By Jade Owens
with Solution Expert Pramod Jain
Making Intelligent Solutions A Reality
A Conversation With Pramod Jain, Sabre's Vice President Of Commercial Planning Solutions
In a recent interview, Jain discusses intelligent retailing and how technology platforms will be the key enabler of the future.
In the future, intelligent retailing will transform how the industry does business and allow airlines to deliver what they promise, as well as sell and service in unique ways that are personalized for every customer.
Question: What are some of the most prevalent challenges facing commercial-planning departments?
Answer: As I travel around the world talking to chief commercial officers and C-level executives at airlines, something that is loud and clear is that they want to make more revenue. More important than driving down costs, they are laser focused on revenue.
So, the question then is, “How do they get there?” The notion in the industry has been to become better retailers. We have a lot to learn from other industries, and we need to know travelers better.
The challenge for airlines though is getting to truly know their customers. Dropping the price and entering price wars with their toughest competition isn’t going to work. It doesn’t create brand differentiation, and they lose value. So that comes out loud and clear.
For airlines to know their customers better, they need vast amounts of data. A lot of it is data they already have in various places today; however, it’s challenging to consolidate it, make sense of it and derive actions from it. Most airlines today leverage data from loyalty programs, but the information is limited. At most, they are collecting name, birth date and email addresses.
To truly know a customer, airlines must collect data at every touchpoint and interaction across the entire customer journey, which is only one part of the intelligent decision-support equation.
Furthermore, we know that most airline traffic today actually comes from travelers who are not in loyalty programs or perhaps they travel with an airline once a year. Regardless of if they are a loyalty member or not, just to get on an airplane, we are required to capture so much information about that traveler. At the end of the day, if we can leverage all this information and data, airlines can be much smarter about how they run their airline. Knowing a customer’s preferences allows an airline to create better routes, schedules, prices and product bundles, all of which lead to a more customer-centric, revenue-generating airline.
Q: Retailing has been a buzz word in the industry for a while now. How do you believe airlines will truly become retailers and still be able to remain competitive in this dynamic environment?
A: I believe it all goes back to technology and leveraging decision-support tools to make smarter decisions. I think the industry has focused too much on getting to the lowest fare. Everyone wants to beat out their competition and will drop their prices as low as they can to accomplish it. I believe the industry, however, needs to spend more time focusing on what the customer truly wants by getting to the best fare or the most optimized price point of whatever product they are trying to sell. There is true value and opportunity for airlines to leverage shopping and booking data to be smarter about identifying customer segments and uncovering what customers in those segments are willing to pay for in any given itinerary.
Furthermore, airlines have a wealth of opportunity around how they package and sell ancillaries. I believe this is a seriously untapped area of opportunity that has been very reactive in nature. For example, there is typically a standard price attached to extra baggage for everyone, regardless of how far they are traveling or for what purpose. This is an area that could be more tailored by customer segment and more appealing to travelers. It’s one of many ways for airlines to differentiate.
Q: Sabre talks about needing “intelligent” technology solutions, what does intelligence mean to you?
A: In my opinion, intelligence is the secret sauce for an airline’s commercial department because it can only be achieved when airlines bring decision-support into offer management. When the industry talks about retailing, most of the time the focus lands on the marketing and sales departments. However, for airlines to be intelligent retailers, they need to be able to answer some basic questions: Who to target?
Which products to sell?
Which prices to charge?
When should specific products be offered?
I believe intelligence is required in today’s landscape, especially when considering industry mandates such as IATA’s New Distribution Capability (NDC). NDC allows airlines to more easily distribute their products to their customers. However, with ease comes the need for airlines to be able to differentiate their products and services and really stand out against their toughest competition.
To make intelligent retailing happen, an airline must use decision-support to secure one consolidated view of its customers. Intelligent retailing requires a platform that captures all customer information that’s available. Decision science will capture the persona of each customer. For instance, if I’m traveling for business, I have a business persona, or if I’m traveling with my family, I have a leisure persona. My needs and wants are completely different, and I want an airline to be able to recognize my needs based on my persona.
