citilink. “By leveraging Plusgrade’s advanced technology and extensive experience in ancillary services, we are confident that our passengers will enjoy the added flexibility and comfort this program will bring to their journey.”
Citilink, a Skytrax four-star-rated airline, operates a robust fleet of 50 aircraft, connecting Indonesia domestically and internationally to Australia, Singapore, Malaysia, and Timor Leste. Renowned for excellence, Citilink solidifies its premier status in the Asia-Pacific region.
This collaboration marks a significant step towards a future where air travel seamlessly blends technology, personalization, and passenger-centric solutions, ensuring an unparalleled travel experience.
About Plusgrade
Plusgrade powers the global travel industry with its portfolio of leading ancillary revenue solutions. Over 250 airline , hospitality, cruise, passenger rail, and financial services companies trust Plusgrade to create new, meaningful revenue streams through incredible customer experiences. As the ancillary revenue powerhouse, Plusgrade has generated billions of dollars in new revenue opportunities across its platform for its partners, while creating enhanced travel experiences for millions of their passengers and guests. Plusgrade was founded in 2009 with headquarters in Montreal and has offices around the world. For more information, visit Plusgrade.com.
About Citilink
Citilink is a subsidiary of Garuda Indonesia Group, serving flights with the system of connecting cities.
As proof of its success and ongoing commitment to improving customer service, Citilink received several awards such as Top IT Implementation Airlines Sector from the Ministry of Communication and Information Technology (2017), the Transportation Safety Management Award from the Ministry of Transportation (2017), a four-star accreditation from world aviation industry rating agency, Skytrax for two consecutive years from 2018, TripAdvisor Traveler’s Choice Award for three consecutive years from 2018, the 4-Star Low-Cost Airline predicate from Airline Passenger Experience (APEX) for the third time, the 5-Star COVID-19 Airline Safety Rating predicate from Skytrax (2021), as well as various other prestigious awards.
Steve Hui, The Points Whisperer, iFLYflat joined to discuss emerging trends in airline loyalty programmes and share insights into his upcoming sessions at Aviation Festival Asia.
This five-minute conversation highlighted the importance of AI and ML in meeting passenger expectations, with Hui noting the need for airlines to improve the quality of their data to fully leverage tech to its full potential. Speaking on the topic of personalisation, Hui stressed that airlines must go further to create individual loyalty:
“It is not just about personalisation, it’s about individual loyalty – creating options for people to choose. So, in some of our discussions, we’re going to cover how some airlines allow you to choose from maybe two out of five options for your loyalty status. So you can pick and choose what is it that you like about it, rather than being gifted everything (just because you’ve reached this level), when you might not want all of it.”
Looking at the post-pandemic loyalty landscape, Hui explained that there are now a plethora of infrequent passengers. At the event, the audience can expect discussions around how the industry can learn from supermarket, retail, and restaurant loyalty to engage passengers, touching on micro discounts, instant discounts, trickle down benefits and more. Offering insights into the evolving landscape of loyalty and the strategies airlines are employing to adapt to changing customer behaviours, Hui concluded the interview setting out a debate around who constitutes the most valuable customer in today’s landscape:
“It is going to be interesting discussion about who is actually the most valuable customer today. It could be someone who does not actually fly, but earns a lot of points and then uses them once in a while.”
At the event, Hui will be speaking to Air India, Pegasus Airlines, Garuda Indonesia, Finnair, and more. To attend these sessions in person – book your ticket now.
In today’s fast-paced markets, you must continually transform business to stay ahead. Waiting to see what competitors will do—or simply moving forward as usual—will mean falling further and further behind.
No matter the industry, it’s more important than ever to find new ways to capture category leadership positions. Modern retail transformation is the airline
industry’s next frontier—the way to sustainable growth. But creating a new model that’s technologydriven, data-centric, and customerfriendly is no easy task. It requires a technology and travel partner to help chart, navigate, and guide the retail journey—and new processes that come with it. Bringing the airline retail vision to life requires a reset across the industry—a careful readjustment of people, organizations, processes, technology, standards, and data management. That’s because we can’t build new things using old ways. The shift to retailing with offers and orders will require modernized capabilities and skill sets, and close collaboration across stakeholders.
