A Digital Airline Commercial Platform
By Stephani Hawkins and Jade Owenswith Solution Expert Rodrigo Celis
of online shoppers believe their ability to search for optional ancillaries, such as seats with extra legroom, needs to be drastically improved.
The airline industry is arguably the most competitive it’s ever been, and airline executives are continually challenged by how to get ahead. Travelers have more information than ever before, and data is growing at an astronomical rate. To help airlines address these challenges, Sabre has identified four key areas of opportunity that make it a win-win for both travelers and airlines. The solution, the Sabre Commercial Platform designed with flexible, open and intelligent technology, drives revenue maximization and creates unique experiences for travelers.
Those who have been in commercial aviation for any length of time would likely agree that these are among the most competitive times in the industry. A brand can no longer be differentiated by delivering the lowest price. The modern traveler expects the experience to be seamless, personalized and affordable. However, the priorities of those characteristics vary across travelers and trip purpose. Competition is stiff as airlines balance delivering a flawless experience that is personalized yet profitable. Success in today’s dynamic space will only be achievable for airlines looking to become true retailers.
Sabre experts see the competitive pressure only continuing to rise as consumers are becoming more accustomed to the simple luxuries provided by many of today’s retailers.
For example, retailers such as Amazon have created the expectation that online orders should be delivered in two days or less. Moreover, companies such as Uber have taken the guessing game out of taxi services and created a customer-first business model without physical inventory or physical money exchanges.
Both examples highlight retailers that have leveraged data and technology to give consumers value they appreciate and, in most cases, an experience they want to brag about to their friends. The question, therefore, is: How does this translate to the travel industry? More specifically, how can airlines create experiences that travelers want to share with their friends?
Numbers that support the complexities airlines face tell an unsettling story. Today, the average consumer visits up to 38 websites to find information and compare prices before booking a flight. According to IATA’s “The Future of Airline Distribution – 2016-2021” research paper, 43 percent of leisure travelers and 51 percent of business travelers want to spend far less time searching for flights. Moreover, 44 percent of online shoppers believe their ability to search for optional ancillaries, such as seats with extra legroom, needs to be drastically improved.
In short, the modern traveler is influencing the way in which airlines must operate to remain relevant. The need for a digital transformation is here, and airlines must consider what it takes to become intelligent retailers. Moving forward, technology and data will be the key components for airlines to accelerate their retailing practices while still achieving their revenue goals. While it sounds simple that data and technology are the catalysts in a digital transformation, airlines cannot forget about how they will enable teams across their organization to align around the common goal of becoming a smarter retailer.
The Opportunity: Technology to Power Organizational Alignment
Imagine if across an airline’s commercial department all teams were marching toward one common goal. Even further, imagine if that one common goal was easily achievable because all the teams had access to a common view of data and every piece of information needed to make optimal decisions every single time. It sounds farfetched, but it is not. Technology exists that breaks down silos across commercial-planning departments and empowers airlines to think differently and intelligently retail like never before.
Network Planning And Scheduling
At base level, scheduling departments must become more customer focused and consider their schedule as a product. Today, planning and scheduling departments work tirelessly to create the most optimum schedules. However, they do this in a silo with little insight or control over how the schedule will evolve during the coming months and fail to account for customer strategies other departments must consider.
Listening to chief commercial offers from some of the leading airlines, one of the primary gaps is determining how to get cross-functional departments to communicate. It is likely that schedulers and revenue managers communicate; however, it is unlikely that collaboration among schedulers and day-of-operations exists. This not only does a disservice to airlines, but it is a disservice to their customers.
Intelligent retailing begins when the airline is determining where it wants to fly. An airline that is truly considering the end-to-end impacts should strive to incorporate customer segmentation data back into planning and scheduling decisions. In doing so, it will know exactly where its customers are traveling and for what purpose, so it can be fully equipped to deliver the right schedule and experience at the right time.
Passing customer-segmentation data between departments is only one part of the equation. Once an intelligent schedule has been created, it can also be fully synchronized to effectively compete and be profitable. Technology that begins to make this “step-one” process become more accurate and profitable throughout the life of the flight is achievable.
Pricing and Revenue Management
The airline industry has made exceptional progress in revenue management; however, there is opportunity still on the table in terms of pricing. Pricing is not only another way for airlines to differentiate themselves, but it is also the crux that will keep them competitive in this dynamic marketplace.
Once the schedule has been defined, the next step is for the airline to sell the seat. This step is the combination of science and art – combining customer segmentation and fares. However, it isn’t that simple. It’s imperative to also consider demand, willingness to pay and competition.
Intelligent retailers of the future will be able to use decision science and data to consider historic fare information, GDS shopping data and airline distribution channels, as well as produce recommendations for a long-term pricing strategy or dynamically adjust for more near-term gains. No longer is it about the lowest fare. It’s about the best fare because it shouldn’t be a guessing game anymore. With machine learning and data science backing, analysts can more accurately predict who is going to buy and at what price point.
