NB: This is a viewpoint by Derek Sharp, managing director for global distribution sales and services at Travelport.
When they succeed, high street stores, supermarket chains, the banking and telecommunications industries stand out as multi-channel retail experts.
The airline industry will also match the retail strength of these industries. But when?
Consumers expect excellent service, a consistent brand experience and the same quality product at every point of interaction.
In a ruthlessly competitive environment those organisations that have gone beyond merely surviving and have actually thrived understand the need for consistency across this channel mix in order to properly serve those consumers.
Ancillaries, bundling and unbundling; this is almost a broken record, the needle worn. The CD stuck. The track that no-one could download.
Yes, it’s been a long time coming.
Why has it been difficult?
The challenge has been partly based on how the respective players in the industry, from IATA to GDSs to Google to the airlines themselves, support the airlines’ urgent need to transform, grow and attract wider sales.
The need to drive that growth and profitability is making it increasingly unsatisfactory to discuss airlines in terms of whether they are flag, traditional, legacy, regional, low cost or hybrid.
Those days are over.
Attempted definitions such as these are blindfolding those who grapple with what drives airline priorities and how to service them better.
Let’s focus instead on what all airlines have in common: the need for growth, profitability and the different choices airlines take to build it.
For example:
- Spirit Airlines announces charges for overhead bags – an unbundling move designed to shave off frustrating minutes and speed up aircraft turnaround in a bid to fill planes faster, get them into the air, make a profit and expand.
- Domestic dog fights between new players (say, Virgin Australia) and incumbents (say, Qantas) mean that airlines used to dominating are having to focus on preserving their home-market position and how to react faster than ever before to these new entrants.
- Airline 1 grows through a combination of joint ventures with various other airlines and builds strategic partnerships in a bid to catch passenger traffic. Airline 2 decides to get new planes, fly further, open new routes and occupy half an airport.
- Air France, British Airways and KLM introduce some fares that do not include checked baggage, previously the sole domain of the low cost carrier, whilst easyJet introduce allocated seating as part of their strategy to entice more business travellers
Set aside your own view of these charges and recognize that each airline will make their own business choices in order to serve their own customers with increasingly better targeted products.
Why is this?
As each airline makes these choices it is critical that they are not restricted by or held hostage to any particular standard or technology and that they can achieve a multichannel retail experience.
Reacting in real-time to consumer trends and cunning competitor initiatives goes over and beyond the algorithms designed to plan for seasonal changes, holiday periods, transitory popular destinations and new routes.
The ability to be even smarter and faster will lead to airlines using different technologies for different circumstances across a multitude of channels.
Filing fares and modifying ancillary services at speed may require using an API – the technology that allows data to be transferred using XML-based paths.
These technologies are no-longer just the domain of websites for leisurely web-bookers but are transferable, to Global Distribution Systems which then present the products to travel agents, travel management companies and a wider audience.
On the other hand, securing more complex operations whether long haul routes, alliances and interlining partnerships will still require the sophistication that allows these products to work between carriers, bookable anywhere in the world, for whatever itinerary world travelers choose: industry standards will need to stick around.
Growth strategies for maturing, new entrant airlines are driving a resurgence in the value of the agency channel.
Websites can get saturated and they understand how web-reach can be limited abroad.
The strength of many online brands is regionalized at best, country-specific at worst and these brands, excuse the pun, do not travel particularly well across long distances – how well recognized are Kulula or SpiceJet in London, Washington or Tokyo?
Airlines are learning the lessons from other industries and the day when we can view the industry as an industry of air travel retailers is rapidly approaching.
A focus for enlightened players in the industry is to ensure that technology enables, as opposed to hinders, the need to provide customers with a truly consistent and dynamic multi-channel retail experience that caters for the wide range of business choices that individual airlines make.
NB: This is a viewpoint by Derek Sharp, managing director for global distribution sales and services at Travelport.
NB2: More on this and other airline distribution issues at the next Tnooz webinar. Sign up for free!
NB3:Airline retail image via Shutterstock.