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Issue 02: Wednesday 30 October 2019
Airlines.
2nd Airline Industry Retailing (AIR) Symposium
SPONSORED BY
October 29 - October 31, 2019 | Bangkok, Thailand
An era of “complete retailing” awaits
Thai Airways opens AIRS
ISSUE 01
Thai Airways President Sumeth Damrongchaitham said it was a “great honour” to welcome delegates to Bangkok at yesterday’s Grand Opening of the 2nd Airline Industry Retailing Symposium. “Thai Airways is playing a key part in developing the Eastern economy corridor, and we see opportunities for positive growth,” he said.
The airline industry is entering the era of “complete retailing” but it still has a long way to go, Atmosphere Research Group President Henry Harteveldt told delegates. He defined complete retailing as “the ability for an airline to dynamically create, price, publish and sell relevant personalized offers throughout the traveler’s journey and manage the order’s creation, payment and fulfillment. “Flight shopping should equal shopping, [but] today it is painful,” he said. It needs to become more intuitive and value focused. “Passengers expect us to serve them the way they want to be served.” Airlines are aware of the issues. According to Harteveldt, more than 8 of 10 airlines surveyed say they need to “substantially improve” their retail capabilities by 2023. The good news is that the traveling public wants to be wooed. According to research Harteveldt presented here, 7 of 10 passengers would welcome relevant personalized offers from airlines. However, only 20% said they receive offers that reflect their interests or lifestyles. Research shows that retailers see a 5% order value bump when they extend personalized offers to customers. In other good news for airlines, passengers believe that fare unbundling gives them more control over their budget, even if they complain about being nickeled and dimed by airlines.
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Day 01 highlights 29 October, 2019
“Flight shopping needs to become more intuitive” Henry Harteveldt, President, Atmosphere Research Group
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Issue 02: Wednesday 30 October 2019
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Innovation at your fingertips The International Air Transport Association (IATA) announced the launch of Accelerate@ IATA, in partnership with Plug and Play, the Silicon Valley-based innovation platform and accelerator. The agreement was signed here by IATA’s Senior Vice President, Finance and Distribution Services, Aleks Popovich, Eric Leopold, Director, FDS Transformation and Amir Amidi, Travel Managing Partner at Plug and Play. Accelerate@IATA is an innovation platform aimed at helping faster technology implementation at airlines. It will deliver sustainable solutions based on IATA standards. The program brings together airlines, value chain partners, and startups to identify problems, find solutions, and bring them to a pilot within 100 days. The four phases are: Phase 1: Startup sourcing phase, closing with Selection Day Phase 2: Acceleration process Phase 3: Closing event to present solutions, Demo Day Phase 4: Pilot phase with airline partners. As part of the second phase, seven selected startups have joined AIRS where they are presenting their solutions in the Startup Sphere.
“Aviation is complex and time will be needed for any transition,” admits Stephan Copart, IATA’s Head, Projects and Innovation, FDS. “Nevertheless, airlines must realize the benefits of new technologies as quickly as possible.” Accelerate@IATA comprises anchor partners and ecosystem partners. Anchor partners help IATA to define the problems and are active decision makers during the entire program through the startups’ selection process, acceleration involvement, outcome, and pilots. There is a maximum of 20 anchor partners, 15 of which must be airlines. Ecosystem partners get to collaborate with the selected startups and will also be involved once the pilot phase is reached. “The program will establish best practice but is not looking to impose anything,” says Copart. “We will be able to educate startups about industry needs in a far more efficient manner and provide them with resources, such as office space at IATA’s Geneva office, so they have constant access to subject matter experts. And for members, Accelerate@IATA is a tool to use as they see fit.” Not every airline has the same needs at the same time but moving into a pilot phase rapidly will provide valuable information for all airlines.
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“Airlines must realize the benefits of new technologies as quickly as possible” Stephan Copart, IATA’s Head, Projects and Innovation, Financial and Distribution Services
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Welcome Reception
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Sponsored by
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Retailing requires collaboration
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“It’s about going forward together in a smarter and faster way” Aleks Popovich, Senior Vice President, Financial and Distribution Services, IATA
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Collaboration between advisory groups and retail industry stakeholders is the key to helping airlines to become better retailers. That was the overriding view from yesterday’s morning sessions looking at the opportunities for airline retailing. A panel session on ‘Industry Retailing Priorities’, moderated by Eric Leopold, IATA’s Director Transformation, Financial and Distribution Services (FDS), discussed the importance of working together with all stakeholders across the value chain. Tamur Goudarzi Pour, CCO at SWISS, said that changing mindsets, reaching out to the other players in the value chain and “moving the stone together” will deliver real transformation. Michael Doersam, Senior Vice President, Group
Finance at Emirates, called on delegates to understand the synergies between different aspects of an airline’s retail framework. “Product distribution and efficient processes go hand-in-hand,” said Doersam. “Pay attention to both in the same way and you get an idea of what retail transformation is.” The panel agreed on a need for increased engagement with technology companies, which Doersam said will simplify the entire shopping experience and drive revenue and improve the passenger experience. Singapore Airlines’ Senior Vice President Sales and Marketing, Campbell Wilson, during his presentation on ‘Retail Perspectives From A Full Service Asian Carrier’ said Asia has embraced digital transformation. The industry in the region is facing disruption “driven by technology and customer”, he said. Singapore Airlines has even set up a separate e-commerce company and from 1 April 2020, the airline is rolling out content that can only be delivered and accessed via NDC. During his presentation on ‘The Journey To Retailing’, IATA’s Director Industry Distribution Programs, Yanik Hoyles said that airlines “need to understand the journey” to becoming retailers. “The pace of change is not going to slow down, so if you’re struggling today… it isn’t going to get better tomorrow,” he warned. Also highlighted during the sessions was IATA’s NDC Leaderboard program, which has 21 airlines that are committed to rapidly growing their NDC sales volumes. “It’s about going forward together in a smarter and faster way,” said Aleks Popovich, IATA Senior Vice President, FDS. “Leaders lead and IATA can share that with the industry.”
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Dynamic offers—the next frontier? With NDC having moved into the mainstream, the fast-approaching next frontier could well be the elimination of published fares and reservation booking designators (RBDs) and their replacement with individual personalized offers. Today, airlines continue to rely on traditional fares and ancillaries filing with booking class inventory control. However, in an NDC environment, every shopping request comes directly to the airline, which is in control of the offer creation. This enables airlines to offer completely integrated offers, explained Sebastien Touraine, IATA’s Head, Dynamic Offer Creation. A dynamic offer is provided in real time, on a one-time basis, by an airline, as the result of a shopping request. According to Dieter Westermann, Etihad Airways VP Revenue Management, and a participant in IATA’s Dynamic Offers working group, dynamic offers
are a win-win for passengers and airlines. Presenting the group’s findings, he highlighted three key benefit drivers of dynamic offers: • Enhance conversion rates owing to more relevant offers, driving customer satisfaction • Improve customer choice with relevant offers • Manage total retailing offers with new partnerships While the majority of benefits occur on the revenue side, there are also cost benefits from rationalizing and streamlining processes. Although there is no timeline for transitioning to dynamic offers, some airlines are already moving in that direction, with Christian Popp of Lufthansa Group citing the airline’s foray into so-called “continuous pricing.” Drop the old world and move into the era of Dynamic Offers, Westermann urged delegates, in summing up.
A dynamic offer is provided in real-time by airlines as the result of a shopping request airlines.iata.org
Issue 02: Wednesday 30 October 2019
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