Technology: Taking the Airlines Testing Industry To The Future Faster

Technology: Taking the Airlines Testing Industry To The Future Faster

With the advent of modern technologies impacting every industry, the travel sector has been ahead in terms of adopting it at a fast pace, specifically to help airline operations become more efficient and flexible. In the airlines industry, the margins are thin; it is imperative to innovate constantly to keep the margins high. It is an industry that cuts across all others like retail, entertainment, manufacturing, network and telecom, hospitality, transportation, payments, maintenance, insurance, cargo and catering. It is the only industry that is so diversified, in terms of inter-dependency. It is unimaginable to think of a smooth, safe and secure end-to-end journey without the advent of technology.

Some innovations and interesting uses of technology adoption include smart speakers in hotels, virtual reality tours from travel companies, new and seamless ways to check-in, self-driving guide robots, digital twin (digital twin is a virtual representation that serves as the real-time digital counterpart of a physical object or process) for operations etc. Technology is becoming all-pervasive, and we are now also witnessing new horizons of development after 5G.
At Mindtree, we have the expertise and experience in terms of validating and testing these complex systems and have reached the pinnacle in executing and providing support during multiple releases to our clients. We have worked with leading airlines and have understood their complex systems, which has helped us gain domain cognizance and align ourselves with their vision and goal. We have brought new and innovative testing solutions, and delivery and cost models to ensure that we deliver at and above pace with the industry.

In the past, the work that we have done has led to on time delivery, reduction in manual effort and cost, faster time-to-market, and less defects in production, leading to long term relationships with our customers. A few instances include:

  • Set up continuous test and manage delivery model for one of the largest low-cost carriers, saving millions over the years
  • Tested complex big data-based critical revenue management for a large European airline
  • Set up common framework and advanced automation tools for a Canadian airline, saving 70-80% effort
  • Validated multiple commercial and operational systems for another large airline in US, bringing in multi-million dollars in savings
  • Brought in digital and automation transformation for a few airlines in Middle East, saving 800 man-days of effort
  • Verified complex scenarios for seat assignment algorithm and UI
  • Provided inflight testing in a simulated environment using real devices to test scenarios that actually replicate the environment 30-40,000 feet above earth, and validate the videos, images etc.
  • Our testing of crew management, network planning, and MRO forms just a fraction of our testing expertise
  • To test the migration of cloud applications, we carried out multivariate and significant cross browsers testing through tools.

We all love technology, and I would like to quote from the book, ‘Factfulness’: “When we have a fact-based world view, we see that the world is not as bad as it seems, and we can see what we have to do to keep making it better.”

This is exactly what technological and digital transformation is doing to humanity and particularly the airline industry – making it better with each step. We are moving towards approaches that enable organizations to rapidly identify, vet and automate as many processes as possible using technology, such as robotic process automation (RPA), low-code application platforms (LCAP), artificial intelligence (AI) and virtual assistants. With AI/ML-enabled automation frameworks and more futuristic technologies like quantum computing, AI, IoT, 5G, metaverse, NFT and digital avatars, testing will definitely gain more momentum. Going forward, we will look to explore more innovative ways to test multiple scenarios to ensure that we reduce time-to-test and have 0% defect delivery.


Arvinder Negi, Senior Testing Manager at Mindtree

Why is NDC taking so long?

Why is NDC taking so long?

I keep hearing the same concerns about the perceived speed of the transition to airline digital retailing, whether I speak with airlines, sellers and travel tech companies who have embarked in the transition, or with other players who have chosen to wait and see.

Understanding the good and bad reasons for the lack of speed (compared to expectations) is helpful to find ways to accelerate the transition. It will be even more valuable to plan for the next transition, towards order management.

 

What are the expectations?

 

Having one airline implementing one distribution API is fast. Air Canada had a distribution API before NDC started. easyJet had an API connected with one GDS before NDC started. An airline group called Open Axis even had a standard for API distribution before NDC started. If this is all we know, NDC should be implemented globally in a couple of years, right?

On the other hand, airlines, travel agents and GDSs have been working hard for the past 50 years to build a global interconnected platform allowing any customer to find in real-time the best itinerary and best fare to get from A to B anywhere in the world. Even after 50 years of hard work, using pre-internet technologies, the platform does not support the latest innovations in dynamic pricing and ancillaries. Upgrading this entire platform, with new processes and technologies, should take at least 50 years, right?

A reasonable expectation lies probably in the middle. Implementing NDC worldwide has clearly not taken 2-3 years (this was only the time necessary to get the US DOT approval). But hopefully upgrading the distribution infrastructure of the air travel industry won’t take 50 years. For a program launched in 2011, the transition will be completed for the first players in 2025 and probably for the rest of the industry by 2030.

 

What are the key remaining challenges for implementation?

 
The initial challenges were typical of a major digital transformation program, except for contractual and business models issues, which are specific to the status of this industry. Challenges included: awareness, business case, funding, skilled resources, contractual restrictions, technical solution, innovative partners, incentives, on-boarding, and differentiated content.

Awareness: I’d be curious to see the results of an awareness survey, showing how many travel distribution professionals have heard about NDC and can define it.

Business case: While many airlines have figured out a business case, including revenue generation from ancillaries, cost reductions and enhanced customer experience, there are still many players still scratching their heads. Indeed, selling the same product, to the same customer, via the same channel, won’t create value even with a new technology.

Funding: Any project requiring investment in the current environment is a challenge. The pandemic crisis has cut the cash resources for most airlines and travel agents. Despite the crisis, some airlines and travel agents keep investing because the new distribution channels, enabled by NDC, are more profitable.

Skilled resources: The transition to digital retailing first required a mindset shift from the management. Then the training or recruitment of staff able to manage API distribution and create new offers across multiple distribution channels. Last but not least, sales teams briefed and equipped to engage the travel agencies about partnership and value creation.

Contractual restrictions: Airlines and travel agents have signed distribution contracts with GDSs, which may contain restrictions or incentives preventing the implementation of alternative channels. Although the European Commission recently closed their 2018 GDS investigation about “possible restrictions in competition in the market for airline ticket distribution services”, such restrictions may remain a challenge today.

Technical solution: With the most advanced airlines having shifted 50% of their indirect bookings on NDC, the technical questions (scalability, look-to-book, polling, caching, etc.) are identified and discussed within technical industry groups. There is still a lot of progress and improvement to be made, i.e. innovation opportunities.

Innovation partners: A key benefit of an open standard for air travel distribution is that it allows new entrants to enter the market, to innovate and partners with existing players. Today there are NDC API providers, NDC aggregators and other NDC service providers (post-booking, etc.).

Incentives: Airlines have designed various distribution strategies and travel agents have elaborated content sourcing strategies to take advantage of the new content and fares. The current transition shows a mix of incentives, ranging from carrots (commissions…) to sticks (surcharges…). After the transition, value creation should become the driver between partners.

On-boarding: Airlines who have built their “distribution platform” are on-boarding travel sellers, either directly or through aggregators. This process takes time and will accelerate over time.

Differentiated content: The purpose of NDC is to enable  a new distribution channel, for airlines and travel agents, capable of supporting any kind of airline offers. This channel adds value to partners once content is differentiated, i.e. more than “airline code – origin-destination – date – fare”. Dynamic offers, where the product and the price are constructed dynamically, will leverage the channel and create even further value.

There are more challenges ahead. They reflect the ambition of the modernization of air travel distribution, the opportunities for new services and new entrants, and the reasons underpinning the time the transition takes.

 

What next?

 
Although I wish the transition moved faster, the current pace is probably right. NDC was launched as something that will and must happen, regardless of the timeline. Knowing that it would happen, the challenge was to make it happen as quickly as possible, but also as robustly as possible in case it lasts for another 50 years.

The next phase of the transition is about order management. The question is not “if” but “when”. The travel industry needs to accelerate the transition to order management if it wants to capture the full benefits of digital retailing. Or we may soon hear “Why is ONE Order taking so long?”.

 

 

Case Study: Lufthansa Cargo Soars Toward Cloud Readiness With Mindtree And TIBCO

Case Study: Lufthansa Cargo Soars Toward Cloud Readiness With Mindtree And TIBCO

During the global pandemic, Lufthansa Cargo faced many of the same challenges as other airlines: decreased passenger flights and increased freight requests. With growing demand for medical supplies, electronics, spare parts, and equipment during a supply chain crisis, Lufthansa Cargo had to pivot quickly.

Switching out passenger seats for cargo and bringing freight from the ocean into the air, the company retrofitted passenger planes into what have become known as “preighters.” Although adopting “preighters’’ was one of the most prominent adaptations Lufthansa Cargo made to accommodate market demands, the company still faced pressing issues involving freighter operations amid numerous travel restrictions, crew requirements, layovers, risk of crew quarantine, multi-leg trips, traffic rights, and more.

The company began its digital transformation journey years ago, but the pandemic accelerated the need to modernize additional processes to easily support rapidly changing global conditions. Before the pandemic, Lufthansa Cargo used several legacy applications to support its business processes. IT had to react on very short notice and adjust its systems within days while keeping operations stable and performing day-to-day.

To fuel its digital transformation and better respond to changing conditions, Lufthansa Cargo wanted to upgrade its technology to enable better responsiveness, speed time-to market, improve service support and quality, automate services, and reduce costs.

Lufthansa Cargo worked with TIBCO Partner Mindtree to integrate all its platforms into a single framework: integration, messaging, and APIs. With TIBCO’s comprehensive Connected Intelligence solutions, the Mindtree and Lufthansa Cargo teams created a model that improved Lufthansa’s current capabilities while pushing its transition journey forward.

The company had two main objectives:

  • First, become a digital company for digital booking, pricing, and revenue management.
  • Second, achieve digital fulfillment. Get rid of all the paper, automate processes, improve service quality, and provide a seamless transport journey for clients from original shipper to final consignee. Mindtree was responsible for gathering business requirements, maintaining applications, and migrating software. The TIBCO partner also developed a flexible API architecture on an on premises platform to host services and applications for end-to-end operations. The platform upgrade was key to cloud migration and cloud readiness.

With its new infrastructure, Lufthansa Cargo’s integration platform is now cloud-ready, and it has moved closer to its cloud-native goals. By moving to the cloud, the carrier can easily lower costs and accelerate service capabilities. Mindtree’s devOps support for the core cargo applications helped accelerate transformation and significantly reduce Lufthansa’s time-to-market.

The platform’s API-based programming connects to previously incompatible programs and legacy systems. Lufthansa Cargo reports successfully replacing 20-year-old legacy systems from start to finish and integrating all of its multiple CRMs. Its new integration platform brought together more than 80 applications and systems and bridged a wide data gap.

Besides installing a new API self-service platform, the company expanded its digital sales channels with dynamic spot prices that can be booked immediately. Dynamic prices are generated in real time via the company’s new Rapid Rate Response (RRR) mechanism, also enabled through the new integration platform. Lately, Mindtree has helped Lufthansa Cargo scale-up delivery capabilities according to business demand; development capacity on the central integration platform is no longer a critical resource bottleneck for the company’s digital transformation goals. Working in collaboration, TIBCO and Mindtree have empowered Lufthansa Cargo with integration solutions that bridged the company’s wide data gap and fueled transformation so it can soar to the cloud.


By Mindtree. See the full case study here.

Integrating your Construction Data with Integrity

Integrating your Construction Data with Integrity

There is arguably no more important step in the data lifecycle process than integration. When we move to a new city, into a new home, or start a new career, we are effectively taking all our economic, social, and cultural values into an established but an also unfamiliar environment that we now call our own.

Collecting construction project information is no different. As-builts, schedules, budgets, and contracts are all fluid as the unique data associated with them. Therefore, it’s critical that as your organization or project evolves, there is a reliable system in place to fulfill all your project information needs.

Integrating Your Construction Data with Integrity

What is data integrity?

Data integrity refers to the accuracy, reliability, and consistency of stored data over its entire lifecycle. With construction projects, data can be unknowingly duplicated, outdated, or outright false delaying project milestone deadlines and inflating a project’s construction budget. Adding to the complication, complex infrastructure projects such as airport terminal expansion can have tens of thousands of physical assets from taxiway centerline light cans to air handler units that all need to be inventoried and be included in close-out submittals. Plans can always change, and unexpected audits can always happen. It doesn’t have to be this way.

Why is integration important?