You may be unsure of where or how to start the journey to modern retailing—overwhelmed by requirements across departments, internal processes,
and legacy or entrenched technology.
But there’s no need to “eat the whole elephant” all at once. Instead, focus on the process step by step—methodically and incrementally identifying,
implementing, and integrating new ways of working as required to achieve specific retailing goals. While it may be difficult to adopt this mindset, taking these small steps to modernization makes it easier to identify and achieve early “big wins,” and maintain the momentum required for future retailing endeavors.
Download our playbook to help you define strategic objectives, set quick wins, and overcome common hurdles as you navigate the transition across IATA´s five “Airline Retailing” transformation programs.
In the latest step along an “innovative path,” Trip.com have showcased a cutting-edge approach to travel with their Trip.Vision app, tailored for the Apple Vision Pro. The app transports users into an immersive, educational mixed reality experience, giving people a virtual taste of destinations before deciding where to book.
The AppleVision Pro is “a revolutionary spatial computer that seamlessly blends digital content with the physical world.” The headset combines augmented reality (AR) and virtual reality (VR) capabilities in a feat of technology that caused ripples internationally. It merges the virtual and real worlds; with AR, users can overlay digital information and interactive elements onto their surroundings while VR offers users a fully simulated and immersive digital experience.
Trip.com’s new app leverages the Vision Pro’s wide landscape settings and robust spatial computing offering users the chance to virtually explore places like Mount Everest, Guilin, Maldives, Antarctica, and the Sahara Desert. Supplementing this with an educational push, the experience is completed with voiceovers and additional information on the areas, encouraging users decide between potential destinations in a new way.
Mr Bo Sun, Chief Marketing Office, Trip.com Group, said:
“The Trip.Vision app revolutionises the travel experience by allowing users to virtually immerse themselves in renowned destinations, enhancing their itinerary planning. This marks a whole new approach, where the exploration begins before the booking, and every destination becomes a story waiting to unfold.”
When the Apple Vision Pro was debuted last year, there were questions around how it would be leveraged by the industry. Do you think Trip.com’s app is the future of travel booking?
It doesn’t matter if we are talking NDC or not the biggest hassle seems to be changes. Not only is it costly it is complex. You would think with automated coding and automated tools to change that this would be no big deal but, in every discussion, we keep coming back to servicing as the biggest challenge for both corporate and leisure travel. In the debate we hear “Change has not been implemented for NDC bookings”, “Our main reason for not implementing NDC is the challenge with servicing”, “Servicing remains the biggest challenge to our automation flow”, “Customers do not understand what they are paying for”. Isn’t it time that we start thinking about how we can modernize this process?
Changes are a corporate pain point
At the latest GBTA conference a corporate stated that they deliberately book as many one-way trips as possible as they struggle with the change process. Not only do they think they are overpaying for the service of change it has become an impediment to innovation. It is easier to book one-ways and gives them much more flexibility. Question is if airlines ever expected this to be the case? Very similar to virtual interlining that airlines never really saw coming.
Changes are a pain point for leisure travel too
And it is not only corporates that struggle with changes. On various online travel forums one of the most important questions is “Why do I have to pay a penalty not to fly”, “Why do I lose my flights from New York to London if I don’t fly from San Diego to New York?” “Why do I have to pay $3000 just to change one flight on my itinerary”. The ugly truth is that passengers do not understand the complexity and it also resonates less and less that I just forfeit a trip I want to cancel.
Changes are a pain point for airlines
For airlines servicing, exchanges, and refunds are constantly brought up as customer pain points. After the pandemic, tons of vouchers were added to the complexity as airlines had little or no experience dealing with other forms of payments than the traditional. Suddenly, they had to deal with longer validity, miles expiration and transfer of value. Customers had to deal with vouchers and expiration dates and constantly changing their plans and worrying whether conditions remained the same or whether the airline was still in business. It became very evident that the underlying airline processes and associated technology are very outdated.
Some of the problems related to changes and refunds are quite mind-boggling in 2024 such as:
Why exchange unused tickets and EMDs?
Why are there still technical restrictions on the number of exchanges?
Is the cost for both the service and the auditing of exchanges justifiable?
