The NDC vision is to enable an offer management system to present the right offer, to the right person, at the right time.
NB This is a viewpoint by George Khairallah, president of JR Technologies.
I translate that to mean the ability to offer the service bundle, the price, and an a-la-carte service catalog that are most suitable to passengers while they are shopping rather than after they book, or after they place an order, to use NDC parlance.
To achieve this, most technology providers are working on NDC ‘plug in’ components to handle ancillary services, rich content, and pricing that eventually feed bookings to the airline’s PSS.
A better match to the NDC vision would be a combined offer and order management platform – an NDC platform – that runs in parallel to the PSS. In this model it is the PSS that feeds information to the NDC Platform, which becomes de facto the master record holder.
The obvious idea behind this architecture is that offer personalization needs access to real time business intelligence (BI) concerning the passenger’s travel itineraries and preferences, derived from past choices which reside in the order management system.
Off limits
A generic offer management system - one that is not integrated to an order management system - will indeed enable the passenger to shop the product features, as well as price and schedule. In such an environment, passengers are likely to make different choices once they are told upfront about the service levels and amenities associated with a flight product.
This is all well and good, but a generic offer management suffers from two design flaws:
(a) The airline might well be shooting offers in the dark. Without proper business intelligence, offers have a low probability to match a shopper’s requirements. This results in very low conversion rates and very expensive customer acquisition costs.
(b) Branded fares and fare families mitigate this risk but are very easily imitated by competitors. If we push this idea to its logical conclusion, we are likely to get to a point where ancillaries have themselves become a commodity add-on and airlines may very well need to compete on ancillary prices and change fees.
In order to come close to the NDC vision and, as much as possible, prevent a flight product from being easily copied by competitors, one needs to think like a tailor who is attentive to his customer’s every need, who remembers his customer’s preferences, and most importantly, who has the ability to scale his attention and good manners to thousands of customers shopping simultaneously.
A flight product and its associated bundle of services needs to be tailored to the needs of the shopper – as opposed to a category of shoppers.
Granted, today’s shopper is mostly anonymous, but one must admit that in the current environment, personalization does not exist at shopping time, and shoppers know that they are likely to find a cheaper fare or a better routing if they shopped hard enough.
Consistent demands
For this behavior to change over time we must first achieve a complete consistency of offers, regardless of the distributor or the touch point, and second we must acquire the capability to deliver intelligent personalized offers.
When the first condition is met, the passengers will be less likely to shop over and over again across multiple vendors and channels because they will be getting the same product at the same price wherever they shopped.
When the second condition is met, the passengers will quickly learn that by identifying themselves at shopping time they are likely to get a better, personal offer.
The need for airline control over how offers are produced and personalized is critical to reaching these goals. What is unclear is the transition.
The first phase of a transition plan should be to build an order management system. Being business intelligence capable at this stage is more important than being NDC-enabled. The question is how to access passenger-centric BI in real time when passenger reservations are recorded on the PNR held in the PSS.
The best way to achieve this is to run the order management system in parallel to the PSS, as shown below.
The airline needs to subscribe to the PSS provider’s PNR data feed. PNR feeds come in various flavors, but mostly they are either batched or real-time. This will enable a synchronization between the PSS/RES and order management system areas. The quality of the data obtained from a PNR feed is generally not perfect, but it offers sufficient possibilities for our purpose.
In addition, this data needs to be parsed then processed through a Passenger Identification Module (PIM). The PIM uses a probabilistic model that can, in the majority of cases, based on the data provided throughout the life of the PNR, identify the passenger and allocate a passenger account number.
From this point forward, PNRs are converted to orders and stored under each passenger’s account. The order management system starts to look like an accounts receivable module. This means that the airline can pull a customer statement at any time that includes all the purchases made by the passenger over a period of time. The business intelligence is now available at will, and its modules are ready to receive more data.
The second phase of the transition should be to deliver personalized offers using order servicing capabilities while becoming NDC capable. Phase 2 requires a number of components including an integrated rich content and merchandising management system that can manage all product attributes - not only ancillary sales - and a real-time dynamic pricing engine.
Since the order management system contains all information about flight reservations, their flown status, the services ordered and delivered, the refunds, cancellations, and exchanges, it becomes the master repository of up-to-date information that can be leveraged to provide the following:
- Passenger name lists including services
- Passenger payment information
- Passenger order information grouped by agency, or channel, or any other grouping the airline may desire
- Accounts payable information derived from the cost of services delivered by third parties
- Interline settlement information derived either through dynamic proration or through settlement information provided by the POA during the transaction
- Detailed taxes payable information
Therefore, the third phase of the transition should be the simplification of the airline’s internal processes in an ERP-like approach that looks at how information is most efficiently shared within the organization.
NB This is a viewpoint by George Khairallah, president of JR Technologies. It appears here as part of Tnooz's sponsored content initiative.
All the tools and systems discussed in this article are not diagrams or ideas modelled on PowerPoint presentations, they are actual systems and you can see them at work. JR Technologies is hosting an airline conference on the 27-29 September 2016 in Chania on the Greek island of Crete to demonstrate this integrated NDC platform and showcase its limitless possibilities. Click here for details and to register.
NB2 Image by Sergey Nivens/BigStock