When integrating any data, we must understand that data is dynamic and may not necessarily be suited for an Excel spreadsheet or Access relational database that we all know and love. Data integration makes data more freely available and easier to consume and process by systems and users. If done properly, it can reduce IT costs, free-up resources, improve data quality, and foster innovation all without drastic changes to existing applications or data structures. Certain aspects of projects may involve sensitive security information (SSI) or contain proprietary information that requires limited access. In this era of information security, preventing data leaks and breaches is more important than ever. When the integrity of data is secure, the information stored in a database will remain complete, accurate, and reliable no matter how long it’s stored or how often it’s accessed. You need a system that can put your data security first.

How to integrate actionable data

Data is only useful if it is timely and actionable. Modern organizations and construction projects are drowning in data but starving for information. Data can also take the form of dates, numbers, text, and files holding that data from a variety of applications that are only accessible to certain parties. If data is cleaned, organized, and archived it not only becomes useful throughout the construction project but after closeout too. You can integrate your project data into software from the Acquisition and Planning Phase into the Bidding Phase, Construction Execution Phase to the Project Closeout and Punch List Phase and Digital Twin Turnover.

Who is going to use this data?

Stakeholders have different data needs. A specification sheet showing an airfield electrician the model numbers of all the newly installed taxiway signs is nice to have but a spreadsheet created by the contractor detailing the preventative maintenance plan for the sign panels is far more beneficial. Imagine having this data right at your fingertips without the wait or figuring out who to call. By having a robust and secure system in place to store all your project information, all team members on a project can collaborate on objectives and accomplish tasks on time. Have your data audit ready. All the time.

How can the project team benefit?

Having the project team identify their data needs is essential for the integration process of a project to succeed. This can be a subcontractor wanting to share a multi-layered plumbing blueprint with an engineer or the airport security coordinator needing product warranty information from the security camera vendor. For a project team to benefit from data integration, management must support the system that is under development and involve users in the development process. This can ultimately save the two most important things to a project: time and money.


Luke Fowler, C.M Aviation Practice Lead at MySmartPlans

What will air travel look like in the metaverse?

What will air travel look like in the metaverse?

In a famous interview in 1995, Bill Gates explained the Internet to Dave Letterman, the host of a TV show. Letterman argued that he could listen to the news on the radio and wasn’t sure why would someone need the Internet. Today, we can listen to the radio on the Internet.

As the metaverse is getting a lot of attention, including in a recent article by Johnny Thorsen, many are wondering if it’s another technology looking for problems to solve, if it’s going to be more successful than Second Life (the first attempt at a virtual world) and if it may have an impact on air travel (you can’t fly virtually, can you?).

Let’s understand first what the metaverse entails then let’s have a look into the current trials and a longer look into the future.

 

What is the metaverse? How does it relate to Web3?

My personal understanding of the metaverse is a term that covers computer-generated virtual worlds and the tools to navigate them. As such it is more than AR/VR tools, it is really a graphical interface layer on top of the internet, pioneered by developers of video games such as Minecraft and Fortnite.

In a related space, Web3 is the blockchain-based iteration of the Web, which was built originally on the internet. If you consider blockchain as a secured and decentralized evolution of the internet, designed to handle digital assets or tokens, your navigation layer is called Web3.

If you mix the two concepts – metaverse and Web3, you can visit a virtual world and handle digital assets in this virtual world. By digital assets I mean virtual properties, virtual currencies and other virtual goodies. Following this simplistic presentation of the new concepts, where is the link to physical travel and tourism?

 

Current air travel initiatives with the metaverse

The most recent example of current initiative is the airline Vueling that announced testing the metaverse to support customers will trip planning and to sell (real) tickets. They partnered with NextEarth, a platform in the metaverse, and Iomob, a mobility platform helping with the integration.

Another example is Qatar Airways presenting a virtual cabin crew, inspired by the avatars in the virtual world. This initiative focuses on giving the customers a taste of the inflight experience.

More airlines are exploring the technology based on their priorities: trip planning, product review, etc. Looking at the current initiatives gives us a hint to the future: the metaverse will be a new sales channel for travel and tourism, including air travel – like the internet enabled 25 years ago online sales, and 10 years later mobile phones enable mobile sales. Get ready for “meta sales”!

 

Looking into the future

The future of “meta sales” is two-fold: 1) reaching customers where they are and 2) showing the product to the customers.

As hundreds of millions of customers spend time in the virtual worlds they will come across people and brands, including travel and tourism brands.

In the case of a virtual world that represents the real world – like a digital twin of our world, think Google maps or Google Earth – the navigation in this world will lead to the digital twin of a hotel or of an airport. Airlines may want to offer a visit of their aircraft.

 

Next steps

It is difficult to predict how long it will take before we feel that it is normal to pay a virtual visit to a hotel and to an airline before making a purchase, like it is normal today to visit their website.

This exploration of the metaverse may seem to be a stretch as some airlines still need to fix the basic features of their mobile app. History shows us that new technologies don’t wait for everyone to master the old ones.

Most people and companies will probably adopt a “wait & see” attitude, while watching the pioneers who experiment and commenting from the side lines. As we’ve seen above, some players have already adopted the “test & learn” attitude. Indeed, the best way to predict the future is to build it.

Seven Key Benefits of Aircraft Digitalisation

Seven Key Benefits of Aircraft Digitalisation

Valour Consultancy has published a new report, “The Market for Connected Digital Applications – 2022”, which offers an in-depth analysis of seven key applications for aircraft connectivity.

  1. Document management platforms
  2. Electronic flight folders (EFF)
  3. Crew tablets/cabin reporting
  4. Weather, charting and navigation
  5. Performance optimisation
  6. Point of sale solutions
  7. Telemedicine

 

Bye-bye Paper Logs

 
As Valour Consultancy explains: “Airlines want to see EFBs [electronic flight bags] (and cabin crew devices to a lesser extent) become increasingly holistic platforms which operate in an integrated system rather than as lots of standalone apps which operate in isolation; however, they also want to retain the ability to select solutions from different vendors to suit their users’ needs. Marrying these two desires is one of the major challenges facing the industry, and efforts to do so are already well underway. This trend will be one of the primary drivers of growth over the coming years.”

Airline industry veteran and Jetliner Cabins author, Jennifer Coutts Clay also covered this trend in a recent article for Inflight Magazine. As she writes, the days of paper-based flight logs and charts are at an end. “[T]he advent of apps has fundamentally changed the traditional cabin-management process.” Cabin crew can now use their airline-issued PED (Personal Electronic Device) to offer superior and more personalised passenger service. With access to live information on passenger food preferences, the status of a passengers’ flight connection, or recent complaints about the journey, cabin crew can quickly address issues and foster loyal flyers.

So what does that look like for the passenger journey? Take an example of an average digitally savvy passenger who has booked their reservation online, obtained digital documents for travel, dropped off their luggage at a digital self-drop location, helped themselves speed through the security line and boarded the aircraft using biometric ID. When they board the aircraft, they will likely want to either use the seat-embedded in-flight entertainment (IFE) or stream content to their own personal electronic device from the airline’s wireless IFE platform. A number of airlines have already made their systems compatible to link with passengers’ own electronic devices so they can queue up content ahead of boarding that will begin playing whenever they like at their seat. But more than that, passengers may want to pre-select their meal options, or order a-la-carte from the menu of snacks and beverages available onboard. Having a ‘smart’ cabin means that passengers could use either their PED or their seat-back screen to place their FAB orders. The inventory system in the ‘smart’ galley could automatically assign dishes top passengers seats, updated to crew’s PEDs so they know who gets what, and keep a running stock in real-time so that passengers can be offered alternatives either by the application or the crew when their first choice is no longer available. The data gathered from that process can help inform the airlines’ catering choices, ensuring less food waste onboard, and adequate stock of more popular items on a specific route. Less food waste is not only better for the environment, it also represents a significant boost to the airline’s bottom line.

On a connected aircraft, passengers can also be alerted on the status of their RFD-tracked baggage, and on the status of their connecting flight. Informed passengers will have fewer reasons to seek-out help from customer service representatives either on the ground at the airport or at call centres or on social. That passengers can self-serve through digital tools to be in control of the journey saves both the passengers and the airline time and money.

Valour finds the effort companies are putting into these cabin digitalisation  developments is yielding returns, even in harsh market conditions. “Despite the impact of COVID-19 on airline expenditure, many cockpit and cabin application vendors have performed resiliently in the face of extremely challenging market conditions. Indeed, some have even emerged stronger from the past couple of years. This is because applications such as performance optimisation solutions and electronic tech logs (ETLs) offer considerable cost savings to airlines by either saving on fuel or improving turnaround times,” they write. “Still, significant challenges remain. The market remains fragmented and the dual effects of integration difficulties and dependency on connectivity, which some applications require to have full functionality, means growth is hindered to a degree.”

 

The IoT of planes

 

The integration of various digitalised cabin systems is another challenge ahead, as Valour points, out. But vendors are actively working to ensure that happens.

As I reported for the Runway Girl Network last year, in an interview with Diehl about their new CANSAS [cabin area network system and services] platform, data exchange standards are in the works to support a variety of PEDs, applications, and ‘smart’ cabin systems onboard. The German manufacturer has joined other industry stakeholders, including include Jeppesen, Rolls-Royce, MTU Aero Engines, SAP, and Lufthansa on the OpsTimal Research Project, which aims to define protocols to guide the development of secure interoperable systems.

 

The Role of 5G

 
While recent headlines have drawn attention to ‘teething’ issues with 5G roll-outs near airports in the United States, the technical benefits of this new high-speed connectivity both on the ground and in the air will boost airline digitalisation, addressing some of the barriers to growth that Valour Consultancy identifies.

SITA has offered some insight on this and a promising view of what lies ahead.

“In a world where some three billion of us – and counting – have our world on our smartphones, people’s dependence on universal, ‘always-on’ mobile connectivity is set for surefire growth,” SITA writes. “And this is just as true onboard the aircraft, as on the ground. When our predecessors conducted the first inflight cellular data transmission more than a decade ago, no one would have anticipated having to adjust to life in a pandemic. But in the today and tomorrow of the post-COVID-19 flying experience, new inflight mobile services, offering expanded capacity and capabilities, will become increasingly relevant to airlines and passengers.”

SITA concludes: “While there is a famous lag in the time it takes for terrestrial trends to land in the cabin, it’s just a matter of time before inflight 5G comes onboard. And when it does, it’ll not just enable an improved and unified passenger experience. It’ll have the performance and capacity necessary to handle fast-mounting rates of mobile and connected device usage, and all the innovation potential that lies within.”

How Airline Business Travel Is Changing and Why That’s Okay

How Airline Business Travel Is Changing and Why That’s Okay

A new report by IdeaWorks and CarTrawler reveals how the COVID-19 pandemic, technology and greater awareness of the environmental impact of flying are changing airline business travel.

“It could be a year in which the airline industry recovers some of the profits lost during the pandemic. That’s the picture for leisure travel, especially in the burgeoning premium leisure sector. The recovery of business travel is complex and largely unwritten. Online meeting technology continues to march ahead, company employees are still working from home, corporations are setting carbon reductions tied to business travel, and the airline industry still struggles to find firmer footing. Innovation and resilience saved airlines during the pandemic, and these same traits will allow airlines to adapt to the changes wrought by new communication technologies and carbon emission concerns,” the report’s author, Jay Sorensen explains.

 

Business is tough, even at home

Is the work-from-home trend having a long-term impact on domestic business travel? It may not be the only factor at play, but as Sorensen points out business today is nothing like usual.

“Delta’s presentation during its 2021 Capital Markets Day reflects overall conditions in the airline industry. Domestic leisure travel is rebounding, while international travel has not recovered. Domestic business travel is off 40 percent from pre-pandemic volumes. Other carriers report similar results with United Airlines disclosing a 40 percent business travel revenue reduction and Air France a 50 percent loss of long haul corporate revenue compared to 2019. It’s a vast improvement from the depths of the pandemic when business travel ceased to exist, but still lagging,” he writes. “Commerce throughout the pandemic has largely remained strong. This has certainly not been true for the travel industry, and in particular for airlines. Business activity marched on without the benefit of salespeople, buyers, technicians, trainers, researchers, and board members traveling to factories, offices, and conferences for face-to-face meetings. This once oh-so- necessary activity was replaced with services such as Zoom, Meet, Teams, and Hangouts. Work-from-home changed from an elusive perk for the few to an expectation for the many. Travel, once a vibrant component of the corporate world, was sidelined by the swirl of all these changes. Business travel is returning but it won’t come back the same. Too much has changed during these 24 months, with the pandemic forcing companies to embrace online meeting tools. Savvy airlines will anticipate the changes and tap new areas of consumer spending for travel.”

 

It’s a new climate 

As Sorensen points out, corporate carbon budgets are leading to greater scrutiny of business travel.

