Sam Gilliland, Accelya
Gilliland spent more than 20 years at Sabre, starting as a software engineer and ending up as CEO, a position he held for 10 years until he left in 2013. He spent some time in private equity before moving into the fintech arena, where he came into contact with Accelya-owner Vista Equity partners.
Accelya is an airline technology specialist that offers software services to help carriers transition to digital retailing.
You're now just over 15 months into the role, what have you observed that has changed in travel and the travel landscape and what's still the same?
As I think back to when I was CEO of Sabre, I think the incumbent technology providers were firmly entrenched with the airlines both in terms of passenger service systems (PSS) and also [global distribution system]. In many respects that has not changed. I think they're still pretty firmly entrenched, but there’s a lot of opportunity on the horizon. That's some of what is the same. Innovation is being constrained in terms of, let's call it the GDS technology, but also the financial incentives for them to change are not great. What's changing now and what we're seeing is that [new distribution capability] is gaining momentum, and the second major thing is the growth in consumer expectations for a better experience. So again, back to what is the same, is I think some of those constraints that are placed on airlines. I felt like back in the day the airline.com sites were pretty far out there in terms of other industries, and now I think they have largely stayed the same, although there is a lot more merchandizing on those sites now.
I do think this combination of the website, the app and NDC is driving a lot more bookings from other channels into what you might call direct channels. So if you look at the stats, I've read that about 80% of [American Airlines'] bookings in the fourth quarter came through the three: the website, the app or NDC. Those are the things that are changing. Everybody has gotten used to Amazon.com and that order experience. On the innovation front, unfortunately, it does take time for that to take hold. If you look at paper tickets going to electronic tickets back in the day, it probably took 10 to 15 years to get across the entire industry. NDC is gaining momentum now 15 years after Jim (Davidson) and Tim (Reiz) at Farelogix really started pushing the envelope there. ONE Order is probably also going to take another 10 to 15 years to propagate across the industry.
What experience from outside travel have you brought back that might help with your role at Accelya?
After I left Sabre I wanted to do something a little different and outside of travel. I went and worked for a private equity firm that was mostly focused on telecom technology but was looking to get into business services. I then moved into financial services. I was helping a friend whose business was growing very quickly, and he needed to figure out how to scale the business and that led me into fintech, which got me acquainted with the folks at Vista Equity Partners. Through that this opportunity to come and work in one of their portfolio companies came about. The thing that's exciting about all those things was to see how technology was working in different industries and how you can apply some of the lessons there to what we’re doing.
You see considerable momentum with NDC, so where are we, where are we going and how quickly?
Our friends at McKinsey talk about NDC more being about when and how as opposed to if. I think it is front and center with the airlines. There are some that are well ahead in terms of driving NDC and working on the adoption. I think our ecosystem for NDC is really vibrant. We have 50,000 active IATA [International Air Transport Association] agencies, but we're working closely with the travel management companies (TMC), and the online travel agencies (OTA) and the GDSs. The good news, if you think about NDC adoption, is that according to the latest published research, which goes back to 2022, we represented more than 50% of all NDC bookings. The key fact around NDC adoption is that 85% of indirect bookings are going through Accelya, so that means we're doing good work with the players. For example, OTAs have been quick to adopt and make it work in their environments.
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I think the greatest challenge we're facing in driving this type of change is where innovation can be slow, there's lots of legacy technology and processes out there that's very much dependent on the GDS. The GDSs haven't moved particularly quickly in my view. When I think about the travel ecosystem I think about the four acronyms, GDS, TMC, OTA and the online booking tools (OBT). So we are working with the GDSs to improve the capabilities that they're then pushing out to their customers. That takes quite a bit of work. We've had a lot of success with OTAs. So we're saying great adoption, really, for all of the airlines. Across our airline customers it's about 30% adoption of NDC, in a few cases about 70% adoption. The challenge we're having is getting all of our technology implemented within that GDS so that our pipe is working really well and pushing through capabilities to their customers. The TMCs and online booking tools are a little more constrained. TMCs, in particular, have built a lot of their capabilities on top of the GDS and continue to want to do that. The adoption numbers I shared are reflective of the fact that we're doing more than competitors in terms of trying to enable those four acronyms.
Do you have a feel for a point in time when there might be a tipping point?
