“Modular” has become the mantra when it comes to airline retailing capabilities, not only from aviation technology providers but also industry bodies.
While progress in getting there remains slow, it is “gaining momentum,” according to Willie Walsh, director general of the International Air Transport Association (IATA).
The organization has been spearheading some of the development in the space through the introduction of the New Distribution Capability technology standard and ONE Order.
Both initiatives, now more than 10 years old, aim to provide airlines with the framework to build retailing capabilities, graduate to an offer and order environment and move away from the passenger name record (PNR).
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Walsh, a former CEO of both British Airways (BA) and BA-parent International Airlines Group (IAG), described the move as a “frightening issue for a lot of airlines because of the complexity of their legacy IT systems.”
“You made the point about modularity. I think, going forward, this is one of the critical issues. Airlines don't want to be locked into one provider. I think having modular systems where you can choose the best in class is very important,” Walsh said.
“One of the benefits of what we’re doing going forward is to ensure that as we transition towards the new world, it’s done on a modular basis.”
Walsh, who was one of several aviation leaders speaking at the World Aviation Festival (WAF) in Lisbon last week, added that a modular approach enables new suppliers to come to market and newer technology “to be plugged in.”
Existing airline technology partners are already developing more modular systems including Amadeus with Nevio and Sabre with Mosaic. Accelya, meanwhile, has just partnered with Amazon Web Services (AWS) to accelerate adoption of modular retailing technology. The focus for the partnership is on expanding Accelya’s FLX ONE platform, helping airlines to integrate artificial intelligence (AI)-ready solutions into existing systems.
Retailing relevance?
Walsh acknowledged the significant change required by airlines and said that many were progressing towards offers and orders while many “have not even embraced the concepts.”
He stressed that for many carriers the ability to sell more products is not as relevant because they are just selling flights.
Airlines don't want to be locked into one provider. I think having modular systems where you can choose the best in class is very important.
Willie Walsh, IATA
“Therefore, it’s relatively easy to continue with the models we have. Where we are selling a package of goods that our current systems are not designed to do easily, particularly when the customer decides to change something, the whole thing unravels. So, offers and orders becomes very important,” Walsh said.
Most discussions around transformation and modern systems now include the potential impact of AI.
Luis Gallego, who took over from Walsh as CEO of IAG in 2020, said that 80% of the projects within its transformation are “linked to technology and linked to artificial intelligence.”
Beyond the wider transformation, two airlines within the group, BA and Iberia, are undergoing £7 billion and €6 billion investments, respectively. BA’s plan includes £750 million on its IT infrastructure, while Iberia has said “significant investments are planned in the areas of artificial intelligence, digitalization and personalization.”
Discussing the impact of AI, Gallego said that some of the problems airlines had 30 years might still exist but can now be solved.
“Some optimizations that were not possible at the time, now you can run in three hours, with different simulations and that can help out.”
He added that AI is also improving the customer experience.
“In the case of disruption, I think for the customer to have a solution in the app, on the web, in real time, it's something that we did not have in the past and we’re advancing a lot.”
In response to a question on areas where it is not right to use AI, Gallego said the industry is really at the beginning with generative AI.
“One thing is to do the thing faster, another thing is to use generative AI to solve the problem. What we see is a lot of things that took a lot of time in the past, we can do faster.”
Graveyards are full of laggards as much as they are full of innovators.
Luis Rodrigues, TAP Air Portugal
During a panel session at WAF, airlines were asked how they prioritizing technology investments and strike a balance between long term and short terms initiatives.
Luis Rodrigues, CEO of TAP Air Portugal, who also joined the discussion, said that the industry’s ability to create a balance of ideas is what has brought it to where it is today.
“Graveyards are full of laggards as much as they are full of innovators,” he said, adding that the airline considers technology investment area by area and where it can help increase people's productivity.
“What we’re not doing is [looking at] how is that going to replace headcount, not at this stage. At this stage we’re looking at how can we do more work, better work with the same resources.”
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