In this article we want to address some thoughts on modernization and what could be ways to change.
Is part of the answer marketplaces?
Both Flybondi and Royal Air Maroc have introduced marketplace concepts where the passenger can resell tickets. This type of reseller functionality has many benefits, it gives revenue management more visibility and control and an opportunity to resell. From a sustainability angle it makes better sense as we want to fill up the plane rather than having no-shows. In addition, there are many opportunities to turn these concepts into products or loyalty benefits.
Or is the answer to rethink the process itself?
Should change become a product like any other product and be unrelated to the fare itself? Rather than having a complex calculation based on availability and fares shouldn’t the change product be more dynamic? Typically, today change conditions state that “change fee is $$$ and any fare differential”, no wonder the customer is confused.
Or would changes in payment be a way forward?
Another thought is if other payment concepts could simplify servicing? We are seeing an increase of new payment and retailing practices being trialled both in travel as other industries and believe that payment will be one of the drivers that will change the legacy eco-system and support inter-operability for multi-modal travel. The common characteristics, however, will be the need to be flexible to changes after the initial order/reservation has been made.
An example of a retail practice being trialled is ‘pay on delivery’. In the Netherlands a global payment provider and a local supermarket chain have introduced this concept. Simply explained you purchase a product or service, the payment platform collects the money and when the product or service has been delivered the seller, releases the funds from a holding account.
Another possible solution could be ‘Pay When You Fly’ (‘PWYF’), it doesn’t solve all the problems, only some of them, and other technology like blockchain or travel wallets are needed. But the more choice and control the airlines offer to customers, trust and loyalty grows, for example by offering PWYF.
It should be noted that PWYF is not new. It has been around for more than 20 years and is used by several airlines typically for corporate travellers. But the question is can it scale?
Which ones of these problems would go away or are radically changed if we were to apply PWYF and how can it facilitate a transition to Offer/Order?
We do not have to remove tickets and EMDs in our transition to Offer/Order, but PWYF can eliminate some of the pain points in the ongoing process to move to Orders. PWYF would eliminate the exchanges of unused tickets and EMDs. It would simplify IROPS (Irregular Operations) when the airline is not delivering a service ordered. It also saves on handling time of complaints, and it is easier to automate compensation business rules. In addition, we would significantly reduce cost of auditing.
Finally, PWYF would work as an extra incentive for travel retailers (airlines, OTAs, TMCs) to ensure that the promises to their customer are delivered; this will further build trust and loyalty.
Will WEB3 come to the rescue?
WEB3/blockchain technology (like the decentralized Camino Network, the blockchain for the global travel industry) is uniquely suited to support this transformation without even needing payment platforms. By using smart contracts – programs that run on a blockchain and execute agreements without intermediaries – you can program any kind of payment rules and payment flows. This means the settlement can be entirely automated based on some external trigger and both parties involved in the contract have the security that the payment will only happen if certain conditions (coded into the smart contract) are met. Pay when you Fly could easily be implemented via smart contracts that provide escrow and could be triggered to initiate the payment when the flight departed.
Pablo Castillo, CTO of Chain4Travel, the company tasked by the Camino Network Foundation to build the Camino Network: “Pay when you Fly is a great example how using modern technology we can reimagine the payment and booking processes to make it more flexible and adapted to the customer needs by eliminating the complexity of transactions, especially refunds, and create a seamless experience for both airlines and customers. With Camino Network, travel companies can finally leverage web3 technologies to drive digital innovation on a secure, agnostic and scalable operating system for travel.”
Reality check, what’s the impact of implementing Pay when you Fly?
By Paul van Alfen, Travel Payments Strategist at Up in the Air: “a ‘can of worms’ comes to mind when looking into the impact on the current ecosystem of switching from ‘pay at booking’ (or at ticketing a couple of days later) to ‘pay at departure’, at scale. Stakeholders from across the business will see massive changes and an overhaul of systems, processes, and policies, with Finance (cashflow), Revenue Management (forecasting) and Revenue Accounting (reconciliation, reporting, auditing) the most affected. It’s probably fair to say that a new generation of systems will be required, combined with a customer centric mindset and a different (non-pre-payment based) financing model, to make PWYF work at a large scale and across the direct and indirect channels for both corporate and leisure customers.