“We are in an era in which corporations are actively engaged in climate change issues. CDP is a not-for-profit charity that operates a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Ten years ago, 3,500+ companies disclosed data to CDP; as of 2021 the number is more than 13,000.2 The list includes top airlines in the world, which have climate change scores ranging from A- to F. Environmental concerns were not included in the 2020 assessment of business travel trends; it’s something which must be considered in 2022. Corporate attention all over the world has turned to the issue of climate change and the reduction of carbon. For some companies, airline travel represents the largest share of their carbon footprint,” Sorensen writes.

But more than a challenge, one might argue this is a marketing opportunity. The aviation industry is already committed to drastically reducing its carbon footprint, but being at the lead in the climate change challenge can lead to favourable brand differentiation.

“Companies can use a variety of methods to reduce business travel emissions. This includes choosing airlines that promise to use sustainable aviation fuels, purchasing carbon offsets, substituting rail for airline travel, sharing ground transportation, booking fuel efficient cars and green hotels, taking nonstop flights, downgrading from business class, and substituting digital for actual travel. There are many alternatives for carbon reduction that don’t involve cancelling business trips. Airlines and other travel suppliers that embrace these tools will naturally capture a larger share of the business travel market,” Sorensen writes.

 

Face-to-face still matters to the bottom line

Sorensen finds there are still some key motivators pushing companies to allow business travel.

  • 25% for purposes of sales and securing clients
  • 20% intra-company meetings
  • 20% conventions and trade-shows
  • 10% support of existing customers
  • 10% tech support — equipment and IT
  • 10% professional services — clients and research
  • 5% commuters by air

“The resulting division between customer and internal audiences is approximately 65 and 35 percent respectively. That’s a meaningful distinction, that two-thirds of business travel is customer-facing and thus difficult to replace with technology,” Sorensen writes. “This brings us back to the December 2020 report which predicted a 19 to 36 percent drop in business travel due to the effects of online meeting technology. Developments since then continue to support the prior thesis, along with a new emphasis on the carbon emissions produced by business travel. Projecting reduced levels of business travel should include another caveat. The global economy could come roaring back with a dramatic increase in overall commercial activity above the 2019 baseline. This rising tide would lift all boats, and airline travel could increase above pre-pandemic levels. Whether this increase would be enduring or temporary is yet another unknown. The most likely outcome has the global economy gradually rebounding with a three- to four-year delay before achieving net growth above 2019 levels. The continuance or escalation of war in Europe and any future Covid variant activity would reduce economic growth and business travel activity.”

More on this last point later.

 

Business purpose is less important than high-revenue seating and posting the revenue share of the cabin footprint 

With all of this in mind, it’s also well past time to think beyond the aircraft cabin as little nooks for the affluent (first), the “business person” (business class) and everyone else (coach). These cabin classes were already growing irrelevant before the crisis we face now.

In fact, I’ve been writing about the need for airlines to change this thinking for years and years and years and years. Fortunately, many airlines have changed, by adding premium economy seating and differentiating their economy class product. Growing trends over the last decade hinted at what we are experiencing now, the rise of the freelancer entrepreneur, the advent of travel and lifestyle influencers, and the cautious corporate cutbacks ‘less flash more productivity’ which began during the last recession. They all predicted what Sorensen finds happening now.

“Airlines are already making the configuration change from business class to premium economy. A recent headline in the London Sunday Times proclaimed: Airlines ditch first class but offer fliers more legroom in ‘premium economy.’,” Sorensen writes. (Just imagine the grin on my face right now.) “The largest market potential for premium economy is offered by upscale leisure travellers. Glen Hauenstein, president of Delta Air Lines, said, ‘We believe that through the pandemic, we’ve created kind of a new class of customer which is a high end consumer who wants these products.’ This is a bold statement because new types of travellers are a rare bird in an industry that’s more than a century old. Mr. Hauenstein makes the argument that the loss of business travellers during the pandemic created the opportunity for wealthy consumers to book premium seats, which were traditionally held for corporate customers at high fares. Airline executives are enthusiastic about the revenue to be gained by mining this treasure of leisure passengers. The president of Delta added more rationale for the focus on leisure, ‘Demand for premium products is actually exceeding our coach products with the business traveler out. The big epiphany for us was there’s a much broader demand for this than just business travelers.’ He closes the argument by predicting the initiative will produce attractive profits.”

 

Where were are is not great, but it’s also hardly the end

While these factors and their impact on business class today are certainly something to consider, it’s also important to keep in mind that we are not back to anything like “normalcy.” So any progress or recovery we see is doubly-remarkable for happening in the most adverse conditions. The most pessimistic of us could not possibly have dreamt up this scenario in 2019.

Airlines have been pushing for a relaxation of mask requirements onboard and the lifting of other travel restrictions, and the world wants to move on from COVID, but the pandemic is still very much with us. Add to that the impact of the Russian invasion of the Ukraine, both socially and economically, and we are still living through a prolonged combination of business shattering factors that we haven’t experienced for many generations.

I don’t believe we can compare the current combination of crises to any previous black swan events in the history of aviation. Nor can we really compare this time period to previous historical crises of the 20th century. I would argue that we are currently experiencing is the equivalent of combining two historic crises.

The plague-cycle conditions of the Middle Ages (when it was generally accepted that society would by necessity retreat and isolate, from time to time, to avoid mass contagion and then return to “city life” when the most recent scare passed) most closely resemble to me what we are go through with the COVID-19 variant waves. In other words, we are not yet able to stamp this thing out completely, but we learn to ride the waves and return to life as we would have it for however long we can, retreat again to wait out the worst, and then return again. It’s hardly ideal, but society has adapted to these cycles before, and we can do so for however long we need to. There is always a percentage of people who will venture out, and airlines still have the huge advantage of being a superior method to cross continents. No other transport system in the history of humanity can get people there and back as quickly as a plane. That is unlikely to change soon.

Regrettably, we now also face a serious political crisis in Europe which threatens world markets and which inevitably will affect airline recovery. It’s not enough to point out that the Russian incursion in Ukraine is a humanitarian crisis in Europe. It is also affecting food supplies throughout the world and affecting global energy supplies. Should the crisis continue, or God forbid escalate, a global recession may not be far off. Airlines would have to adapt again.

Both of these events happening at once might seem too much for aviation to withstand, but the human desire to live and even thrive through chaos is stronger than the chaos humans are capable of bringing about. At least, to me, that has been the lesson of history. We have been through any combination of earth-shattering, lifestyle-shifting events many times over the centuries. And yet, here we are—not behind, but far ahead. I am writing this on a device connected to the world which is a useful tool to perpetuate the momentum of business even when ordinary life has come to a grinding halt. It is nothing like meeting with you in person to give you this pep talk, but it will do for now.

Our expectation for recovery to business “as was” in aviation should be tempered. It doesn’t really matter who flies or when they fly as much as the fact that people are flying—despite all of this—because flying is an essential component of modern society. I think it’s really remarkable that Sorensen’s data shows 10% of business flying demand is produced by IT-related needs. Computers have changed our lives for the better, but they are not all of life. And they too—from development to production to distribution—rely on aviation.

What must happen is that governments should continue to recognise aviation as vital social and economic infrastructure. In other words, if things get grim, airlines should get a helping hand. After all, airlines pay lots of taxes.

And, as Sorensen says: “Ours is an industry which knows how to persevere and serve.”

Aviation tech innovation in 2022 – time for a new mindset?

Aviation tech innovation in 2022 – time for a new mindset?

 

Aviation tech innovation in 2022 – time for a new mindset?

 

As the global travel industry finally is exiting the grips of Covid after 2 long years it is worth taking a step back and evaluate the new landscape we now are living in – because there has been some dramatic change in several areas.

The first development might not be fully visible, but a significant number of airlines have experienced a substantial talent drain in their internal technology department while being faced with severe restrain on capital available for new IT projects and products. This sets the scene for a new mindset where airlines suddenly are strongly motivated to work with external startups who have are agile and nimble and capable of providing new solutions very quickly for a minimum fee as they are prepared to engage in “software as a service” projects with “pay as you consume” business models. 

The second development is more obvious, but still worth mentioning – during the last 2 years new technologies such as DLT (aka blockchain), elastic cloud infrastructure, edge computing, NFT and not least Web3 infrastructure have evolved at an incredible pace and are now ready for primetime. The combined potential of these exciting developments is substantial for the aviation industry and will likely result in completely new solutions for distribution, ticketing, payment, capacity planning, yield management, customer service and disruption management to name a few areas. 

The third development is the new operational environment with limited workforce in multiple critical areas combined with high fuel cost and shortage of products in the global supply chain combined with short notice traveler behavior change in terms of preferred destinations as well as advance booking window and price sensitivity. These changes are making it much harder for airlines to plan ahead and implement a traditional schedule and pricing forecast model and therefore require more flexible automated software to analyse the latest information and provide the right recommendations. 

The fourth and final development is the sustainability wave crashing over the global travel industry – gone are the days where airlines could focus on selling seats based on the best price, best cabin class service or on-time performance. Today’s airline customers – both corporate and leisure, are increasingly focused on the sustainability performance of the airline resulting in new demands for transparent operational data such as fuel consumption, SAF blend, carbon offsets, load factor, flight path efficiency and even on the ground tarmac movement energy efficiency. 

When the 4 developments listed above are added together it becomes very clear that airlines must implement a new strategy for deployment of and usage of technology services – and it is highly unlikely the internal IT department will be able to adjust accordingly and start delivering new services and solutions on a few months – or perhaps just a few weeks – notice. The good news is that the majority of the travel tech startup community actually has strengthened during the Covid hiatus and the startups who have survived now appear to be stronger, leaner and better equipped to help the airlines embark on a rapid innovation journey. 

 

See a few of the most interesting new solution providers

 

Obviously it is not possible to mention all the relevant startups in this article, but here are a few of the most interesting new solution providers with a short description of the service they provide. 

Pat (www.pat.ai) : Provides a AI chat based virtual agent solution designed to replace a substantial amount of the work performed in a traditional airline call center including support for complex products such as “round the world” tickets 

Vendia (www.vendia.com) : Provides a blockchain based data engine designed to enable real-time access to and usage of data located in legacy systems or in different cloud environments – all without compromising data privacy and security 

3Victors (www.3victors.com) : Provides a real-time analysis of global travel search data designed to provide airlines with instant alerts when search pattern changes in order to optimize yield management, capacity and schedule planning 

Envest Global (www.envestglobal.com) : Provides a detailed benchmark analysis of the sustainability performance of 50+ airlines designed to provide airlines with a better understanding of their own operations compared to their competitors while also providing the investment community with better insights to the carbon resilience level of each airline 

Tryp (www.tryp.com) : Provides a new type of “inspirational search engine” for leisure travel designed to generate complex package offers in seconds without asking for a fixed destination to start the search which can help an airline sell more seats on to low load factor destinations 

BlackBook (https://blackbookapp.co/) : Provides a super app designed to be a digital concierge for the traveler before, during and after the trip for both corporate and leisure travel which can help airlines provide a richer service and generate increment revenue 

Medical Travel Companions (www.medicaltravelcompanions.com) : Provides a human assistance concierge service for travelers who are unable to travel alone due to medical conditions which enables airlines to service this 100M+ global passenger segment better 

Kyte (www.gokyte.com) : Provides a modern JSON API service designed to sit on top of the legacy airline tech stack without going through the complex and time-consuming NDC development process which enable an airline to offer true digital retailing capabilities to any online travel or ecommerce solution 

Aeropaye (www.aeropaye.com) : Provides a blockchain based smart contract engine designed to automate and optimize the cancel and refund process which can reduce the overall cost of payment for airlines as well as provide a way to service travelers who don’t have credit cards and bank accounts 

Spotnana (www.spotnana.com) : Provides an open innovation platform for the travel industry designed to unite suppliers, agencies and technology providers through a single cloud-based tech stack using open API’s and unbiased content to provide personalized offers directly to the traveler 

These are just some examples of startups who have survived the Covid crisis and are well positioned to help the airlines around the world become more agile and take advantage of new solutions faster without having to develop them internally – hopefully we be able to look back at 2022 in the future and view this year as the beginning of a new chapter in the aviation tech world where airlines work closely together with startups to accelerate innovation and modernize the tech stack rapidly.


By Johnny Thorsen

Retooling revenue management for the entire organization

Retooling revenue management for the entire organization

Retooling revenue management for the entire organization

Over the past two years, uncertainty has become the new normal for airlines. This has made the lives of revenue management analysts and their commercial partners especially hard as the majority of pricing decisions and forecasts are based on historical purchasing patterns.

