airlines.iata.org
Issue 01: Tuesday 23 October 2018
Airlines.
Airline Industry Retailing Symposium
SPONSORED BY
October 23 - October 25, 2018 | Rome, Italy
Welcome!
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Welcome to the inaugural Airline Industry Retailing (AIR) Symposium.
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This event is an important response to market dynamics. Changes in distribution and payment are paving the way for innovations in airline retailing, while at the same time benefitting consumers. Initiatives like the New Distribution Capability (NDC) are enabling airlines to become true retailers and to control the offer in every sales channel. Meanwhile, digital transformation and big data are creating huge opportunities for personalization and customization. The result is a new era in which travelers will have more transparency and greater flexibility to tailor their journey when they shop for travel, while airlines will be able to offer a richer, more customized retail experience, and own their content, regardless of shopping channel. The AIR Symposium provides a forum to examine this vision of airlines as retailers. There is much to discuss. If airlines are to be retailers,
Travelers will have more transparency and greater flexibility to tailor their journey when they shop for travel, while airlines will be able to offer a richer, more customized retail experience
for example, which organizations outside aviation should we look at as our benchmark for success? Should network and low-cost carriers have different retail strategies? What about for business and leisure? Where does dynamic offer creation fit? Supporting these creative efforts requires a superior order, delivery and service proposition. For example, how can additional payment options delivered by airlines create greater value to consumers? The AIR Symposium will feature sessions on all these fascinating questions, in addition to presentations from recent winners of AIR Hackathons, AIR Competition finalists, and the AIR Think Tank. Enjoy the event!
Aleks Popovich, IATA Senior Vice President, Financial and Distribution Services Subscribe free to IATA’s Airlines. magazine at airlines.iata.org
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Tuesday 23 October 2018: Issue 01
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Issue 01: Tuesday 23 October 2018
“Airlines need to unlearn the way they are running their business processes and switch from a process-centric to a customer-centric mindset.” Eric Leopold, IATA's Director, Transformation, Financial and Distribution Services
Making the switch to retailer Should airlines be retailers?
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The answer is clear, says Yanik Hoyles, IATA’s Director, New Distribution Capability Program. “If one believes that the airlines which win are those that listen to the customer, then my conclusion is that airlines need to move to the world of retailing… and do it pretty fast,” he says. Based on research carried out by IATA and other organizations, there are some key and recurring themes in airline customer feedback. Customers want to see all the features of a product when they shop, and they want to be able to compare “apples with apples.” They also want to be connected in real-time and receive information on the move. Finally, customers are willing to share personal information if they believe they may get a targeted offer in return. Encompassing all this is the fact that most people now enjoy highly digitized experiences in many other aspects of their lives. In short, customers expect airlines to be retailers.
What are the main challenges for airlines to achieve the retailing vision? Too many airlines still focus on enhancing existing processes, says Eric Leopold, IATA’s Director, Transformation, Financial and Distribution Services. “But the world has changed drastically, and the expectations of airline
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customers have gone digital,” he adds. “Airlines need to unlearn the way they are running their business processes and switch from a processcentric to a customer-centric mindset.” The other big challenge is setting up the right environment. A few carriers have created a digital company to implement new services. Some are even aiming at becoming digital companies that happen to fly aircraft, their focus being on offering a 100% frictionless experience to their customers. “These digital airlines are ready to compete with digital retailers,” suggests Leopold. Hoyles accepts that the path to becoming a true retailer can be challenging and will be disruptive. For a successful journey toward airline retailing he suggests that airlines should: •
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Be customer focused and embark on a journey toward retailing with the customer as the key driver; Assess the digital drivers for change that
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• • • •
can be leveraged during the journey, such as social media, IATA industry standards, and new payment models; Build a medium to long-term business plan that captures not only the goals but also the critical success factors and the key strategies to get there; Involve its value chain partners as early as possible and listen to them; Ensure it has the contractual freedom to do what it wants to do; Have a supportive CEO leading the vision and strategic direction; Know what the resulting airline retailing organization will look like and be prepared for some significant internal disruption.
What can airlines learn from beyond the industry? Many different industries have already been disrupted by the digital revolution. In the transport and hospitality area, AirBnB and Uber are often used as examples, but digital disruptions don’t stop there. “Other disruptions show how new entrants managed to capture the customer relationship without owning any asset,” explains Leopold. “For example, YouTube and Netflix have become the world’s largest online entertainment companies. YouTube lets users create their own content. Netflix allows users to customize the content—to watch what they want when they want to watch it.” Leopold believes it is clear that the question is not if the airline industry will be disrupted, but when, and how. “Airlines need to learn from other industries and get ready for major changes,” he concludes.