The main difference with Buy Now Pay Later (‘BNPL’), when it comes to impact, is that BNPL does not affect the timing of payment to the Airline, it’s the full amount at the time of booking and therefore ‘business as usual’.
In summary
We predict that considerable change appears to be inevitable at some point in time to allow flexibility in ordering, changing/servicing, payments, and settlement. Change is driven by the customer and new entrants in the travel ecosystem. Pay when you Fly is only a small part of that change but could lead the way towards much needed simplification.
In today’s dynamic aviation landscape, non-aero revenue has become crucial for airport growth. As passenger numbers increase, airports are not just focusing on operational performance and airline partnerships; they are exploring direct e-commerce offerings to enhance the passenger experience and boost revenue.
The rise of non-aero revenue streams
Non-aero revenue streams are gaining importance as airlines negotiate on aero fees paid to airports. Airports are diversifying their offerings, including duty-free shopping, order-ahead food services, parking reservations, and fast-track options.
This evolution continues as technology advances, providing airports with a broader array of services. Non-aeronautical revenues have grown significantly, reaching over 40 per cent today, according to ACI statistics.
Addressing the challenges
While introducing new services is essential, the challenge lies in ensuring passengers are aware of and utilize these offerings. Limited user engagement and a one-size-fits-all approach create hurdles for airports:
Limited User Engagement: A study by TNMT / Lufthansa Innovation Hub research reveals that only 7 per cent of passengers regularly engage with airport apps or websites, leading to missed upselling and cross-selling opportunities.
One Size Doesn’t Fit All: Passengers have diverse needs based on their journey type, making personalized services crucial.
Personalization challenges
Effective growth in airport e-commerce hinges on a solid understanding of personalization and its wider effect on passengers. For airports, this involves addressing pain points, ensuring broad-based platform accessibility, and implementing journey-based personalization.
Despite growth in non-aeronautical revenues, low digital engagement rates remain a challenge. Personalizing the passenger experience through an integrated travel planning platform can help maximize online business success.
Current digital touchpoints struggle to reach more than 7 per cent of passengers. Even for those who interact, offers often lack personalization, missing the mark for relevance.
Airports leading in e-commerce personalization
Several airports have successfully leveraged e-commerce personalization:
Incheon Airport (ICN): The “My Airport” platform tailors shopping and dining recommendations, boosting concessions 3-5% yearly.
Amsterdam Airport Schiphol (AMS): Linking frequent flyer data allows personalized digital ads, increasing retail repeat sales by 10%.
Dubai International (DXB): Rich profiles from passenger bookings enable personalized push notifications, increasing non-flight bookings by 15%.
Munich Airport (MUC): A “plan-your-trip” site uses cookie data to present relevant deals, increasing associated revenues by 7% annually.
Hong Kong International (HKG): Linking a frequent flyer app to on-site beacons delivers geo-targeted offers, improving targeted communications and crossover loyalty programs.
Vancouver International Airport’s “YVR Experience” travel assistant allows passengers to enter trip details, receiving a customized journey overview with maps, amenities, and promotions.
A shared travel planning platform: The Airport WebApp
The proposed “Airport WebApp” is a revolutionary solution to bridge gaps in digital engagement. Passengers input flight details, receiving a preview of their airport experience with real-time updates and recommended offers. Airports maintain control over promotions for different passenger segments, refining targeting over time.
The Bottom Line
As aviation and e-commerce intertwine, airports face a choice: evolve, personalize, and grow, or remain static and miss opportunities.
The Airport WebApp, with its intuitive design and personalization focus, represents a beacon for the future—a testament to technology transforming challenges into opportunities.
One major trend identified for 2024 travel was music tourism. Amadeus’ research showed that music would continue to drive tourism in various regions throughout the 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 travel booking patterns in the APAC region. Joining the likes of Ryanair, Pegasus, and Frontier in leveraging this trend, AirAsia MOVE (formerly airasia Superapp), has partnered with Coras to introduce MOVETIX.
Spearheaded by Hassan Choudhury, MOVETIX is a joint venture between AirAsia and Universal Music. The cutting-edge platform, gives users access to over 10,000 global events and activities, seamlessly integrated with flight bookings, hotels, and land transport.