“We place significant focus on how airlines can consider their schedule as a product and leverage technology and data to best determine the most lucrative markets to serve..”
Q: How can airlines begin to leverage intelligent solutions?
A: Intelligent solutions exist today, and there are two key areas I like to focus on when thinking about the role in which they play:
1. Scheduling: There is a key product I believe a lot of airlines don’t consider, which is the schedule. A schedule should be treated like a product because it’s what differentiates airlines from their competition. To create a competitive schedule, one that creates revenue, as well as other differentiation points for airlines, they must start with network planning.
We are a leader in network planning. More than 90 airlines use our network-planning solutions. We place significant focus on how airlines can consider their schedule as a product and leverage technology and data to best determine the most lucrative markets to serve. With these technologies, airlines can not only define where they should fly, but also who their target customers should be and how much revenue these routes will produce.
Now, what’s going to change in the way network planning is conducted is customer segmentation. Airline customers look for specific types of products and ancillaries, and there are different types of customers with different needs. If they are expected to make purchases during the shopping phase, an airline’s schedule and aircraft needs to meet their needs. Thus, if a customer wants to purchase a seat with extra legroom and the aircraft isn’t properly equipped, an airline can’t fulfill the request. Therefore, it is essential for airlines to incorporate customer segmentation back into network planning and scheduling by understanding exactly who their customers are, what they want and when they want it so their requests can be fulfilled.
For example, on a specific Dallas to Chicago route, an airline can see that it has several business travelers and it knows what these travelers want at a macro level, so it can use that information to plan the schedule and assign its seats accordingly.
2. Pricing: Once the airline has the schedule defined, the next step deals with fares. It’s a balance of how the airline segments its customers and determines which groups are going to be assigned higher fares and lower fares … it’s the entire art and science of revenue management.
Data plays a key role here because competitive insights will be what ultimately sets an airline apart. It’s important to understand how an airline is reacting and responding dynamically to competition. Therefore, dynamic pricing comes into the play, which is basically how an airline responds to market conditions and competition.
Leveraging decision-science and data and using the latest technologies and operations research models present an opportunity to produce precise recommendations for long-term pricing strategies for both seats and ancillaries. Consider if an airline discovers it is underpriced on a certain seat on a certain route. It knows it is offering a superior product, therefore, it can apply dynamic-pricing practices and adjust the fare accordingly.
This is where I truly see intelligent retailing becoming a reality. Once an airline has considered its network and has the right schedule and availability, then all the recommendations can be passed on to the marketing side of the business. This is where, for example, a fast shopping engine will help ensure that if a customer does not like the recommendations that are served up based on his or her search criteria, he or she can change the query or filters and get a more suitable response in milliseconds. This helps turn a shopper into a buyer.
Q: Looking forward, what excites you most about the future of the aviation industry?
A: I’m excited about the future of intelligent retailing. Today, we talk a lot about personalized retailing, but if we’re all being honest, most airlines are, at best, doing trip-segmentation retailing, and even that can be challenging. In the future, intelligent retailing will transform how the industry does business and allow airlines to deliver what they promise, as well as sell and service in unique ways that are personalized for every customer.
And from where I sit, being on the forefront of the technology side, I am excited about what we’re working on to power airlines to be world-class retailers. Our digital airline commercial platform uses flexible, open and intelligent technology so airlines can successfully retail, distribute and fulfill. Because we are in a time where the customer has to be the center of a business, technology will be the catalyst to accelerate growth and enable a digital transformation in the industry.
While this transformation will rely heavily on modern technology, it will also be interesting to see how business processes and organizations are transformed. As airlines have more visibility into data and can leverage machine-learning algorithms, silos will break down and the information transfer across departments will be powerful. We are in an exciting time in the industry and on the cusp of great opportunities. /A
Pramod Jain is a recognized technology leader known for crafting the requisite strategic vision to achieve business goals. He holds a bachelor’s degree in electronical engineering from Kurukshetra University and a master’s degree in industrial engineering focused on operations research from Mississippi State University. Pramod has more than 12 years of experience in the airline industry, technology, finance and management. He can be contacted at firstname.lastname@example.org