So how can airlines move forward and focus on driving revenue to pull themselves out of the effects of the pandemic?

The obvious answer is by pursuing anything that can restore top-line growth. One of the smartest ways for airlines to do this is by investing in their products and operations to help them be more competitive in the marketplace. Revenue management (RM) systems, such as the one developed by FLYR Labs, help airlines maximize revenue opportunities and support their business growth.

Business areas that can benefit from retooling revenue management

Network, channel sales strategy, and marketing are among the top three business areas that can also benefit from retooling revenue management.

The network planning and scheduling group builds an airline’s product. Revenue management is the gatekeeper to this network, setting the market fare for access onto flights. They are also one of the first teams to see where a network strategy is succeeding or falling apart and can relay insights back to the network team in order to make the airline’s product stronger.

This insight into forward-looking revenue trends can also be used by marketing and sales strategy teams to influence the right moments to move inventory and volume or when to hold back during times of organic demand.

Do your current RM tools need an upgrade?

Many airlines invest in revenue management as a core competency and see it as key to their success. However, the range of tools available at present depends on the resources of the airline. For example, smaller airlines tend to buy an off-the-shelf product, while larger operators build their own tools and systems. Within these tools, the Revenue Management System (RMS) creates demand forecasts and price optimizations, and the analysts interact with demand and post-processing to arrive at the optimal price for their network.

As the pandemic has shown, there are weaknesses in the majority of existing revenue management solutions. Many have been built so that operators are steering their airlines using strictly historical data. Similarly, other airline groups remain heavily dependent on historical data such as the network planning teams who typically look at last year’s profitability to create next year’s schedule. Although

helpful to look at historical bookings and pricing to predict future pricing, this methodology leads to a lack of reactivity. It only works well when the coming year looks similar to the last 12 months.

In the brave new world in which we now live, predictability is no longer the norm. There is now a growing appetite for change, spurred on by the recent volatility in the market and an eagerness to look at other possible ways to approach the revenue maximization problem.

Improving reaction speeds with the latest RM solutions

The Revenue Operating System® by FLYR applies the latest AI innovations to maximize revenue, deliver measurable results, and add clarity to revenue decisions. Importantly, it differs from traditional revenue management tools in that it delivers much-improved reactivity to the volatility found in today’s marketplace. It can capture the sparks of demand that pop up but aren’t always obvious, applying analyst-grade intuition and decision making and applying it to every flight, every day, throughout the entirety of the network.

The Cirrus platform is built to serve airlines of all sizes and operating models and does not limit startup, low-cost, or network carriers from enjoying the benefits of solution capabilities, as they currently reside with other legacy systems. In fact, The Revenue Operating System offers a configuration specifically designed for the smaller or startup segment of the airline industry.

In addition to revenue maximizing pricing strategies, Cirrus also natively produces load factor and revenue predictions (both common KPIs across commercial airline functions). These metrics can be easily and quickly understood and communicated in order to bolster collaboration and empower data-driving decision making across the organization. This is an improvement compared to most native revenue management solutions whose primary model outputs are only abstract metrics or concepts such as unconstrained demand.

In recent years there have been many buzzwords thrown around between revenue management practitioners in this industry, such as NDC, total revenue optimization, and continuous pricing. However, the market is beginning to see airlines test cases that adopt these advancements in technology. With the introduction of The Revenue Operating System, airlines not only have a solution that offers backwards compatibility into their current legacy processes, but also one that has been built to optimize future technological opportunities – a world where airlines can create more personalized, real-time offers that provide the right product and right price to each customer.

If the past two years have taught the industry anything, it is that flexibility and reacting to change is essential to returning to top-line growth. Revenue management will continue to play an important part in creating competitive advantage, and, as can be seen with Cirrus, the future of revenue management is already here.


Kyle Holden, Head of User/Flight Analytics at FLYR

For more information about FLYR Labs and how we use advanced and intuitive technology to understand context and help airlines achieve their ultimate revenue potential, contact us today

Optimization Software Helping to Address Labor Challenges

Optimization Software Helping to Address Labor Challenges

The aviation industry is rebounding from the pandemic with flights having resumed and passenger confidence rising. There still, however, remain many challenges for airlines, airports and ground handlers stemming from the coronavirus and its latest variants – be it due to labor shortage, ever-changing governmental regulations or highly volatile air traffic. Therefore, from continued unexpected contingencies to labor-related issues, effective planning and resource management has never been more important. That is where optimization software, driven by advanced technologies such as hybrid Artificial Intelligence (AI), Machine Learning and proprietary algorithms, has proven an essential solution.

 

Addressing the “What Ifs” with Staff & Equipment Planning Software

For airlines maintaining on-time arrivals and departures is critical. Managing multiple resources from staff to equipment and planning for their effective utilization requires sound planning. Similarly, ground handlers must content with various operational disruptions, intercepting and resolving them quickly. For airports to function optimally, both airlines and ground handlers too must operate efficiently. Without this, there is a domino effect which has negative consequences across all areas. Helping to drive better planning is feature-rich optimization software. It supports optimum workload and shift demand planning, infrastructure utilization. For example, an airline leveraging AI-driven planning software can be applied to develop long-term, mid-term and short-term resource planning scenarios for staff and equipment. It can improve the assessment of flight schedule changes using “what if” analyses. It can drive significant improvements across many areas. They range from customer service, gate services and passenger bus services, to aircraft services, aircraft movements, loading/unloading, baggage services, cargo line maintenance, crew transport and turnaround supervision.

 

By applying staff and planning software, many benefits can be derived. They include:

  • Better adherence to Service Level Agreements (SLAs) with SLA-based planning
  • Maximization of resource revenues
  • Optimal balancing of airport, airline and passenger demands
  • Improved service times and safety performance
  • Reduced capacity-related delays
  • Enhanced customer service achieved by more consistent, reliable operations

 

Flexible Shift Schedules

When it comes to supporting optimal flight schedules, managing staffing fluctuations is critical. Employee illness, family needs, workers being detained due to a major traffic jam, or other contingencies can arise at any time, causing a last-minute disruption to a shift schedule. The pandemic has only increased these circumstances. Robust planning software facilitates the automatic planning of rosters with built-in flexible shift times so that fluctuations in staff requirements can be managed. The software provides precise demand forecasts and target staffing level capabilities that reflect flight schedules.

 

Optimized Workforce Planning

Pre-pandemic labor shortages have been further exacerbated by increasing staff absenteeism due to individuals contracting COVID-19 and forced to endure quarantine periods. In addition, we have seen many staff members fired due to their failure to comply with vaccine mandates and others who have resigned from their jobs because of these mandates. Leveraging advanced workforce planning solutions, airlines, airports and ground handlers gain agile decision-making support to achieve appropriate staff levels, improve management of work volumes and related staffing capacities, support work process guidelines and improve forecasting of future human resource demands. These solutions facilitate the development of optimized staff schedules, which not only help management meet critical staffing demands, but also enables staff to secure schedules that best address their preferences. This, in turn, helps promote increased staff satisfaction, productivity and retention.

Today’s most advanced software solutions incorporate extended monthly planning features that enable planners to perform their role covering periods of six weeks instead of having to develop plans to address four to six individual scenarios to cover this timeframe.

 

User-Friendly, Feature-Rich Solutions

Color-coded weekly visualizations, enhanced Gantt chart, user-friendly navigation and other features support ease of use and convenience. As a result, planners can optimize their time, planning and decision-making to develop effective schedules to a high degree of precision and detail. They can easily create alternate plans, schedules and what if scenarios that maximize efficiency and resource utilization. When accompanied by robust employee portals, optimization software enables workers to easily log in to view their work schedules and any schedule changes. This is in contrast to tedious paper schedules having to be distributed to employees and changes communicated verbally. Mobile apps further support online workflows, quick roster assignments, workload adjustments and the easy, digital communications of this information.

Pertaining to COVID-19 status, a digital tracking capability of the most advanced workforce management solutions allows for COVID-19 positive cases or those deemed suspect to be entered into the system to mark infected or potentially infected employees for quarantine and blocking from work assignments.

 

Among the projections planners can now achieve with AI-driven staff planning software are:

  • Workload demand by qualification
  • Impact of using part-time staff
  • Workload characteristics such as work volume and peak periods

 

The software also helps planners in answering key question such as:

  • How can we maintain or increase service levels?
  • What are the relevant flight and workload key performance indicators (KPIs) for internal communications?

 

Workforce Management Solutions

In addition to advanced planning solutions, workforce management software solutions empower planners with the ability to address a myriad of criteria ranging from an organization’s corporate culture and governance requirements, to its service level agreements (SLAs) and government and industry regulations. These solutions deliver critical performance features, including:

  • Daily working time demand planning that accommodates an airline’s, airport’s and/or ground handler’s needs in updated real-time
  • Staff vacation planning functionality which captures, verifies and automatically approves vacation requests, while balancing them with minimum staffing requirements
  • Automated schedule creation and publication that supports various planning strategies (i.e., fixed shift patters, free rosters, working time flexibility, use of external service providers, etc.)
  • Categorization and management of staff absences, while automatically checking them against SLAs
  • Informing employees regarding schedule changes, while continually monitoring planned and actual deviations
  • Communication of each employee’s deployment status via an employee portal
  • Classification and aggregation of working time, payroll, accounting, timesheet data processing and corrections, and working time evaluations
  • Creation of reports and dashboards
  • Easy changing of business requirements without the need for programming.

 

Supporting the Recovery

While the industry has a long way to go to return to its pre-pandemic levels of operation, a recovery is clearly underway. Challenges, however, have persisted. For example, the new year started off with a rash of flight cancellations. In the United States alone, over 8,000 flights were cancelled from January 1st through January 3rd, impacting more than one in ten scheduled flights based on data from the tracking service, FlightAware. Many of these cancellations came as a result of the surge in coronavirus infections among staff members. Major weather events have also wreaked havoc on airline operations. These and other disruptions will always be factors the industry must address. What is helping the industry better address the “what if” challenges are optimization software solutions that facilitate greatly improved resource planning.

 


Dr. Wolfgang Vermöhlen, Product Manager Aviation Division, INFORM GmbH

Airlines Adopt New Revenue Management and Continuous Pricing Strategies to Compete Amidst COVID

Airlines Adopt New Revenue Management and Continuous Pricing Strategies to Compete Amidst COVID

What do you do when your crystal ball cracks?

 

In a panel discussion led by Sinead Finn, Founder, Affinity Ltd., Bryan Porter, Head of Commercial — EMEA, Accelya Group, Jason Coverston, Director, Office Domain, Navitaire, an Amadeus Company, Sophie Dekkers, CCO easyJet, Achim Tyler, Vice President of Global Sales, Infare Solutions, and Krassimir Tanev, Chief Commercial Officer, Blue Air each shared their views on changes in the marketplace since 2019 and the rapid adaptation required to stay ahead, particularly in revenue management systems.

“In the last 20 months or so, is it’s very much a switch towards away from looking at historical behaviour and historical data into much more forecasting and forward-looking; which is a challenge, because who knows whose crystal ball is right,” said Sophie Dekkers, CCO, easyJet. “But we are having to switch and use much many external data sources to help make sure the points that we’re looking at in terms of forecasting are correct… In terms of the revenue management system itself, it’s trained to price at certain points with certain low matter. We’re in a very different time now, with a much later booking window. We were at about 75% of our sales were coming in the last three months [before travel]. Recently that changed to around 63% now [booking] in the last three months for travel next three months. That’s still very near-term [bookings] versus what the system had learned over the last 25 years, built to look much further out.”

 

“How do you stimulate demand? Once they get to the website, the conversion is there because the prices are attractive at the moment.”

 

Customer behaviour has also shifted somewhat in terms of apprehension to book, although Dekkers said the airline had seen a marked improvement in conversions, returning to 2019 levels. “But it’s the demand traffic in the first place that isn’t coming in. Once they come in, they see the prices, and they’re converting. So, our conversion rates are the same as in 2019. But it’s the demand that’s still depressed. If we look at searches on Google for flights, generically, they’re still down about 40% of what they were from 2019. That demand is the challenge—how do you stimulate demand? Once they get to the website, the conversion is there because the prices are attractive at the moment.”

Krassimir Tanev, Chief Commercial Officer, Blue Air, explained that the company as a whole had reshaped its business model from a hybrid budget airline to a true low-cost airline, with a greater focus on ancillaries.