Nadia Omer, CEO of AirAsia MOVE said:
“Entertainment is an essential part of travel, and Hassan’s role in RedRecords and MOVETIX aligns perfectly with our commitment to deliver the best value in travel and to develop talents in Asean. Teaming up with the best of entertainment with Coras on our AirAsia MOVE platform will elevate the experience of our customers, while staying true to our brand proposition. With MOVETIX, our app users can now book their entire trip seamlessly including flights, hotels and land transport through airasia ride, meals via the Dine-in option, all within one single cohesive ecosystem.”
Customers frequently need to pair booking travel and accommodation with booking tickets to a live event. Streamlining the process into one app can create a more convenient experience for passenger as well as offering greater control in managing their travel plans.
Through the partnership with AirAsia, Coras hopes to contribute to Southeast Asia’s growing marketing for live entertainment, offering AirAsia MOVE’s 15 million monthly active users tickets to the best events across 67 cities.
Nadia Omer, CEO of AirAsia MOVE will be speaking at Aviation Festival Asia on reinventing the travel agency landscape. Book your ticket now to avoid missing out.
The COVID-19 pandemic not only dramatically limited travel but also caused permanent shifts in traveler behavior, forever changing “business as usual” for airlines. No touchpoints with travelers have changed more profoundly than loyalty programs.
In 2020, airline industry revenues totaled $328 billion, about 40% of revenue from the previous year, McKinsey reports. Benefits designed for frequent flyers continue to lose their efficacy as uncertainty around the return of business travel remains.
There are predictions that anywhere from 36% to 50% of business travel may never return, according to Forbes, especially as remote conferencing grows in its acceptance.
COVID-19 will subside, but airlines may need to come to terms with a fundamental change in how they approach loyalty. Loyalty programs themselves are a business-critical source of revenue, after all, with complex partner ecosystems that depend on frequent traveler activity. But as Forbes describes, “Loyalty programs will change because people will likely be traveling less, and the old rules about what was rewarded and what rewards are desired may also change.”
With legacy loyalty technology, airlines have backed themselves into a corner.
Simply put, loyalty programs need to evolve. Airlines must make programs more agile, increase their diversity of offerings, and reconsider the various tiers and categories that define their loyal travelers.
Unfortunately, many airline business leaders don’t realize their existing loyalty technology platforms—often longstanding, monolithic systems—severely limit their success in adapting to market changes. Too many airlines have invested in framework systems that offer loyalty functionalities but do not accommodate the complex needs of individual airlines and their customers.
Loyalty projects fail because airlines attempt to custom-fit new technologies to these existing legacy solutions. Too often, innovation in loyalty programs is capped, or scrapped, because underlying systems do not support it or are too expensive and time-consuming to adapt.
Business leaders need to start taking seriously new opportunities to transform the foundational digital technologies that support their loyalty programs. Fortunately, modern cloud-native platforms can support:
More dependable business benefits
A wider variety of customer benefits
New currencies and “wallets”
More versatile partner and business integrations
More agility and flexibility airlines need to meet current and future industry challenges.
In this report, we consider the new opportunities these cloud- native digital tools provide when adapting loyalty programs to today’s market realities. We also illustrate how these tools can carry airlines to future success – even in the event of future crises.
NDC gives airlines unprecedented control over their offers and orders in third-party distribution channels. It’s the key to modern airline merchandising and a better online shopping experience.
A new era
Fast-tracked in part by the global pandemic of 2020, the airline industry as a whole has strengthened its digital technology capability. The wave of digital transformation across all industries has raised consumers’ expectations – if you can’t deliver a fast, seamless online experience, you could quickly lose customers to your competitors.
Instead of visiting multiple websites or calling multiple travel brands to create their own travel package, consumers can now visit travel aggregator sites or use metasearch engines to find the best available options. Consumers are balancing value and convenience with the expectation that they can customize their travel selections. New channels, choices and expectations have reinvented their purchasing behaviors.
