5 things you need to know about delivery management
In this Article:
- What is delivery?
- Why is it important?
- What are the financial benefits?
- What does the transition to delivery management look like?
- How can airlines get started?
Watch First
Vanessa Gonzalez: Delivery management needs a rethink
What is delivery?
In the context of airline retailing, offers refer to the various products and services airlines present to customers. These include flights, seat upgrades, additional baggage allowances, in-flight meals and lounge access – as well as offerings from third parties such as car hire, airport transfers, accommodation and excursions.
Orders are the transactions through which customers purchase the offers presented to them. Once a traveler selects an offer they create an order. This order contains details such as the chosen offer, the price, the customer’s personal information, payment details and any additional preferences or requirements.
Delivery is the process by which airlines manage and fulfil travel products and services that were originally presented as offers and later ordered by the customer. This will be achieved using a Delivery Management System (commonly referred to in today’s PSS world as a Departure Control System or DCS) which encompasses various functionalities to ensure efficient management and seamless traveler experiences. While departure control occurs largely within the airport environment today, the delivery management solution of the future will extend beyond the airport as airlines expand into retailing third-party products and services.
With so much complexity involved in the airport experience – from security, customs, and immigration through to ground handlers, airport operators and airlines themselves – it’s easy to see why delivery management plays a critical role in the overall traveler experience. For our part, Sabre is focused on providing end-to-end delivery management that goes far beyond what the existing DCS enables.
Effortless travel is the goal
The 2023 IATA Global Passenger Survey indicated that travelers want to get from curb to gate within 30 mins if travelling with carry-on bags, and within 45 mins if traveling with checked bags.
Why is delivery management important?
In the context of airlines transforming toward a more dynamic world of offer- and order-based retailing with multi-content (both air and non-air) components, delivery management is crucial for several reasons:
Modern travel experience. Today’s travelers are becoming increasingly sophisticated and expect more from their travel experience. They don’t just expect their trip experience to work – they expect it to work well. They want it to be effortless. And while airlines have evolved through the years, airport processes haven’t.
A robust Delivery Management System (or DMS) ensures that customers receive a consistent and streamlined brand experience across all aspects of their trip, from booking to boarding, enhancing traveler satisfaction, and building loyalty. This could encompass everything from the ability to purchase ancillary services on the day of travel to a biometrics-enabled fast and frictionless ‘curb to gate’ experience.
Real-time order synchronization and fulfillment. Delivery management enables real-time tracking, synchronization, and fulfillment of orders, ensuring that traveler requests are processed accurately and promptly, thereby reducing errors and delays.
Optimized inventory utilization. Effective delivery management helps in optimizing the use of available inventory, such as seats and ancillary services, leading to increased revenue and reduced wastage.
Integrated systems and operational efficiency. By integrating with various systems like CRM, GDS, and payment gateways, delivery management ensures seamless data flow and coordination across different functions. It automates and streamlines processes to reduce manual effort, minimize errors and increase the efficiency of airline operations, leading to cost savings and improved operational efficiency.
Scalability and flexibility. Modern delivery management solutions – such as the Delivery Management product suite within SabreMosaic – are scalable and flexible, allowing airlines to adapt quickly to market changes, new business models and customer demands.
Regulatory compliance. It ensures compliance with regulatory requirements by maintaining accurate records and facilitating smooth audits, thus avoiding legal issues and penalties.
Data-driven insights. Delivery management systems provide valuable data and insights into customer behavior, operational performance and market trends, enabling airlines to make informed decisions and stay ahead of the competition.
In summary, delivery management is vital for modern airline retailing as it enhances the customer journey, optimizes operations, drives revenue growth and ensures the airline remains agile and competitive in a dynamic industry.
What are the financial benefits of delivery management?
Today, the process of selling and servicing travel is too complex and existing Departure Control Systems are PNR-based and are not suited to the offer and order world. The move to modern airline retailing underpinned by an offer/order/deliver model seeks to address this by streamlining fulfillment and delivery to enable a more seamless end-to-end travel experience – and in so doing, unlock significant financial opportunity.
In their business case for airline retailing transformation, IATA validates projections from a 2019 McKinsey report to arrive at a potential benefit of $7 per passenger per year as a result of retailing transformation. It’s a huge opportunity. One that airlines can’t afford to pass up.
While the IATA analysis of the $7 per passenger incremental value attributes it to increased revenue and cost reductions across offer management and order management, there are key omissions from the airline business case related to the impact on operations that are worthy of consideration.
In addition to incremental revenue generated through the sale of ancillary products and services on the day of travel, we estimate that operational efficiencies achieved though order-based delivery management could generate significant cost savings. Streamlined staffing at airport checkpoints, enabled by off-site ID and document verification systems that replace manual processes, along with other cost-saving measures and seamless integrations, offers significant potential for reducing costs.
With passenger numbers set to double within the next decade, airlines that do not evolve towards more robust and scalable delivery management could severely limit their ability to deliver a seamless airport experience for travelers.
Rich Ramdanny
Director – Product Management | Sabre
What does the transition to delivery management look like?
Offer management and order management represent logical starting points in the transition towards modern retailing, particularly offer management which provides the lowest hanging fruit with clear and easy-to-measure financial benefits. That said, delivery management holds the key to a seamless traveler experience. It plays a critical role in ensuring a frictionless experience on the day of travel, which in turn supports customer loyalty, drives revenue growth and enables long-term retailing success.
Given the direct operational impact that delivery management has on travelers, it’s understandable that airlines would approach change with a higher degree of caution. In recognition of this, Sabre’s phased and flexible transition pathway empowers airlines to decide how, when and in what order they wish to implement the various elements of our delivery management solution.
For some airlines, this could mean consuming certain future-ready products earlier in the process, while still operating on their existing PSS platform. Other airlines may prefer to wait until later in their transition – once they have moved onto the new offer- and order-based platform – before enabling a next-gen delivery management solution.
How can airlines get started with delivery?
While the focus for many airlines is squarely on the offer and order elements of retailing transformation, we’re already working with airline partners that are looking to progress their thinking around future-state delivery management.
A good starting point is to work with your tech provider to identify Proof of Concept (POC) or even Minimum Viable Product (MVP) opportunities. Working on an MVP, for example, is a low-risk approach that can be an efficient way to deploy a solution with real-world benefits – such as addressing an existing pain point – alongside your existing tech stack. It fits with Sabre’s phased and modular approach to industry transformation, enabling airlines to continue using existing systems while adopting new solutions as part of the transition to offer and order management.
Explore SabreMosaic
The transition to offer- and order-based retailing is a multi-year industry-wide undertaking, with individual airlines at different stages of the transformation journey. See how SabreMosaic – our revolutionary airline retailing platform can help you get started.