“We have deployed a robust commercial plan over the last 12 months, focused on three main pillars that underpin our developments. The first one was network development, or rather, network enhancements, adding more value to our customers by focusing first on primary airports. We have tried our best to expand our operations rapidly and flexibly into the gaps that full-service carriers have opened up. We’ve opened up new markets like London Heathrow, Amsterdam Schiphol, Milan, Linate, and Frankfurt, just to name a few. The second priority for us was the customer experience elevation. Here, we also made significant progress. We used this time to upgrade our products. We have added a new fleet with a state-of-the-art, cost-efficient 737 Max 8 aircraft. And on top of that, we have also enhanced our customer experience capabilities and customer notification platforms–we’ve added new chatbots. Our digital systems, we’ve improved overall. We focused on adding more value to the customer experience. And last but not least, we focused a lot on actually driving growth in ancillaries. We know that most carriers have reported weaker or softer yields throughout the pandemic. But one thing that we delivered very well was that we provided more opportunities to our customers. We increased our ancillary yields by more than 50% thanks to our new ancillary strategy, where we have unbundled our products further. We have created new product features and new product bundles for our customers. And we have deployed dynamic ancillary pricing, just to name a few of our actions. But more importantly, we have enhanced, or we have increased our exposure to the VFR (visiting friends and family) markets, which has proven to be much more resilient compared to other market segments.”

 

“We work very quickly with existing customers to start consuming new types of datasets”

 

Bryan Porter, Head of Commercial — EMEA, Accelya Group, shared some examples of how the company’s airline customers had adjusted RM when historical data proved less useful. “Norwegian started using Accelya’s airRM revenue management solution back at the end of 2019. So we implemented a solution that effectively used historical behaviour to predict future behaviour. We built in all the forecast models, and, of course, along comes COVID–none of that is effective anymore. [How we deal with that is] we work very quickly with existing customers to start consuming new types of datasets. This is taking in market insight data and competitive fare data and utilising that to optimise prices. We also started pulling in data from the look-to-book activity that we’ve seen on some of our customers’ websites and other data that allowed us to focus on price optimal optimisation on an intraday basis. So if there’s a sudden, unscheduled event or a sudden fluctuation, our customers were able to cater for that. We effectively moved midstream with Norwegian. At the same time, we had customers coming to us—Iberia being one of them—who had barely been using their traditional RM system and suddenly found that it wasn’t fit for purpose. So they started working with us, implementing some of the solutions similar to what I’ve just described for Norwegian.

“Another example is we have seen the rise of new low-cost carriers that have effectively started during the pandemic. They don’t have any huge debt burden, and the cost of entry into the market is lower than it’s ever been. So we’ve had airlines coming in, who have no historical data to optimise their prices effectively, and are looking for new tools that can suddenly get them into the market. It’s been an interesting time for us. We’ve managed to onboard 11 new customers during the pandemic—our team’s been very hard at work. We’ve effectively introduced 280 discrete additional value points to our product set. We focused on new data integration, better visualisation to allow revenue managers to identify trends and start making more active decisions, as well as to look at automation and intraday optimisation.”

 

“One of the things that we’re working on with some of our newer customers is total offer optimisation.”

 

Porter also discussed how the company’s acquisition of FareLogix has helped refine the pricing of both fares and ancillaries. “One of the things that we’re working on with some of our newer customers is total offer optimisation. Through our flex merchandising module, we’ve started revenue managing ancillaries. We can start using price optimisation across the ancillary products and start doing that with bundling as well. [We’re] working with a large European airline currently to effectively couple our airRM revenue management solution with our merchandising solution. We are introducing AI (artificial intelligence) and ML (machine learning) to enable ‘willingness to pay’ models. We’re not just looking for an entry bid price, but ultimately at what the customer is willing to pay and utilising that to optimise price.”

Achim Tyler, Vice President of Global Sales, Infare Solutions, said data supply to inform RM models has increased.

“We’re looking in the future, then looking into historical data. We don’t throw away any information we collect—it’s still available. If you want to go back to 10 years and further, if you want to look into the market, we still do that. But last year and this year was always about the future… We invented a product called Market Trends, which observed the scheduled flights versus the flown flights, how prices were changing how quickly they were changing, how [many flights were] cancelled. That was last year. This year… there’s not too much churn. We focused this year more on optimising costs for our customers in the way we source our data. We did a couple of projects regarding API access to data—NDC API projects… We have already about ten customers on NDC APIs. NDC is the most efficient way for airlines to access the information they have on their website, which is our quality aim… We also see shopping data and ancillary data as a newer trend, talking about dynamic pricing and continuous pricing. You can imagine it’s going to be much, much more data. We work together with airlines and RM vendors to make this most efficient for all of us. A lot of data needs to be collected and consumed. You have to run all the algorithms, on top of that, to get to the really good revenue results.”

 

“One of the things that we’ve found is that our crystal ball is not as good as the crystal balls that our customers have—and they each have a different one.

 

Jason Coverston, Director, Office Domain, Navitaire, an Amadeus Company, also mentioned the importance of working closely and collaboratively with airlines to collect the correct data and refine predictive models. “You’re just talking about how much data it takes to react,” he said. “One of the things that we’ve found is that our crystal ball is not as good as the crystal balls that our customers have—and they each have a different one. So we try and get out of the way of our customers. For example, [one of our] customers realised they

needed to react more quickly [to] data coming in from Infare. We have a team dedicated to helping customers operationalise the data they get. So, we came in, and we created a pipeline. They were able to implement exactly the logic and algorithms they wanted. We take a very non-structured approach to deliver value to the customer. When it came to the algorithm choosing fares and exactly how to write the logic around how to compete, that was completely up to the customer. But they needed a bit of help in operationalising that because it wasn’t part of their out of the box system. So, whether it’s [data sources like that], or maybe somebody’s got a new Google TensorFlow model that they need to get into the system. We don’t use our crystal ball to decide [for our customers what they need, such as] you need willingness to pay, you need probability, you need x, y, and z. Instead, we say, we’ve got some patterns that we’ve seen to be successful, and they’ll show you what other customers have done. But at the end of the day, you can invent entirely new steps in the process so that you can be agile as the world changes from month to month.”

 


By Marisa Garcia

 

Revenue Management and Pricing

 

RM, continuous pricing and Demand Forecasting Panel Discussion: Rebuilding and adapting forecasting models with different inputs and future strategies to ensure that we capture demand?

>> Watch on-demand on our website

American Airlines’ Alison Taylor on Enhancing Travel Retailing to Drive Recovery

American Airlines’ Alison Taylor on Enhancing Travel Retailing to Drive Recovery

During a breakout chat conducted at Aviation Festival, London, Alison Taylor, Chief Customer Officer, American Airlines, shared some of the airline’s changes to its retailing strategy as it adapted to the COVID-19 pandemic.

One of the strategies has been offering customers menu options to book ancillaries and services on-demand on the day of travel, such as requesting wheelchair assistance, adding a lap child to the booking, getting a day pass for the airline lounge, or booking preferred seats.

“Even now, you can buy flagship dining—which was only ever for our first and business class—for that day for that airport. They’re opening at JFK, Miami, and soon they’ll be LA. We’ve tried to become more nimble at the options we offer for the customers and how we deliver those offers. Of course, NDC always helps us with that.”

 

“We want people to be able to purchase where they want to purchase”

 

Taylor said the airline had employed an “educational” approach to merchandising, informing customers on the options available to them more than pushing a sale or a particular sales channel. “We want people to be able to purchase where they want to purchase. It could be via GDS, or it can be direct. That’s not for us to worry about. We just want the customers to be able to purchase it, but it has enabled some things for us on the retailing side that we’ve never done before.”

Rich content options available through ATPCO and Routehappy have helped the airline get creative in presenting offers to different customers. “We had rich content that we could supply whether you’re a leisure agency, corporate agency, or corporate direct. For us, that freed up that content. We have a lot of leisure operators absorbing that into their systems, making sure that it’s enabled through ATPCO and NDC. That has helped us to deliver the content they needed. We dealt with some cruise lines as well. [The COVID pandemic has] broadened the audience that wants that [rich content]. They had to have a lot of information available to their customers on travel, health protocols, safety, wellness, and the leisure agencies needed that quickly. We could do that by working with Routehappy and ATPCO… We’ll continue that journey now, but it was very much at the forefront of the pandemic because the leisure operators needed to inform their team members and also the travellers.”

Taylor shared that the pandemic has also resulted in a marked shift in buying habits and preferred sales channels and increased the demand for customer support teams.

 

“One of the things that we needed to do for returning customers—who were younger—[was to simplify enrollment].They weren’t going to fill out a whole screen of forms.”

 

“It’s quite different depending on the country, of course. When you talk about American Airlines now, one of our major markets is the US, without a doubt. In the US, we have seen that many of our travellers are buying through agencies because they need that extra helping hand, and they want the servicing aspect of being able to travel. I’ve been seeing many operators here while I’m in the UK, and they have seen that shift as well. So I’m sure we’re not the only ones. But, at the same time, we have seen new customers, booking on AA dot com, and new customers becoming AAdvantage members. We had to change our AAdvantage Program very quickly. One of the things that we needed to do for returning customers—who were younger—[was to simplify enrollment]. They weren’t going to fill out a whole screen of forms. They just needed a one-click to join the AAdvantage Program and become members. We did that very quickly. It’s something we’ve been talking about but hadn’t done. We did it in a matter of weeks, which greatly helped the number of young millennial memberships for AAdvantage. Also, even our corporate brand card—we have MasterCard, Citi, Barclays, of course, very strong here in the UK. We even had to change how we talked about our partnerships onboard and on the ground, changing the scripts to appeal to a different audience when we send to different channels…[Another] shift for us was people needing more servicing. We have large servicing centres, and we added almost 3000 [staff] to reservations. Because those that did book direct, and all those agencies, just needed more servicing. The calls were much longer. The calls to our reservation teams are five times longer than normal because they’re asking about border closures, border openings, and of course, what you’d expect about [travel health] protocols.”

 

“…recognize our customers and understand what they may need without constantly asking them the same questions again”

 

Personalization continues to be a priority for American Airlines, Taylor shared. “Personalization has been on our roadmap for a while—this is really important for us so that we can recognize our customers and understand what they may need without constantly asking them the same questions again. It even means—eventually—we can serve up different surveys for them as well…We just want to be customer-centric in using our data. I’m going to give you an example. If we know that you never buy flowers on Valentine’s Day, why are we serving you up via AAdvantage, something to do with a florist, right? So [we want] to make sure that we’re relevant at every touchpoint. Maybe we also know that you don’t open emails at a certain time. We can be relevant with that in our communication or the offers we are providing you, whether on the ground or in the air. It also helps us to adapt our offers. We want to get to the stage where we know that if you’re in your seat, we can utilize our IFEC data and understand what you watch, so we serve that up to you more naturally. That’s down the track, but those are the things that we’re working through. We’re working through with AAdvantage Program on entertainment, understanding whether you enjoy lounges, as well. Data enables all of that. Our customer journey is very important to us. My title is Chief Customer Officer because we want to put the customer at the forefront, not just commercial or business deals, etc. This is important for us. We’re completely enhancing our AA dot com app to make sure that we’re at the forefront of that. What the app will eventually serve you up will be more personalized as a result.”


By Marisa Garcia

Distribution

Panel: How does American Airlines plan to offer enhanced travel retailing to help drive recovery?

>> Watch on-demand on our website

Context is Everything

Context is Everything

Context is everything: decoding post-pandemic demand through new data points

 

Airlines need to sell the right product to the right customer at the right time and at the right price. Any additional information that can be utilized to make that happen provides much-needed context to those pricing decisions.

In traditional revenue management systems, observations can be made about demand leading up to a flight departure, the capacity of a flight or route per day, and the impact of holidays or regional and global events. However, the legacy science, systems, and processes that used to drive commercial decisions for airlines are unable to keep up with the new, volatile environment that the industry has found itself in.

Even before the pandemic, adaptability was key for airline strategy. Anything from extreme weather conditions to a marketing initiative from a competitor can impact demand and make forecasts redundant. Being able to apply context to pricing puts airlines in the best possible position to gain revenue uplift.

Adaptability was at the core of how Cirrus™ was designed and enabling airline analysts to understand and interpret context means they have the confidence to use our insights to make better commercial decisions.

 

How does Cirrus provide extra context to pricing decisions?

 

FLYR’s Cirrus technology maps every piece of commercial data or input to all others, even in the noisiest or most data-sparse environments. This includes bookings, schedules, competitors’ schedules, pricing or capability, ancillary transactions, and third-party demand signals.

By mapping and understanding this context within our airline customers’ networks, we can accurately forecast future performance and set appropriate pricing strategies, even for markets that have not been flown before, or which have seen dramatic disruption in their environment.

