Many mid-tier airlines who have been relying on outside companies to build their websites are now considering easier, cloud-based options.
Mid-tier airlines -- which are similar in size and stature to Aeromexico, Copa, Finnair, Jetblue, LAN, and Virgin Australia -- are preferring digital platforms that let them tweak their sites on the fly themselves -- especially for merchandising.
Today if the typical mid-tier airline decides it wants to add checked bag fees or champagne service, it has to knock on the door of the custom software shop that built its site and ask for some re-coding.
But if the airline is using a more flexible digital platform to power its merchandising and ticketing engines, it can swap things out quickly and on its own.
Cost is another factor. A custom shop may bill in a couple of lump sum payments, while the vendor will charge in a recurring monthly cost. The latter's software-as-a-service (SaaS) model tends to be easier for an airline to budget for.
Flexibility matters for merchandising, meaning the selling of things in addition to tickets -- like checked bags, meals, champagne service.
Airlines want to experiment with prices and products. Being able to make quick changes is vital.
"Where's the login?"
Case in point: This past winter, executives at a North American mid-tier airline sat in a conference room with a vendor asking for a proposal to update its merchandising.
The executives wanted to start selling seats to different tier levels of fliers. But the vendor had created the airline site so that customers had no login for inputting their profile information early in the search-and-booking process.
At the point in the funnel where the airline wanted to offer seats according to tier level, there was no way of knowing what tier the customer was in, such as elite or not a loyalty member.
The airline couldn't fix the problem on its own. The airline's IT teams were at the mercy of the vendor to do a full revamp of the user interface.
To help such airlines, a wave of companies have increasingly been offering more flexible products on a software-as-a-service model: Datalex, OpenJaw, and the two largest passenger service system (PSS) providers: Amadeus Altéa and SabreSonic.
Many of these companies are moving from consulting and enterprise models, where the vendor tends to retain control of the retailing portion of the sites.
The new standard is a digital modular SaaS platform, where the airline tends to keep control and can make quick updates via easy-to-customize and update modules.
Farelogix and Switchfly
Today Farelogix, an airline messaging company, announces it is getting into the game through a partnership with Switchfly, a travel merchandising and loyalty technology company.
Their target is airlines that are locked into a contract with a custom software shop and who don't have flexibility in updating. The commercial arrangement is variable – sometimes combined into a single deal, sometimes with separate contracts.
Farelogix and Switchfly claim their combined product will let an airline make a change in pricing to an existing ancillary product, such as hiking the price of champagne from $35 to $50, in only a few minutes. The same is true for a change in a business rule.
Says Farelogix CEO Jim Davidson:
"The biggest objection out there is, number one, how long these things typically take to get started and get implemented.
For the record, Farelogix got Delta Air Lines's merchandising solution online fully functioning within three months of signing a contract. That's a fast pace, and for smaller airlines we can be quicker.
If for some reason, as an airline, you fall out of love with us, we can go away without you having to dismantle your kingdom.
That should be appealing to many airlines. Some executives have been burnt before by engaging with a software company and spending their budget and being dissatisfied with what they got.
Or they got burnt by buying this through their PSS and finding the implementation doesn't live up to its promise, and they're stuck in a long-term agreement.
We help airlines get up and running quickly without having to make a major commitment. We put the merchandising engine in and train the airline's team on how to set business rules and adjust pricing.
The airline's marketing and e-commerce departments have control. Our involvement after that can be minimal, though we have 24/7 support."
Getting creative
Airlines can keep things as simple or as complex as they like.
On the more sophisticated end, there's United as an example.
United has used Farelogix's merchandising plumbing to make quick changes to business rules.
For instance, in certain airports at certain times of day, the airline limits the sales of priority boarding passes, according to Davidson.
They don’t want to congest the frequent flier line. So they tie the merchandising engine to a yield management rule that says between X hour and Y hour of peak traffic, it only wants to sell X% of these priority boarding passes because history shows otherwise all the consultants are prone to getting jammed up in the jet bridge.
Similarly, United sometimes puts in place a rule where if a flight is booked full two days out, it will cut the price on checked bag fees to try to encourage more customers to put their luggage under the plane. It targets those offers to customers on the specific flights.
For flexibility like that, no wonder more airlines want their systems in the cloud, where they have ready access to them for quick experiments.
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