And while airlines might have complete control over the options available on their websites and mobile apps, third-party channels frequently compare airline offers based solely on flight schedules and unbundled airfare prices. What’s more, third-party channels often lack the ability to offer the add-on ancillaries that travelers expect. Everyone loses: the airline, the traveler and the travel seller.
What’s keeping travel sellers from embracing NDC?
Money. Time. Opportunity.
Achieving widespread adoption of NDC across the travel industry requires collaboration and standardization between airlines, travel agencies, technology providers and other stakeholders. As with most industries, the overall travel industry can be slow to change. Some travel sellers are concerned about servicing capabilities, like the ability to modify bookings after they have been created. Others are waiting to see if NDC will actually take off or fizzle out. There’s a lot at stake. For airlines and travel sellers.
But some OTAs (online travel agencies) see the trajectory and are eager for NDC content; they recognize airlines are moving their best content from traditional sales channels, or only adding new offers to NDC-enabled channels. Airlines are offering exclusive fares and promotions to get travel sellers to move to NDC, and major travel agencies and aggregators, such as Expedia, Booking.com, CWT, Kayak and more, have already made the leap.
Standardized messaging creates new opportunities
With its standardized API messages and the opportunity to introduce rich content, NDC lets airlines regain control of how third parties sell their products and services. Beyond the specifics of standardization and technology schemas, NDC is simply a means to an end that reflects the reality of the modern travel ecosystem. With it, travel sellers can more broadly access and sell the products and services that airlines are already selling through their websites and mobile applications.
Changing norms
NDC is less about compliance and more about capabilities. It’s the enabler that the industry is leveraging to evolve airline reservation systems from aging and limiting order taking systems to flexible digital retailing platforms. It’s imperative to give travel agencies and corporate customers the same merchandising capabilities that airlines have on their own websites and mobile apps. Airlines that are slow to update their legacy mindset may miss out on all NDC can deliver.
New innovations like lie-flat seats, inflight internet and entertainment, sky couches, sleeping pods and more are elevating the travel experience and adding real differentiation to an otherwise commoditized product. But airlines need to be able to sell those enhancements to drive new innovations.
NDC can help airlines accelerate the move to modern digital merchandising by offering transparency into their full array of products and services to enhance the traveler journey, creating a path to full product visibility.
The bottom line
The adoption of NDC is transforming the travel ecosystem in profound ways. It’s giving airlines more control over their distribution strategies and helping them differentiate themselves to attract travelers. It’s also reshaping traditional business models and changing the way airlines do business with travel sellers. Airlines and travel sellers need to work together to unlock the opportunities that NDC enables.
The time to adopt a new technology platform leveraging data driven, digital-first, modern APIs to connect with your partners – all powered by scalable cloud-based solutions – has never been clearer. Time to get on board.
For many airlines, Offers and Orders has been a key topic in 2023, and will continue to be in 2024. As a matter of fact, we predict that even more airlines will seriously look at what Offers and Orders really brings, and if deemed valuable will start analysis on how they can transition.
A brief look to the end of 2022 saw IATA and several airlines initiate the Airline Retailing Consortium. The consortium worked through 2023 to define an industry business case which can be applied by airlines at a high level and gives considerable pointers on where cost and benefit will come from. A business reference architecture was developed as well as an airline transition plan (with TiM’s support). Finally, an Industry Transition Paper was published in conjunction with the Boston Consulting Group. For 2024, the consortium aims to deliver some procurement guidelines. For those who have not had the time to review these documents, we urge you to visit the link above and skim through these documents.
We have heard from several airlines quite publicly about their ambitions and aims for the Offers and Orders Transformation (OOT). Lufthansa announced their path to be off PSS by around 2028. Air France KLM announced in October 2023 that their executives approved the funding and the business case to initiate their transformation. Saudia announced their move to Amadeus’ Nevio product by 2025. And those are just a handful of the public announcements. At Travel in Motion, we are working with several other airlines on concepts and transformation design towards Offers and Orders.
What will 2024 bring?
At an industry level, we think it is safe to say that IATA and the Airline Retailing Consortium will continue its efforts to drive forward the transition and provide additional support and materials to airlines. We also believe that at an industry level, we are beyond the concept phase, and have now moved to the design phase. We recently outlined this in a whitepaper we published. To support the industry efforts, we ask IATA and the consortium to focus on some of the more challenging parts such as:
Interline and intermodal travel – less from a technical perspective, but rather from a business process and settlement perspective.