Key areas we provide context on are:

  • Forecast – Airline forecasting is more critical than ever. However, legacy systems are limited by data scarcity resulting from the use of a narrow scope of metrics heavily reliant on flight-vs-flight and market-vs-market information, none of which will quickly surface clear trends at the required level of granularity. Cirrus solves this challenge by giving airline executives and commercial teams a new superpower, Forecasting at the Speed of Change. By identifying similarities across markets, origins, destinations, flight durations, departure schedules, and competitive pressure, Cirrus’ Deep Learning algorithms can identify trends before they are visible in data-sparse subsets of the airline network. With the right insights readily available and continuously updated, airline teams can, in real-time, start to resolve complex questions that used to be answered with guesswork.
  • Geography – Cirrus tracks the length of each flight segment and which airports are operated into and out of. Similar airports are mapped via embeddings, for example, the South Florida markets or the LA 5, to better predict pricing. This analysis can be done with far greater insight and automation.
  • Seasonality – Cirrus models seasonality with any persistent shifts in demand reflected. So, in the post-pandemic world, we can assess what the new seasonality may look like, as we cannot rely on previous years’ data. Using legacy systems can work can take months, as airlines have access to this information but are unable to utilize it efficiently. Cirrus uses machine learning to absorb this data and turn it into a richer set of insights than is possible using legacy ruled-based systems.
  • Itinerary – Cirrus can forecast Willingness To Pay (WTP) for a given market and differentiate WTP between customers looking to fly non-stop, on convenient single connection routes, or on more complex journeys.
  • Speed and Granularity – In traditional revenue management systems, if system demand falls short of forecast, the airline might take more than a week to observe and then react through broad system-wide changes in parameters. Instead, every day Cirrus learns about demand on an individual flight level, observing bookings continuously, forecasting those changes daily, and amending prices accordingly.
  • Competitor capacity and activity – Cirrus utilizes real-time competitor pricing when making revenue optimal decisions and when displaying market trends. The platform also knows when an airline’s strategy is optimal compared to a competitor’s actions. Cirrus’s competitive strategy is complex and highly depends on context, for example, the type of competitor and how many competitors there are for a certain route. For example, if you are only up against one non-stop competitor on a route, the best action may be to not match on price. However, if there’s another competitor in the market, it might be suboptimal to ignore competitive pricing. Airlines can price closer depending on the competitive landscape, in a game-theory-style strategy.

 

How can analysts manage these context data points?

 

Cirrus brings analysts the ability to combine all these context points within a single interface. Previously, analysts would hold historical and current performance data in separate places, often managed through spreadsheets, and then use another program to influence decisions. In Cirrus, analysts have access to all the above context data points and can see forecasts, revenue, load factor, and competitor positioning to review how pricing compares.

However, Cirrus is not 100% self-driven. If an analyst prefers to implement a pricing strategy different from that of Cirrus, there are many familiar pricing influence options available to the user. For example, when looking at their own pricing relative to competitors, they can choose to meet a competitor’s pricing by only 20% or 50%, or adjust by a specified Dollar amount.

The data afforded through Cirrus is incredibly rich. Analysts have access to over 150 metrics within the user interface, and if they want to explore any specific metric, they can click on it and see a trend graph. The ability to overlay this amount of rich, granular details together is rare in legacy revenue management software.

 

How does context affect the baseline expectation and resulting revenue?

 

For every flight or market in an airline’s network, Cirrus generates a ‘baseline expectation’ for revenue and load factor. This baseline is a much more accurate alternative to year-over-year metrics or historical averages, which cannot be relied upon due to COVID-19. Once established, the baseline can objectively compare actual revenue and load factors as it builds over time.

We can characterize how similar or dissimilar airports, routes, departure times, and competitor presences are across the network in the form of a ‘vector’. Such vectors help produce market – and flight-specific – forecasts and strategies that perform even under the most volatile conditions.

FLYR runs true A/B tests to compare flights that remain underpricing control of a legacy revenue management solution to those managed by FLYR. Using this comparison, we can measure revenue and load factor uplift. Typically, we see a significant revenue lift of 5-7% amongst our customers.

For more information about FLYR and how we use advanced and intuitive technology to understand context and help airlines achieve their ultimate revenue potential, contact us today.


Author:

Brian So, Lead Revenue Management Analyst

Agility, Confidence, and Transformation

Agility, Confidence, and Transformation

FLYR | Highlights of 2021 and What 2022 has in Store

 

While the past 18 months dealt unprecedented disruption to the aviation industry, 2021 also became the year during which airlines recognized their need for an accelerated digital agenda to maximize efficiency, plan with confidence, improve their agility, and create more alignment between different commercial teams.

At FLYR, our objective has always been to enable such agility and confidence for commercial decision-makers, spanning from analysts to commercial leaders that seek to align revenue management, capacity planning, and marketing teams.

For us, 2021 was a year of rapid growth as our vision rapidly aligned to that of airlines around the world, culminating with the demonstrations of our technology and its results at the World Aviation Festival in December.

Here’s to the Mavericks

 

Our origins sit with a small team that simply wondered what would become possible if cutting-edge Artificial Intelligence were applied to airline pricing and forecasting. Back then, we were a maverick group of technologists with grand ambitions. Now, our crew is on track to reach 300 strong in 2022 with a presence across the US, Europe, Middle East, and Asia.

These days, we are fortunate to also count among our crew many former airline operators and revenue management experts that recognized the need for change, becoming mavericks in their own right by driving positive change in an industry they’ve known for decades.

Some examples of such industry veterans are Rob Haun driving customer deployments, Jon Ham driving continuous performance improvement, Kyle Holden assuring customer adoption and confidence, Kartik Yellepeddi letting science lead the way, Dennis Michon aligning 15+ product teams, Niels Colémont enabling our ancillary optimization, and Matt, Dominic, Clayton, and Jan carrying the torch to airlines in need!

Interested to join our Maverick crew? Find the latest opportunities here.

 

Great Backers for Great Ambitions

 

Notable in 2021 was our $150M Series C capital raise led by Laurence Tosi’s WestCap, Jeffrey Katzenberg’s WndrCo, Silver Lake, Peter Thiel, JetBlue, and others. We were fortunate to welcome WestCap’s Will Cunningham to our board of directors, jointly focused on a deep partnership between WestCap and our teams.

The fundraise makes for one of the largest private investments in the area of revenue management, forecasting, and airline business intelligence. With it, we can place big, bold bets and reduce time to value for our airline partners.

Other examples of our growth ambition can be found in the rapid succession of acquisitions such as Faredirect to expand our ancillary offerings, xCheck to closely interconnect revenue management and marketing tools, and Bonanza to enable real-time, dynamic offer management.

 

Our Alliance with Air New Zealand

 

At this year’s World Aviation Festival in London, a contingency of FLYR crew members provided over 2000 attendees with live demonstrations of our product, user interface, implementation processes, analytics, and change management infrastructure.

The event was the perfect platform to announce our strategic alliance with Air New Zealand, which will see us working together to collaboratively develop advanced AI-based applications that utilize our Cirrus™ software platform. The alliance marked an expansion of the relationship between Air New Zealand and FLYR which began in 2020.

Looking ahead to 2022, the collaboration with Air New Zealand will see co-located teams out of Air New Zealand’s headquarters in Auckland, also forming the blueprint for similar alliances in the works with other FLYR customers. After all, we consider ourselves a partner first, and a vendor second.

 

The Revenue Operating SystemTM

 

Planning throughout their cautiously optimistic recovery, airlines are announcing new routes, migrating capacity at a rapid pace, launching new ancillary offerings, and reevaluating their distribution strategies.

In an environment exemplified by volatility, the need for a Revenue Operating SystemTM is more critical than ever, aligning all commercial teams and their decisions around the best pricing technologies and common ground truth. To that end, we are committed to deploying our own capital in helping airlines adopt our technology at a rapid pace and plan for a bright future without delay.

We thank our airline partners for their trust in us and for serving as our product’s brain trust, our investors to support our bold vision for the future, and most importantly, our FLYR crew for living and breathing the change we believe in.


Author:

Alex Mans, Founder & CEO of FLYR

COVID Crisis Spurs Airlines to Double-Down on NDC and Other Digital Merchandising Projects

COVID Crisis Spurs Airlines to Double-Down on NDC and Other Digital Merchandising Projects

During the closing keynote panel on Day One of the World Aviation Festival, London 2021, a panel of airlines and experts in distribution updated attendees on their progress with NDC programs and answered questions on how the COVID crisis has affected the pace of new programs to improve distribution and merchandising. There was almost unanimous agreement that the crisis had helped accelerate these programs.

The expert panel consisted of Mike Croucher Group CTO The ATCORE Group; Steve Domin, CEO and Co-founder Duffel; Bas Hooft’t, Distribution Director Merchandising, Air France/KLM; Tina Larson, Director Online Travel Agencies and Distribution Hawaiian Airlines; Antii Tolvalnen, Vice President Revenue Management and Pricing, Finnair; and Sebastien Touraine, Head, Dynamic Offers, IATA.

“Back in 2020—the beginning of the crisis—we asked as part of the distribution Advisory Council..what we should be doing..”

 

As IATA’s Sebastien Touraine explained, “Back in 2020—the beginning of the crisis—we asked as part of the distribution Advisory Council..what we should be doing. They said, please don’t stop NDC. And actually, some of the airlines have been using this crisis to reflect and to use some new capabilities—continuous pricing has been a key investment for some.”

Tina Larson, Director Online Travel Agencies and Distribution Hawaiian Airlines, shared: “Prior to COVID, we just started getting traction on new merchandising initiatives, NDC, and marketing projects. Then COVID struck. I remember the day that our flights went to 13% of our original size, thinking COVID would kill every single one of these projects. But I have to credit our leadership team because they came to us and said, ‘Don’t stop. You guys need to keep moving. Because when we come out of this, we need to be more agile, more nimble, and we’re going to have to fiercely compete in the whatever the new normal is.’ Since then, we have invested heavily in data. Our data was an absolute mess before. We had disparate sources—my data and your data mentality. We worked together as a commercial team to build out this commercial data domain, and from there, we talked about what we wanted to do with this. That led to our revenue management team upgrading our revenue management system, expanding our merchandising capabilities…we took advantage of the downtime to double down on the plumbing. Restructuring is going to be so important when we’re back fiercely competing.”

Antii Tolvalnen, Vice President Revenue Management and Pricing, Finnair, suggested that the momentum to improve distribution will be ongoing, and COVID crisis or not, as part of the airline’s core objective—to reach the end customer and meet their needs.

“What’s behind the transformation that we are doing?”

 

“What’s behind the transformation that we are doing? It is not a digital transformation or a distribution transformation. It’s a transformation of the business model from B2B to B2C. We must keep in mind that we try to serve our customers. That is the main target. Then, of course, all those customers will not find our content on our direct channels. They’d rather use an agent or an OTA, a Meta channel, or something like that. Then it’s essential for ourselves as a sales channel. Again, we must think about how our products find the customer. I think this will be something that will add value to the whole value chain, but maybe some weights in the value chain will change in future. That might be a painful transformation to get [through], but I think we just have to make sure that everyone understands that we are just talking about the customer in the end.”

Bas Hooft’t, Distribution Director Merchandising, Air France/KLM, suggested, “GDS is morphing towards the aggregator models…we need them to get our reach out there. We’ve never said this is not about the interaction or moving everything direct. We need travel agencies. We are a global company. We are connecting a lot of passengers around the world. We can’t be everywhere, and there’s a role for aggregation in the marketplace. But that model is changing. We announced our Amadeus contracts, and this week we’ll announce another one.” Air France/KLM announced a new NDC Distribution agreement with Travelport. “We are also leaving space for new aggregators.”

Steve Domin, CEO and Co-founder Duffel, said they have also seen a lot of activity on NDC during this downturn. In terms of the company’s role in the new distribution landscape, Domin said: “At the end of the day, the work that we do as intermediaries, or aggregators, in the broadest sense of the term, is understanding the needs of the airlines and the products in a way that it an agent can do individually. I think we’re spending a lot of time and resources on the technology side to make that product available in the best possible way for the travel agent. Since the GDS have done that for a long time, we are trying to do it on new rails.”

“Every airline in the future—as the service tends to get more sophisticated—I expect will have different requirements of what they expect to personalize that offer.”