If we talk about about the [United States] market, there are probably a few more airlines on their way to NDC, that ends up being a part of the tipping point. If I were to make guesses around when we’re going to see even more momentum or when we're going to be at a place with TMCs in particular, and the OBTs, that there's broad adoption in the corporate market, my guess would be about a year off, maybe 18 months. I think we're going to see airlines beginning to push the envelope on the fares they’re pulling out of the GDS and the bundles they're offering through us and others.
What's next and will it be the same kind of struggle?
In many respects NDC, in my view, equals ONE Order, which equals travel retailing. We have already put into production those NDC bookings moving into an order format meaning the IATA airline industry data model order format. IATA has the 21.3 standard for NDC, and there’s a data standard around how you store what used to be called a booking but is now an order and we're fully compliant and in production with that.
Backing up from that is offers, it’s merchandising, how do you combine fares with other ancillaries, with seat upsells, that type of thing. We're now generating 15 billion offers a day on behalf of airline customers. Those are then flowing into NDC orders and then the next piece of this is the back-end process, order accounting. Nobody talks about this, and we're well on on way and engaged in deep discussions with several big brands in having the accounting that sits behind offers and orders. It means they're starting process that migration of moving off of tickets. Tickets are going to go away at some point, and it's all going to be orders similar to what you see with Amazon.com, and what's good for us is we have a very good relationship with AWS and we're using a lot of the same technology that Amazon.com uses. For every airline to be in this world will take time, but it's exciting what airlines can do right now even side-by-side their PSS systems.
Going back to the 15 billion, are we talking seat and bag and those very basis bundles?
It can be that but it's also, if you think about the compute involved, it’s also the dynamic pricing and continuous pricing that you can employ as part of that merchandising. It's not simple, but as you think about the products, the biggest upside for the airlines is around that seat upsell. Seats is huge, it has been huge for airlines employing those bundles. So it's a combination of pricing, and then it's those products they want to sell, maybe it's lounge passes, maybe it's upgrades so there are a handful of things that provide a lot of revenue uplift for the airlines. I don't want to convey it as just being an airline thing. There is a lot of opportunity to better serve consumers by having those bundles available that you can choose from, and we can use new technologies like AI to even consider the customer's willingness to pay and around how you merchandise the products to them.
I think the greatest challenge we're facing in driving this type of change is where innovation can be slow, there's lots of legacy technology and processes out there that's very much dependent on the GDS. The GDSs haven't moved particularly quickly in my view.
Sam Gilliland
What comes to mind when you see different airlines with different approaches?
There is no one-size-fits-all approach to distribution, and airlines have different views around how they want to play. Some are very corporate friendly, they're very GDS friendly. We saw that change in strategy at Southwest Airlines, where they decided to participate in all the GDSs. Their strategy is to meet the customer where they want to meet us. Others are pushing in a different direction. American is talking about getting 100% of its distribution direct or via NDC. All the airlines are on a tack to get to a more modern experience for the traveler, and I think ONE Order and what it can mean in terms of the traveler experience is going be huge. We’re going to look back to a day when we didn't have that set of capabilities and think this is way different.
Views on AI and its capacity to disrupt the distribution landscape in a good or bad way?
Mostly good, there are risks, there's lot of concern about data privacy, bias and discrimination, security. There are some things we all have to pay close attention to. Most of it though is upside. We're going to take advantage of AWS' artificial intelligence (AI) technologies, and we'll build some of these things on our own. One of the things that can really fuel innovation are the tools available now to improve developer productivity. You think about generative AI, and the view is that you can improve developer productivity by 30%. That's super exciting in terms of how quickly you can move new technology out into the marketplace. We're going to be building it into a number of our solutions, and we're in that process right now.
Project forward five years, what will the airline retailing and distribution landscape look like?
Airlines will have a lot more freedom to control the offers and the retail experience. ONE Order, while again there will be constraints on how quickly an airline can adopt it and how quickly they can replace some of their legacy systems with it just based on their contractual obligations, but ONE Order is going to be here. I also think that through that process of relieving constraints we will also be able to improve our product offering or improve the cost structure for airlines, so it's not just about the revenue upside but also the cost structure and even the freedom they have around the solutions they employ.
If you could change one thing within Accelya, what would it be?
What I love is the quiet humility of our team members. They bring that to work and they bring it to our customers. The other day I was with a significant industry technology consultant to the airlines and he said, "You guys are always so on it," and I feel good about that. I also want us to be bold and confident; we were the pioneers of NDC, and it doesn't always have to be quiet humility, let's talk about all the great things we're doing.
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