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Issue 01: Tuesday 23 October 2018
“ONE Order is a significant simplification of back-office processes. It will make airlines more efficient and provide customers with a superior service proposition.” Sebastien Touraine, IATA's Head, ONE Order program
Together on the ONE road
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ONE Order is an industry standard that creates a single access point for all aspects of service provision contracted through an airline. In essence, in a ONE Order environment, when an airline customer makes a purchase— regardless of what is bought and who supplies the service—just one record is created, easily tracked by customer and suppliers alike. Multiple reservation records as well as e-ticket and electronic miscellaneous document (EMD) concepts will be phased out. A standardized expandable reference will replace the single access point for customer orders by third
parties, including interline partners, distribution channels, ground handling agents and airport staff. Through ONE Order, aviation stakeholders can exchange real-time information on travelers, and their travel purchases, enhancing data consistency and accelerating reporting. “ONE Order represents a significant simplification of airline back-office processes,” says Sebastien Touraine, IATA’s Head, ONE Order program. “It will make airlines more efficient and provide customers with a superior service proposition.” Reducing complexity won’t be easy, however. Over the years, airlines have developed bespoke IT ecosystems, replete with their own jargon. The
passenger name record, containing the traveler’s identity and itinerary sends information to a departure control system, while the e-ticket functions as a record of payment and mechanism to track delivery. This organic development has run its course, says Touraine. The internet has enabled universal connectivity and airlines must take advantage if they are to offer customers the service they expect. ONE Order is currently in testing, and IATA hopes pioneer airlines will be using the program—or a version of it—by 2020. “If airlines want to be better retailers, selling more than flights, ONE Order is essential,” Touraine sums up. “It is the way to go. But this is a major industry project and every stakeholder has plenty to do in the next few years.”
Airline IT solutions providers’ best kept secret SPONSORED BY
Say you’re an airline and your passenger services systems (PSS) are costing you $100 million a year. You’ve heard of NDC and ONE Order and your trusted IT solutions providers are telling you these are just new communication protocols. Adding these to your PSS and support multiple versions will cost more, and still you have the same complexities. You still don’t know who your passengers are. Reducing complexity is the first goal of NDC and ONE Order. When you
reduce complexity, you have access to real-time information about your passengers, real-time accounting, and the list goes on. When you take that problem to your IT solutions providers, you will hear that they cannot “eliminate” complexity, but if you want it so bad they can “hide” the complexity, for an additional cost. And now your PSS bill is $125 million. Let’s think about this. If your IT solutions provider is billing you a $100 million, what is their incentive to bring your invoice down to $25 million? What
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is your leverage to make that happen? NDC is about eliminating complexity, not hiding it. By eliminating complexity, you reduce the number of processes between you and your passengers, which makes for happy customers, and reduces your IT costs significantly. Can this be done in a scalable, secure, and reliable way? The answer is yes. Visit JR Technologies at the AIR Symposium (booth 23) and see it firsthand. By George Khairallah, CEO – JR Technologies
Tuesday 23 October 2018: Issue 01
On the brink of revolution Aviation business models are changing dramatically as new technologies and pressures come to bear on the industry. Nawal Taneja, Airline Business Strategist, Ohio State University, called it a ‘revolution rather than an evolution’ at the IATA Global Airport and Passenger Symposium in Athens earlier this month. Customers, technologies, regulations, and new complexities are forcing the changes, he said. Customer demands are increasing, for example, empowered by new technologies. Those same technologies are enabling new competitors to enter specific areas of customer service and affecting today’s travel norms. Meanwhile, regulations are accumulating and affecting every aspect of industry. This is just one of many factors increasing the complexity of aviation. The pressure of personalization is another. “Why will it be revolutionary?” asked Taneja. “Think about driverless cars. Why would you pay to park at the airport? The car will drive itself home. So that revenue stream and all those parking spaces will be gone.” Airside could be equally disrupted. Small, automated air vehicles could fly thin routes from non-airport bases while ultra-long-
range aircraft will get a traveler directly from Sydney to London or New York, bypassing airports in Asia or the Middle East. Taneja accepted that some airports will remain congested due to the enormous growth in air travel demand, but felt that the industry “could perhaps be overestimating” the need for airport development. “These changes will happen, and aviation businesses must be prepared to adapt,” he concluded. “We must look at how the lever of technology can be used to re-platform the industry.”
“Think about driverless cars. Why would you pay to park at the airport? The car will drive itself home. ” Nawal Taneja, Airline Business Strategist, Ohio State University
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Issue 01: Tuesday 23 October 2018
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