 

Domin believes there are opportunities to bundle over types of content. “Products like insurance are very popular. That’s an enormous opportunity for the airlines to push insurance through the NDC channel.” On the complexities of integrations, he said, “I think I kind of look at the problems in two ways. One is the complexity for us understanding the product that the airlines are pushing, then breaking it down to the travel agents in the way that they can display it, [but still] in the way that the airlines envision it. The other side is how can we get the data to the airlines that they need to create these dynamic offers. Every airline in the future—as the service tends to get more sophisticated—I expect will have different requirements of what they expect to personalize that offer.”

In the end, though, airline distribution is always about getting very complex information to be digestible by consumers logically, in a way that is easy to process, shop, compare, and book. That consumer demand for simplicity and ease of shopping is the key differentiating factor, in terms of competitiveness, regardless of the distribution channel. The critical engine of progress in airline distribution is a never-ending quest to simplify flight search.

As Mike Croucher Group CTO The ATCORE Group put it, “We’re nine years into NDC, and it’s coming to fruition, and people integrate in that way…When NDC was first there, they played off on the GDS and put their channels in place. And now they’re doing deals with the GDS to distribute NDC through it. The initial NDC proposition was to avoid aggregators, and now we’re seeing aggregators aggregate NDC content because it’s complex again, and they’re taking the complexity out. So I think there’s always going to be platforms to take the complexity out of distribution.”

 


By Marisa Garcia

 

Retail

Closing Keynote Panel: Delivering on the promise of Retailing, Dynamic Offers, NDC and the future of One Order?

>> Watch on-demand on our website

Intelligent airlines: Discover the new potential – embrace, emerge, and evolve

Intelligent airlines: Discover the new potential – embrace, emerge, and evolve

The aviation industry was among those most impacted by COVID-19. While the industry is still reeling under the pandemic’s aftereffects, we can also begin to spot accelerated technological innovations that would have otherwise taken years.

Technology is evolving at lightning pace, making it a great time to embrace it, emerging as a future-ready, intelligent airline. Airlines can tap technologies like Artificial Intelligence (AI), Machine Learning (ML), big data, assistive technologies, mixed reality, NLP, cloud computing to derive the following benefits:

  • achieve operational excellence through real-time actionable insights
  • overcome interdepartmental silos
  • develop interoperability and collaboration
  • captivate many other smart decision drivers

Sounds great, but the obvious next question is about the ‘how.’ How do you leverage tech? Let’s find out.

How can airlines use technology to succeed in the post-COVID world?

Here are some tech-enabled steps that can add value:

  • From the curb to the gate in 30mn, with an almost touchless experience at the airport.
  • Augment ancillary sales yields by using intelligent merchandising platforms.
  • Create an ideal baggage handling experience by leveraging digital bag tags and advanced technologies.
  • Optimize turnaround processes by using computer vision and machine learning (ML) models.
  • Reduce the impact of disruption by identifying the early stages of disruption and optimizing a recovery plan.
  • Decrease maintenance and engineering efforts through predictive and prescriptive analytics to avoid unplanned maintenance and overhead expenses.
  • Automate back-office jobs by leveraging Robotic Process Automation (RPA).

 

Such an intelligent airline can be a perfect blend of smarter people, optimized processes, and state-of-art technology. This article will explain how airlines can sculpt the future of air travel by focusing on a seamless customer experience and intelligent operations.

Seamless airline customer experience.

Customer experience is the new battlefield where airlines can use the latest technologies as their most potent weapons. They are now discovering how AI and ML can improve customer experience and meet modern customer demands by focusing on personalization.

With rapidly evolving mobile technologies and ease of connectivity, new-age travelers have developed a habit of exploring, connecting, and buying on the go. The attention span of today’s buyers is also quite limited, implying that the current way of non-personalized engagement will not work. Airlines need to rethink how they can sell according to the evolved market conditions and traveler expectations. Fortunately, AI-enabled technologies have the power to make this happen. As has already been proven in the retail industry, contextualization, and personalization—two related AI technologies— have made consumer engagements much more successful.

In AI-based personalization, the system learns the user’s likes, dislikes, and preferences to create personas and customer segmentation.

AI-based contextualization means that the system considers the current situation and circumstances with general world knowledge, which often affects the decision for or against a specific option.

Airlines can use AI to develop an intelligent merchandising capability that combines personalization and contextualization in real-time. This helps determine the most relevant offerings that meet customers’ travel needs. It also maximizes the conversion rate and gives a one-click buying experience to the customers.

At the same time, digitally mature airlines have begun adopting IATA standards such as New Distribution Capability (NDC) and one order to modernize their product retailing and create a transparent buying experience. NDC gives airlines the capability to easily sell ancillary and rich content directly to aggregators like OTA and GDS through a set of standard XML APIs.

Apart from NDC’s capabilities, AI models can also help airlines build an intelligent and advanced retailing system to offer more value to the customer. NDC enables airlines to sell flights and ancillaries in a retail way. AI-based technologies allow airlines to add a personalized and contextual wrapper to achieve a higher look-to-book ratio, allowing airlines to transition from non-personal selling to retail-driven personalized selling.

Inlaying agility in airline operations

Airline operations are complex and have many challenges like inter-departmental silos, manual processes, and low collaborations. These challenges then lead to operational inefficiencies. Innovative technologies can help by creating an intelligent airline ecosystem and inlaying agility into operations. Let’s examine three such areas.

Enabling data-driven insights and collaboration

Airlines can build a collaborative ecosystem of integrated operations with a well-informed and connected workforce. Empowered digital employees increase productivity, break internal silos, and produce cross-functional insights. AI/ML data used in real-time for predictive analysis and operational recommendations ensure increased efficiency. All airline processes – crew management, passenger management, turnaround operations, baggage management – can be made more efficient and reliable using data and AI/ML-driven technologies.

For example, an airline can leverage computer vision and machine learning technologies to enable reliable turnaround management. The flight turnaround process is crucial for every airline. It should be optimized to reduce delays, save costs and satisfy customers with on-time flights. The turnaround of aircraft comprises all tasks that occur from arrival to departure. These activities include boarding and disembarking passengers, cabin cleaning and catering, aircraft maintenance and refueling, loading and unloading cargo, security checks, etc. Various stakeholders (boarding staff, BMA staff, security, ramp agent, OCC, controller) collaborate to ensure an on-time flight. However, this objective often fails because they often lack a common source of information and are not connected at all times. Now, imagine, what if they could be?

Airlines can leverage computer vision and AI/ML to build a model that associates each task with an object visually identified from the camera stream at the airport. The following table depicts the tasks:

This model can connect all the dots, simultaneously evaluating the performance of the turnaround activities, alerting stakeholders if a process has not yet started or is likely to be delayed.

The use of AI/ML has created many such use cases, which has significantly improved the efficiency and predictability of the airline’s operations.

Digital M&E functions

Any airline’s engineering function offers a vast scope for digitization, potentially saving costs and increasing productivity and safety. One such area is the digitization of maintenance records. Airlines must maintain detailed aircraft usage and maintenance records, including any changes made to the aircraft’s configurations and components. Any failure to comply or not manage records properly can directly impact the aircraft’s resale value and increase the time of returning the leased aircraft to the lessor. Enter RPA!

Robotic Process Automation (RPA) can be used to identify missing paperwork, data entries, and inaccuracies. The maintenance process can be streamlined by digital maintenance records, increasing visibility, and access (anywhere). This data can then be shared with internal audit teams and third-party MROs to plan scheduled maintenance. Airlines can also use AI/ML on these data insights for proactive and predictive analysis to reduce unscheduled maintenance overheads.

Another use case involves using smart glasses for aircraft inspections and recording feedback through audio recording and pictures from smart glass. This can significantly accelerate the overall process by not only making it error-free but also hassle-free.

Minimize disruption impact

IROPS (IRregular OPerations) is a situation in which a flight doesn’t operate as scheduled. The cause may be bad weather or technical faults or crew shortage or delayed connecting flights or anything else, leading to flight delays and cancelations. Often, the effect of the disruption is enormous as it affects passenger experience, crew duty times, along with a loss of revenue and reputation.

Airlines, as per the preferences and availabilities, adopts various recovery methods simultaneously to overcome these impacts, such as:

  • Delaying subsequent flights by a few minutes, keeping in mind the minimum connection times and crew duty limits.
  • Re-allocating passengers by moving passengers to other available flights.
  • Swapping resources when aircraft or crew members are unavailable for the next flight – other available aircraft or crew at the same airport replace the original ones.
  • Utilizing any reserved resources that are generally kept on standby.
  • Upgrading and downgrading an aircraft.
  • Dead-heading and ferrying aircrafts: The airline crew is transported to a disrupted airport as a passenger, and a empty plane is hauled to attend to an unscheduled flight.

So far, many airlines have struggled with two challenges:

  1. a) Evaluating the exact impact of disruptions
    b) Choosing the appropriate recovery method that can reduce the overall commercial and reputation impact.

While the methodologies to predict potential IROPs situations and plan better are quite limited, AI/ML technologies have opened a new dimension. With real-time data insights, AI/ML-based predictive models can help airlines identify the early stages of disruption and measure their impact over the short and long term. These inputs can also optimize schedule recovery (including aircraft, crew, slots), connections (including passengers). This enables a passenger-centric recovery approach that reduces the overall commercial and reputational impact of disruptions.

Clubbing the IROPs methodology with a customer personalization engine can elevate the quality of service. IROPs-impacted customers can receive some specific services based on their history and consumer preferences, potentially converting an otherwise stressful experience to a much better one.

Conclusion

The advent of innovative technologies opens new avenues for airlines in the field of passenger service and digital operations. It is time to board the seamless, intelligent airline driving innovation through disruptions. Are you ready to take off on the future of aviation? Nagarro’s digital and aviation expertise can help you reach new highs. Reach out to them at explore.tnl@nagarro.com to discuss more!

 


Written by Vinay Yadav, Nagarro

The lessons learned from providing payment orchestration for airlines

The lessons learned from providing payment orchestration for airlines

International airlines have, by necessity, some of the most complex payment ecosystems of modern merchants, and an equally diverse (and thus demanding) customer base to match. The COVID-19 pandemic led to unprecedented levels of stress being placed on systems which, in many cases, were already outdated to begin with, highlighting the need for innovation and automation throughout the payments process.

CellPointDigital CEO Kristian Gjerding, explores the myriad challenges faced by airlines in the wake of the pandemic – both within and outside of the payments space – and how merchants in all verticals can leverage these learnings to make payments easier for their customers.

An industry understandably concerned with security

Fundamentally, the airline sector is justifiably risk averse when it comes to every aspect of its business. External threats to security, technology malfunctions and simple human error can, in the worst-case scenario, lead to loss of life, leading most airlines to favour tried and tested systems in place of new initiatives. Furthermore from a commercial perspective, airlines on the whole have high overheads, and operate at such low margins, that making any changes to their existing systems could significantly damage – or improve – their bottom line.

The high-risk nature of change leads to a reluctance to embrace new technologies, which is perfectly epitomised by the flagship model, the Boeing 737, which, despite taking its first flight over 50 years ago, is still widely used throughout the industry today, even though there are far more efficient models available on the market. This culture of risk aversion extends to airlines’ payment ecosystems, with many carriers preferring to persevere with traditional and cumbersome payment solutions, or sub-optimal partnerships with a single PSP, rather than embracing the benefits of new, emergent platforms and solutions.

A complex payment eco-system in a complex market

By definition, international airlines serve customers from all over the world, operating in multiple different currencies and jurisdictions. This leads to many nuanced challenges in allowing customers to pay how they want; different cultures prefer different methods, with some regions preferring digital options over physical cash, for example. Currency barriers can also create friction during the shopping and payment experience, leading to failed conversions. Additionally, consumers have many different profiles, from business travelers to families on long-haul leisure breaks, each with their own unique payment needs.

As a result, airlines need to offer a wide variety of payment methods around the world, managing a high volume of cross border transactions and offering multiple different currencies to match their consumers’ needs. The complexity, however, isn’t just on the customer’s side. Managing a payments ecosystem that can successfully meet the needs of an international customer base means building relationships with several different acquirers and PSPs in every territory the airline serves, giving them multiple options to mitigate risk and optimise their costs and acceptance rates.

Given the cumbersome process of establishing and integrating new acquirers, payment method providers or PSPs, airlines often encounter difficulties in rolling out the right payment eco-system they need for their network, or scaling platforms to support a new destination. This leads to friction for customers looking to buy, change or refund their tickets.

COVID-19; a catalyst for digital adoption & automation

These challenges for airlines and their consumers were brought to bear during the COVID-19 pandemic, which placed unprecedented stress on airlines’ traditional payment systems. As consumers on a global scale tried to refund tickets in the event of mass flight cancellations, airlines had to be on hand with alternative options to keep capital in house, largely by offering rescheduled dates and issuing vouchers wherever possible. At a time when refund requests hit their peak, the need for and benefits of automated solutions to offer and issue refund vouchers as an alternative became self-evident.

