We're in the middle of a discussion concerning NDC (New Distribution Capability) by IATA and ancillary product sales by airlines.
Who's we?? We in this case is the travel trade, and more specifically the 3rd party sales colum to which I referred to in an earlier post.
In my opinion, there is always an opportunity, the only thing is that sometimes we need to create that opportunity. In this case, we are facing a complex issue. To do this right, it will need a thorough mind change with decision makers in the airline distribution landscape. Airfare distribution in general, and distribution via the third party sales channel in particular, is on the edge of an ever changing structure. Airlines are pushing product differentiation, or better said personalisation of their air travel product, whereas the third party sales channel in many cases rely on GDS technology, based on techniques from the fifties, sixties and seventies of the former century. Airlines are forcing unbundling, ancillary products and personalized sales to customers and travellers. With NDC coming up, ancillary sales is a new product feature that will change the distribution column completely, especially if the third parties cannot use techniques that can emphasize this.
I’ve seen diverse product enhancements in the GDS communication bulletins, but these product features don’t emphasize what is the basic urge. Products that are designed to book ancillaries is not what the third party sales channel is looking for.
The third party sales channel, in my honest opinion, is not only looking at booking procedures or booking products, they are looking for comparison methods and booking products at the same time. Now the latter is being developed all the time, but I hear no one looking at comparison features.
Third parties are relying on price driven product sales, but with the unbundling, NDC and ancillary introductions, this price driven competition is not relevant anymore as it doesn’t show the complete travel costs to customers. The workflow that this (showing the total travel costs, including comparison with competative airline products) creates is thus complex that it needs a thorough redesign of these distribution ways. Furthermore, we must be aware that airlines control their products, so the entire story is subject to 1 basic assumption: Airlines must be prepared to create product differentiation targeted to this third party sales channel. In other words, if the airline industry doesn’t cooperate here, any possible useful solution will fail. It will be key for agents, OTA’s, TMC’s, (even GDS’ses ) and the likes to negotiate this with the airline industry. If this cannot be discussed, it will be clueless to try and change the sales channel to the benefit of agents and the likes. Even worse, it will be virtually impossible to prepare the third party channel to compete, with NDC and expanding direct airline sales on the way. A useful API that is unable to compare product features is in fact almost useless. That said, the total solution, in my honest opinion, would be an API that can shop for airfare solutions, with ancillary product specifications on top of these results. IATA has a great story to tell, and they do it on a large scale basis, but they leave out one tiny little issue: personalistion of the air travel product is needed, but what they don't tell, is how the future distribution model will be capable to compare the different personalised airfare products..... and in my honest opinion, that's where the hammer is, with current software and the current sales channel, it is not decently possible without creating a huge workflow.
Now, in the current third party sales channel, there is no software available (at least not that I know of...) that has the capability to do just that: shop for the total travel experience and book the results accordingly in an easy to use transaction. What we find available is price driven full product features, without personalized and/or discounted sales opportunities.
However, currently, the underlying
necessary data is already available. Every ancillary product has a product code
with ATPCO and tech suppliers, airlines and attached market parties. By using
these product codes it will be possible to create software that creates a
thorough comparison tool that shows results in a webpage. This will also be
possible in mobile equipment such as tablets and smartphones where we find
todays and future most growing market shares.
What are we talking about here? Research confirm that in 2012, airlines earned
$ 27 bn on non-seat sales, 20 % more than in 2011 and twice the amount in comparison to 2009.
So, for agents and the likes in the third party sales channel, it will be key to provide airline shopping and sales opportunities. Looking at the GDSses, which are agents’ key technology providers, I find opportunities and discrepancies regarding the ancillary sales subject. I will try to address these below.
First of all, GDSses are based on price driven saleschannels, however prices are not key in future air inventory distribution.
Secondly, (or even better: as a result of the above first statement), customers and agents will find price driven product competition, where airlines want product based sales with possibility to personalize these products by means of frequent flyer discounts, yield propositions and historical customer relation settings.
The GDS does not currently have any tool to present a shopping result as such and the urge of designing one is increasing.
As I indicated earlier,
I’m not a technician, but I do have a vision on that distribution issue, that
might be worth looking into. In my opinion, it must be possible to create a shopping-
and booking tool that creates the
opportunities that the industry is looking for.
Now, when we book flights in a GDS, we get an airfare shown, but it is nowhere indicated if preferred seating is included in this airfare, nowhere is indicated if lounge access can be bought, nowhere is indicated if luggage transportation is included in the airfare and airlines’ discounts for a passenger that has a high tier frequent flyer card is not taken into account. Furthermore, possible creditcard fees and other charges such as bookingfees and the likes are not shown in the overview that the GDS provides me.
When I want to book a first piece of luggage and a seat, I can sometimes book the luggage in the GDS directly, but sometimes I need additional software to book a preferred seat. Be aware, I cannot book the luggage and the seat in the same software, and I cannot view the opportunities and prices in the first search at all. In other words: I need to book it first to find a decent price.
NOW, WOULDN’T IT BE NICE IF WE WOULD BE ABLE TO HAVE AN OVERVIEW IMMIDEATELY AFTER SHOPPING FOR THE ITINERARY REQUESTED AND BOOK IT IMMIDEATELY AS PER ENQUIRY BY OUR VALUED CUSTOMER, INCLUDING LOUNGE ACCESS AND A PREFERRED SEAT WITH ADDITIONALLY A PIECE OF CHECKED LUGGAGE TRANSPORTATION INCLUDED IN THE SHOPPING RESULT ??
As we all know, with NDC coming, all ancillary products currently available have so called product codes at ATPCO and the likes. Why wouldn’t it be possible to create a shopping result based on these codes?
Additionally to the above mentioned features, there must be a possible frequent flyer registration beforehand, and based on the tier level of the valued frequent flyer card, discounts can be granted for personalized shopping methodes.
It might even be possible to create a fill out screen when starting the
shopping mission, where the likes and dislikes can be opted in or opted out, so the
shopping results only show results appliccable, such as:
- Airfare with 1 piece of luggage, 1 preferred seat in all segments
- Airfare with 2 pieces of luggage, 1 preferred seat in all segments
- Airfare with 3 pieces of luggage. 1 preferred seat in all segments
The above should be possibly to be programmed by current software, and it will be a marketing success, as third party sales channels are waiting for features as such, furthermore, this platform can be used in OBT’s and Smartphones also.
All the above mentioned information is based on the personal opinion of an over active travelconsultant, who is brainstorming about the future role of the Travel Management Company, OBT’s and OTA’s on the one side and product suppliers on the other.
These suggestions have been addressed by the undersigned, explaining a process driven workway, that was simplified for easier understanding. Along the way, working with the outlined situation and with knowledge of the current practical workways, we might be willing to take this basic idea to a higher level by getting airlines and GDSes involved in this process. I’ve seen many product advisories passing, for various GDSses, but I have not at all seen one that combines shopping and booking. It will require open communication and willing cooperation from all participating parties to get involved in a process that is bigger than to be overseen from a single perspective.
Whereas I am aware, the
above mentioned indications are just a small piece of the total project that
might be ahead, I believe, it will bring a brief impression on how we should be thinking here. And maybe, it will provide basic intentions to basic solutions.........
So, as I said earlier, stop fighting the inevitable, and start creating solutions !