Offer Management is unique in that the other three areas mentioned are traditional airline departments that have been around for decades. However, offer management has become ever more important as airlines look for ways to drive revenue growth. Offer management actually touches all planning and scheduling, pricing and revenue management, and sales and distribution as airlines create, price, package and distribute their products.
To date, airlines have mostly focused on how to price core tickets. However, this approach ignores a recent, fundamental industry change: an increasing percentage of revenue now comes from ancillary items such as checked baggage, onboard food, premium seat selection and extra legroom.
According to McKinsey & Company, given the growing importance of ancillary sales, airlines cannot simply continue to tweak their existing revenue-management strategies and models expecting to optimize total revenue. Rather, they should:
• Deliver personalized offers and services that are consistent across all channels,
• Deliver seamlessly throughout the customer journey.
Offer management must be considered on day one because if airlines are going to reimagine retailing, offer management includes the schedule, the aircraft, the pricing and the availability. It’s not just about the “extras” you are giving your customer to create some revenue uplift. There is true opportunity to not only create incremental revenue, but to also create a more enjoyable experience for your customers throughout their entire journey.
To make intelligent offer management a reality, airlines must leverage additional data sources to more accurately understand who their customer are, what type of offer they want, when they want it, and how they want to receive it.
However, to gain insights from these data sets, there must also be integration across systems and departments. Having a central repository that allows for multiple departments to work from the same data sources in real-time will be the enabler to setting offer management apart. Moving forward, airlines must be able to quickly analyze shopping patterns to forecast products, target offers and benchmark against their historical performance, as well as other market dynamics such has top competitors.
Sales and Distribution
While distribution has historically operated in isolation, it is becoming more integrated with airlines’ sales and marketing departments. Airline-distribution professionals, therefore, realize the need to gain a better understanding of their customers so they can create appropriate, useful shopping experiences.
According to Google/Ipsos Connect April 2017 “Traveler Attitudes and Behaviors,” traveler preferences and behaviors are evolving faster than ever:
- By 2021, we will have begun to enter a post-mobile world. By then, mobile will no longer be “a” channel, it will be “the” channel passengers, travel agents and others use to connect with airlines.
- 69 percent of travelers are more loyal to travel companies that personalizes their experiences online and offline.
Moving forward, sales and distribution must be more proactive in how they package and sell their products. There are opportunities to extend product offerings, optimize bundles by customer segments and ensure consistent availability across all points-of-sale.
Consider this: What if an agent was able to spend more face-to-face time with a customer selling additional ancillaries and ensuring a meaningful customer experience? Imagine if the agent interface was identical to what the traveler sees. The agent can shop, book and service the customer in an interface that is intuitive and efficient, so he or she spends less time dealing with cumbersome solutions and can spend more time selling additional products or services.
In addition, consider if your website could perform 25 times faster and give shopping results to your customers in the format and speed that they expect. Both examples are in arms reach for an airline that wants to reimagine retailing.
There are opportunities to completely change customer perceptions of the airline industry, and a key component sits within the shopping and fulfillment experience. If travelers can have a flawless booking experience that extends to the day of travel and how they interact with airline agents, it can bid a large return for both employee and customer satisfaction.
Furthermore, airlines have the potential to be on the same playing field as top retailers because despite the complexity this industry faces, the data is available. The industry needs to leverage the tools, processes and technology to capitalize on it.
Airline commercial departments have an opportunity to come together to not only share common goals but operate together, adopt new processes and leverage new technologies to reimagine the way airlines retail.
Airlines Need State-of-the-Art Technology For Future Growth
Sabre believes the true opportunity is through an integrated platform that empowers airlines to drive revenue maximization and deliver a unique brand experience. Such a platform would naturally break down organizational silos and rigid processes by unifying cross-functional departments to align on the common goal of focusing on customers.
If airlines are going to be successful in today’s competitive environment, they must set themselves apart, and they can’t do it alone. The beauty of a commercial platform built for digital airlines is the breadth and depth of expertise, solutions and vision for the future. To make scientific, competitive and innovation decisions on how to package, price and sell products, it is vital to have a robust, end-to-end view of the customer. This approach and unique perspective for a commercial platform supports airlines in reimagining retailing.
A commercial platform built for digital airlines enables them to:
- Build intelligent shopping and retailing strategies powered by decision science,
- Embody openness by empowering rapid deployment of new solutions using a flexible framework,
- Create flexibility by utilizing intuitive user interfaces across applications
Furthermore, a digital airline commercial platform must be flexible, open and intelligent. “It must allow airlines to seamlessly leverage data-driven insights to dynamically and intelligently market their services, fulfill across all channels and deliver a personalized customer experience,” said Sabre Airline Solutions President Dave Shirk.