Mass ticket cancellations also led to a near overwhelming amount of chargeback requests which, again, many airlines didn’t have the technology in place to manage efficiently. Carriers that didn’t have the capability to automate the management of unjustified disputes had to either incur sizable costs to increase their back-end resources to handle the volume, or simply write revenue off altogether, leading to significant negative financial impact in both scenarios.

Society’s wider shift towards digital and contactless payment methods was also accelerated during the pandemic, with customers increasingly demanding socially distanced, COVID-secure payment methods, and airlines who readily embraced this change saw the benefits. One example of this is Cellpoint Digital client, Southwest Airlines, which incorporated Apple Pay into its payment mix in late 2019. The platform has since become their most popular alternative payment method in the wake of the pandemic and continues to grow month-on-month.

What the pandemic highlighted overall was the rigidity and lack of automation of most airlines’ current payment solutions, and the need for more agile payment orchestration solutions to better serve their customers and optimise their payment ecosystems on a global scale.

A new dawn for the airline sector?

For an industry that was already averse to risk, and faced challenges in innovation and technological development, COVID has spearheaded digital adoption and exposed the need for more efficient payment systems. The changes brought about by the pandemic will be felt for years to come, and airlines will need to adapt to survive. Like airlines, the merchants who embrace the widespread shift to new technologies such as payment orchestration, and invest in allowing their customers to pay how they want, will see the greatest benefits in the digital-native future.

 

 

Undisrupt: Bringing Power Back to Airlines

Undisrupt: Bringing Power Back to Airlines

The travel industry has been disrupted

​​Historically, the relationship between airlines and travel agencies was one in which the airlines truly had all the power. The travel industry at that time included a highly fragmented set of agencies for distribution and each one of those agencies had their own segment of the market. During this time, the airlines, the travel brands themselves, had most of that control.

Today OTAs have grown into global entities with massive reach and the ability to scale infinitely to capture as many customers as possible. This upended the control of the value chain to where the brands, the airlines, no longer had the same standing that they did before. The disruption this caused in the travel industry persists today.

OTAs have been able to commoditize the airline, creating no differentiation in their products, or in the airline’s brands. Airlines struggle to bring offers in front of customers at all the various touchpoints, whereas OTAs can present offers at every touchpoint, including powerful comparison-shopping tools. OTAs have intercepted airlines’ customers and captured an outsized percentage of travel demand.

The opportunity to “Undisrupt”

When COVID-19 hit, non-essential travel came to a halt and the travel industry was severely affected. As a result, OTAs reduced their spending in paid media and on innovation, creating an opportunity for airlines to close the gap and move a higher percentage of sales to their direct channel.

Direct sales are not only more cost-effective, but they also build brand loyalty between the passenger and airline and provide more leverage to the airline in the market overall. When passengers purchase flights through OTAs, airlines become a commodity to the customer.

“Airlines have recognized for years the importance of driving online direct sales to reduce dependency on Online Travel Agencies for market share and own the relationship with the customer. This increases loyalty and lifetime value of their passengers,” said Seth Cassel, Co-Founder, and President of EveryMundo. “COVID-19 has been damaging for airlines, but it has also been a wake-up call: airlines must do more to own their customer relationships directly, and they require technology from partners such as EveryMundo to accelerate this effort. We are seeing energized motivated airlines use our fare marketing software like never before.”

We believe now is the time for airlines to take advantage of this unique opportunity by prioritizing customer acquisition and direct sales to drive customer lifetime value. It is time for airlines to “undisrupt” the industry and take the power back from OTAs. A key factor in capturing travel demand is improving the customer experience, including user engagement technology, enhanced visualization in offers, calls to action, and more that supersedes that of OTAs. By utilizing technology airlines can increase website traffic, improve booking conversion rate, enhance online user experience, reduce their dependance on OTAs, and drive brand engagement on and off the airline’s website.

Passengers Welcome Biometrics, IATA Finds

Passengers Welcome Biometrics, IATA Finds

According to the latest Global Passenger Survey (GPS) published by the International Air Transport Association, passengers welcome the efficiencies of biometric identification at control checkpoints.

The survey results of 13,579 participants from 186 countries show that passengers want to spend less time queuing and would want to use biometric identification if it expedites travel processes.

“Passengers have spoken and want technology to work harder, so they spend less time ‘being processed’ or standing in queues. And they are willing to use biometric data if it delivers this result,” said Nick Careen, IATA’s Senior Vice President for Operations, Safety and Security. “Before traffic ramps-up, we have a window of opportunity to ensure a smooth return to travel post-pandemic and deliver long-term efficiency improvements for passengers, airlines, airports and governments.”

Biometric Identification

The notion of using biometrics as a form of identification has had a significant lift in acceptance.

  • 73% of passengers are willing to share their biometric data to improve airport processes (up from 46% in 2019).
  • 88% will share immigration information (including health questionnaires) before departure to expedite processing.
  • 51% would be willing to share their biometric data with partners, including hotels, car rental companies, if it helps to facilitate their onward journey.

Part of that increase may be attributable to the successful technology roll-out thus far.

  • 36% have experienced using biometric data when travelling.
  • 86% of those who have used biometric data to travel were satisfied with the experience.

The top three touchpoints where passengers welcome the ease of biometric identity are:

  • 51% Entry Immigration
  • 47% Exit Immigration
  • 34% Security check

These coincide somewhat with the current low touchpoints in passenger satisfaction during the journey. Border control immigration is the lowest rated satisfaction touchpoint (62%). Security satisfaction rates were slightly higher at 71%, topping transfers (68% satisfied) and baggage collection (69% satisfied).

However, passengers still care about the security of their biometric data.

  • 56% of those surveyed indicated some level of concern about data breaches.
  • 52% of passengers want clarity on who their data is being shared with
  • 51% want to know how their biometric data is used/processed

Less time spent at the airport

Passengers still want to cut short the time they spend at the airport, the survey reveals.

  • 69% said that when they are travelling only with carry-on luggage, they would like to get through the airport process in under 30 minutes
  • 73% said that they would like to get through the process in under 45 minutes when they travel with carry-on and check-in baggage.
  • 85% of passengers want to spend less than 45 mins on processes at the airport if they are travelling with only hand luggage.
  • 90% of passengers want to spend less than one hour on processes at the airport when travelling with a checked bag.

Passengers may still welcome time spent enjoying the airport’s facilities and concessions, but they would rather cut through the stress-inducing parts of the journey and get to the pleasurable ones.

Overall, queues are unpopular, which should surprise no one who has ever stood in a queue.

  • 55% of passengers identified queuing at boarding as a top area for improvement.
  • 41% of passengers identified queuing at security screening as a top priority for improvement.
  • 38% of passengers identified queuing time at border control/immigration as a top area for improvement.
  • 54% want to see queuing cut down at boarding time, and 29% expressed dissatisfaction with queueing in the jet bridge.

With the lifting of travel restrictions around the globe, as airlines ramp up to reopening, this is a particular area of concern. The new travel requirements may exacerbate queuing.

“With additional document checks for COVID-19, processing time at airports is taking longer,” IATA explains. “Pre-COVID-19, the average passengers spent 1.5 hours in travel processes (check-in, security, border control, customs, and baggage claim). Current data indicates that airport processing times have ballooned to 3 hours during peak time, with travel volumes at only about 30% of pre-COVID-19 levels. The greatest increases are at check-in and border control (emigration and immigration) where travel health credentials are being checked mainly as paper documents.”

Solutions to congestion

IATA touts two mature programs underway, working with industry stakeholders to give travellers the expedited air travel experience they crave. These can also avoid airport crowding, as passengers return to flying under new COVID-19 related travel protocols, cutting queues and reducing the risk of airport congestion brought about by new document check requirements.

  • IATA Travel Pass app can handle the complex mix of travel health credentials that governments require. It gives passengers a safe and secure way to check the requirements for their journey. They can get test results, scan their vaccine certificates, verify that these meet the destination and transit requirements, and share the information effortlessly with health officials and airlines before departure and when using e-gates.
  • The One ID initiative will help the airline industry advance so passengers can move from curb to gate using a single biometric travel token such as a face, fingerprint or iris scan. It will require government acceptance of digital biometric credentials, a process that is still ongoing.
    e-gate

As IATA’s Careen points out: “We cannot just revert to how things were in 2019 and expect our customers to be satisfied. Pre-pandemic, we were preparing to take self-service to the next level with One ID. The crisis makes its twin promises of efficiency and cost-savings even more urgent. And we absolutely need technologies like IATA Travel Pass to re-enable self-service, or the recovery will be overwhelmed by paper document checks. The GPS results are yet another proof point that change is needed.”


BY MARISA GARCIA

The travel industry has a payments problem. It’s time to fix it.

The travel industry has a payments problem. It’s time to fix it.

The financial impact of the COVID-19 pandemic has been huge for the travel industry. Finding a new way to work with its acquirers is going to be critical as we look to recovery.

The travel sector and the payments industry have never had a simple working relationship. There are several examples of travel industry failures, such as the collapse of Thomas Cook and Monarch Airlines, that have concluded with the travel operator and their payments partner accusing the other of being the source of the failure. This happens when the acquirer withholds funds to cover the cost of the chargebacks it will be liable to repay customers if the operator goes out of business. Taking this precaution is of course understandable, but it is the view of the travel business that this withholding of cashflow at a critical time creates enormous pressure for them and in fact is final straw that triggers the very collapse that the acquirer is seeking to protect itself against.

And of course, the pandemic has brought that strain in the relationship into even sharper focus. Global travel and tourism lost almost $4.5 trillion in 2020. For context, while worldwide gross domestic product contracted 3.7 percent, travel’s contribution to the global economy reduced by 49.1 percent.

And it hasn’t only been only financial challenges that the travel sector has suffered since the outbreak of COVID-19; there have been operational issues to face as well, as they were forced to process many millions of reservation cancellations. To make matters worse, some acquirers reacted to the adverse market conditions by either exiting the sector altogether, or resetting the terms of business with their travel clients. This has put even more pressure on the relationship between the two parties in a situation where the travel business has options because fewer payments partners that will work with them.

The heart of the issue: future delivery payments are high risk

Much of the friction that can occur between the travel sector and acquirers stems from the fact that travel is considered a high risk vertical by the payments industry, and this was true well before the pandemic. This is true of all sectors where long periods of time occur between the consumer’s payment and the date that they receive the goods or services. In the travel industry this period is typically 60-90 days.

If the goods or services are not delivered for any reason, be it cancellation, unforeseen circumstances such as COVID-19, or the business ceasing to trade, it is the acquirer who is liable for repaying the customer. When the high transaction values typically seen in travel are factored into the equation, acquirers can find themselves exposed to tens of millions of pounds worth of risk for a single travel business. Many simply do not have the appetite for that level of risk.

A new solution: safeguarding addresses the issues created by holdbacks

As we have already discussed, risk is usually managed by the acquirer through withholding cash as collateral. But there are several drawbacks that makes this a sub-optimal solution for the travel sector. The drain on liquidity is an obvious one, but in addition it is often unpredictable how much acquirers will withhold to offset the fluctuating risk, and that makes decision-making and forecasting extremely difficult. Withheld funds also cannot be shown on a company’s balance sheet.

So it will come as no surprise that travel sector is trying to find a new way of working with acquirers as they strategize recovery and growth beyond the pandemic. And progressive payments companies including Paysafe are also looking for new solutions to work more harmoniously with the sector, specifically replacing cash collateral with a trust-based mechanism called safeguarding.

With safeguarding, the travel business still lodges a cash reserve with a third party. But instead of being repaid in large sums often at the acquirer’s discretion, the funds are released steadily on a planned basis either when or shortly before travel takes place.

This new way of working addresses both the liquidity and transparency issues the travel industry has consistently voiced its concerns about. Funds held in trust can also remain on the company’s balance sheet.

Working towards a better future

Cash collateral was the go-to solution for managing acquirers’ risk exposure in the travel sector for years. But this system is no longer fit for purpose. Safeguarding will soon become the most common mitigation process for travel merchants and acquirers. It will enable airlines and the rest of the travel industry to avoid tying up critical funds that would be better spent on running and expanding great businesses, as well as attracting investment through making balance sheets healthier.

Paysafe’s latest whitepaper Safeguarding the future of travel: Why its time to rethink payments and liquidity in the travel industry is available to download now.