Legacy conversion and backwards compatibility – supporting the industry with conversion processes and tools to support the airlines with the ambition to move forward but who are held back by having to interact with airlines which (currently) have no ambition to change.
DCS and the related departure control processes and the ground handlers, by bringing them on board, getting their buy-in and perhaps most importantly, demonstrating to the ground handlers the benefits of change.
And while there are many more areas, these are perhaps the areas in which we have encountered the highest levels of uncertainty among airlines.
At an airline level, we expect that more large and mid-size airlines will be educating themselves on the value of offers and orders. At the same time, they will be talking to their incumbent vendors to understand their transition plans. Many will also be talking to those vendors which seem to have made the most progress in the past years towards the world of Offers and Orders. We project that dozens of airlines will start building their business cases and designing their possible transition path. We already see that this is front of mind with many airlines from the number of educational, analysis and design workshops we have been engaged to deliver in late 2023 and early 2024. Often, and this is the best-case scenario, this is tied tightly to an overarching distribution strategy review, as the alignment of the future of airline distribution and the world of Offers and Orders is extremely important to get the greatest benefits in the short and mid-term.
We urge airlines who have not yet started any activity in this area to review the IATA consortium documentation and to closely monitor what your competitors and more importantly, your close airline partners are doing.
We recommend to those airlines who have already done some research and analysis, but not yet initiated any true change to start the planning of the transition design, and identifying the areas of quick wins versus the complex areas which will take considerable time, and to not stand still.
We ask of those airlines well advanced with their journey to share their learnings with the industry to make the overall transformation less of a challenge for everyone. The greatest benefit to the industry and the consumer comes then when we have done a large-scale transformation and airlines can, at a larger scale, take advantage of the technologies and richer digital interactions with customers.
Finally, we ask the vendors involved to make clear their proposition, and to proactively work with airlines, IATA and other industry partners to drive forward on their paths, and to identify, address and eliminate technology challenges as quickly as possible. We urge new vendors to come into this space and provide modules and components, ideas and innovation – and we sincerely hope the airlines reward you for that by giving those new vendors their trust.
For Travel in Motion, we see a very busy year ahead. We have gained a lot of knowledge from our work over the past eight years working with IATA and airlines on NDC, ONE Order and Dynamic Offers. We have spent the past five years working with airlines on the order transformation by doing projects such as interline proof of concepts to engaging with airlines to define a transition concept and design a complete multi-year roadmap. We are convinced that this work over the past years has given us great insight into the challenges, the benefits and the methodology, but also into the vendor landscape and the airlines’ needs for the next years. Thus, our key focus for 2024 will be supporting airlines, vendors, and IATA on the continued transition to Offers and Orders.
At World Aviation Festival, key industry players gathered to take a critical look at the modern airline retailing revolution. The expert panellists included Apurva Mathur, Vice President, Strategic Accounts, DataArt,Tiddo Veldhuis, VP Offer Management & Ancillaries, KLM, Tamur Goudarzi Pour, Chief Commercial Officer and Member of the Management Board, Swiss International Air Lines, Justin Jovignot, Director, Commercial Strategy and Distribution, TAP Air Portugal,and Jitendra Sindhwani, President and Head of Global Sales and Marketing, IBS Software.
Looking at the future of airline retailing within the context of emerging technologies, panellists shared their unique insights, answering the question: What does it all mean for the ongoing retailing revolution?
This 50-minute session covered the feasibility of IATA’s 2030 Offers & Orders target, explored the impact of new fintech on the journey, and debated which should come first – order or offer?
In an era where digital transformation is paramount, the aviation industry is not left behind. Traditionally, airline loyalty programs were confined to frequent flyer miles and associated credit card points. However, with the advent of digital wallets and smartphone apps, a new horizon in customer engagement and loyalty is emerging. This article explores how these technologies are reshaping loyalty programs, making them more accessible and beneficial for both airlines and passengers.