Behind solution innovation, airlines need modern technology that allows them to deploy solutions using artificial intelligence, mobile, augmented reality, virtual reality and conversational commerce. As these emerging technologies become the norm, airlines will have to move quickly to adopt and effectively utilize what’s available. Looking ahead, airlines need partners that will:
- Enable build-once, use everywhere models;
- Easily integrate;
- Provide access to more modern and robust data;
- Represent a flexible, open and intelligent infrastructure
Key Tenets Of A Digital Commercial Platform
Flexible, open and intelligent are the crucial characteristics of a commercial platform built on the premise of reimagining airline retailing. Individually, these words might lose their esteem; however, when brought together to describe next-generation technology, they should be non-negotiables. Let’s examin. how crucial each of these tenants are to making a digital-retailing platform come to life:
- Enable build-once, use everywhere models;
- Easily integrate;
- Provide access to more modern and robust data;
- Represent a flexible, open and intelligent infrastructure
Flexible technology gives airlines the freedom to build business practices and workflows that meet their business needs without being boxed in by a single provider. Flexibility enables airlines to drive differentiated experiences throughout all channels and adjust their product offerings on their own terms.
Consider these two scenarios:
- Your airline can now deliver a seamless and personalized experience across all customer touchpoints that isn’t simply a “me-too” experience to what your competitors are doing. Now, your frontline agents can significantly improve exception handling, increase ancillary sales opportunities and drive on-time performance.
- Your agents now have access to tools with best-in-class and intuitive user interfaces. Now, they can toggle backand forth between workflows and customer views and, ultimately, improve their productivity by up to 30 percent based on past common airport workflows.
Open technology can sound frightening with everything we hear about data privacy and security. In reality, however, open technology is a requirement for technology partners who want to enable airlines to quickly and efficiently deploy innovation.
A microservices architecture is one example of openness because it empowers unique business strategies and gives airlines control to uniquely configure, extend and differentiate how it positions its ecosystem of technology and processes. Airlines can decide how they want to develop and deploy innovation and deliver on their own unique strategies. They don’t have to rely on a single provider to deliver all of their innovation because microservices architecture gives flexibility to take a community-based, in-house or third-party approach.
In addition, as we see the aforementioned market dynamics playout, it’s never been more important for business and technology teams to join hands to brainstorm, develop and think differently about what intelligent retailing means for an airline. Every airline needs to derive its unique strategies, but regardless of the strategic direction, open, microservice-enabled technology will be a requirement.
Intelligent technology powers an airline to drive decision accuracy and personalization in a way most airlines aren’t capitalizing on today. For example, most airlines charge a standard baggage fee regardless of the trip length, fare price or the customer profile, and there is no rhyme or reason behind it. Imagine if your airline could determine exactly how much it should charge for baggage by customer segment because it has machine learning algorithms in place that have considered customers’ willingness to pay.
Intelligent solutions leverage machine learning and artificial intelligence to be smarter and more strategic about how to price, package and sell products. For airlines, this level of intelligence:
- Improves schedule synchronization and deploys schedules faster to increase revenue and reduce reaccommodation costs,
- Monitors and analyzes fares automatically to provide an enhanced competitive advantage,
- Delivers persona-based, flight-plus-ancillary bundled offers,
- Provides broad pricing recommendations that are buffered from abrupt market changes and use multi-channel availability.
According to PODS Research, some of the greatest revenue benefits from next-generation pricing mechanisms will come from increasing the degree of segmentation and personalization in the offers presented to customers. This can only be achieved if your airline has access to the intelligence it needs to know more about the customers your airline wants to serve.
"A industry-only digital airline commercial platform will give our customer community the competitive edge to truly differentiate their airlines in a very challenging environment. We look forward to partnering closely with our thought-leading customers to bring these innovative solutions and technology to the market. Dave Shirk, Sabre Travel Solutions President."
The Opportunity Is Now
If an airline is serious about reimaging retailing, it must adopt technologies that are flexible, open and intelligent to interact with today’s technological landscape. No longer will reactive, “me-too” approaches work. Profitable airlines will be required to think of new ways to maximize revenue and create a differentiated brand experience, and we believe there are opportunities readily available today to make this a reality.
Intelligent retailing requires both technological and organizational alignment, and one cannot lag the other. The idea of a commercial platform built for digital airlines lays out clear opportunity for how these two come together to achieve a unified goal. By leveraging integrated commercial solutions, an airline can be empowered to establish unique and differentiated strategies, as well as easily deploy and deliver on those strategies to set its brand apart from the rest.
Sabre is excited about the opportunity to reimagine retailing. The need for a digital platform isn’t in the far-off future. We believe the opportunity is here, and now is the time to give travelers what they’ve been waiting for. A digital airline commercial platform will meet airlines where they are and take them where they want to go. /A
For additional information about the Sabre Commercial Platform, please contact Rodrigo Celis at firstname.lastname@example.org.
Rodrigo brings more than 20 years of product management, software development, e-commerce, business development, account management and large-scale implementation deliveries to his current position as vice president of SabreSonic and Retailing for Sabre.