Evolution of Airline Loyalty Programs
The digital age has brought a paradigm shift. Earning points has evolved from mere flying to online affiliate-tracked partners and now, to point-of-sale retail counters. The integration of QR codes and sophisticated app technologies has dissolved the barriers once imposed by the need for expensive hardware. Now, a simple smartphone in the customer’s pocket and a standard tablet on the retailer’s side can turn any purchase into a loyalty point, redefining the concept of ‘earning miles’.
Key Examples of Retail Point-of-Sale Partnerships in Australian Airline Loyalty Programs:
Singapore Kris+ in Australia (Sydney and Melbourne): This app’s partnerships span a diverse range of businesses, including cafes, restaurants, bespoke tailoring services, recreational activities, and Melbourne airport’s Skybus service. Users can earn points and access discount offers through these collaborations.
Qantas and Accent Footwear: This partnership allows Qantas Frequent Flyers to earn points (and soon redeem) at over 670 stores, including popular brands like The Athlete’s Foot, Platypus, Skechers, Stylerunner, and Hype DC. This initiative is particularly geared towards a younger demographic. Besides Accent Footwear, Qantas has partnerships with BP Rewards and Hoytz, offering both earning and redeeming points opportunities at the point of sale.
Virgin Australia: Virgin has an earn-and-redeem partnership with 7-Eleven petrol stations and a redemption-focused partnership with Myer department stores, enhancing its loyalty program’s value and reach.
Impact of Bypassing Traditional Payment Rails
By creating their own payment and loyalty ‘rails’, airlines are moving away from traditional systems like Visa and Mastercard. This independence reduces costs and gives airlines direct control over their loyalty programs, enabling them to collect more customer habit data. This leads to a more tailored, flexible rewards system, potentially increasing customer retention and satisfaction.
Future Trends and Conclusion
As airline loyalty programs continue to evolve with digital technology, the benefits extend beyond more accessible rewards. These advancements offer airlines deeper insights into consumer behaviour. The integration of app-based solutions marks a significant leap in airline customer engagement, heralding a future of enhanced convenience, personalisation, and loyalty.
Reduced rollout costs mean more competition for loyalty engagement
While this technology reduces the costs of rollout and widens the retail partner footprint for popular coalition loyalty programs like Qantas, Velocity, and Krisflyer, it means other programs can also easily offer this system like Flybuys or Hilton, Accor and other international airlines and even Mecca’s Beauty Loop loyalty program may not be out of the question, leading to a future where point-of-sale retailers/cafes/restaurants might have multiple partnerships and terminals.
The result is a diverse retail environment where point-of-sale retailers may host multiple loyalty programs, giving customers a choice in their preferred loyalty scheme.
This raises a crucial question: As this technology becomes ubiquitous, how will it shape the landscape of customer loyalty and retail partnerships as every program starts to cross lanes to chase consumer engagement?
Are Brits planning to fly next year? Where to and who with?
As the cost of living rises in the UK and across the world, questions are emerging about how this will impact travel. After conducting research with 2,000 UK customers last month, easyJet’s latest survey has some of the answers.
Will people be travelling next year?
Over two thirds (67 per cent) said they are more likely to travel abroad in 2024 than in 2023.
How does travel factor into spending and saving?
Over three quarters (77 per cent) said they will prioritise spending money on a holiday over anything else in their yearly budgets – up from 70 per cent last year.
76 per cent said they still plan to go on the same number (or more) holidays than usual.
What will people give up in order to go on holiday?
54 per cent said they’ll be reducing their spending on eating out, 40 per cent said they’ll cut back on new clothes and shoes, and 38 per cent are opting not to pay for a new car or home upgrades to be able to get away.
What carriers will people be flying on?
70 per cent are more likely to book with a low-cost carrier (up from 66 per cent in 2022).
Where will people go abroad?
People are looking at destinations that are closer to home next year with 72 per cent looking at Europe vs 10 per cent planning a trip to North America and 9 per cent to Asia.
This survey indicates a strong year of travel in 2024, showing that Brits will continue to prioritise travel where possible.
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.
New innovations like lie-flat seats, inflight internet and entertainment, sky couches, sleeping pods and more are elevating the travel experience and adding real differentiation to an otherwise commoditized product. But airlines need to be able to sell those enhancements to drive new innovations.
