Eight ways airlines can prepare for a new era of retailing
The airline industry is at an inflection point. Traveler needs and expectations have evolved. There’s a need to adapt; to identify smarter ways of working and increase profitability.
The industry has its eyes on a more traveler-centric retailing model enabled by offers and orders. But to achieve its vision, the airline industry must undergo extensive transformation.
The opportunity presented by industry transformation is well-trailed and significant – $7 per passenger additional revenue by 2030. So the question is: What can airlines do today to prepare, and maximize their chances of success?
Here are eight considerations for airlines looking to set themselves up for retailing success, split into categories spanning strategy, technology and organization.
STRATEGY
1. NDC
Distribute personalized offers across direct and indirect channels
NDC is opening up the capability for airlines to create and distribute enhanced travel offers that incorporate more elements of a trip and ensure travelers can more easily find what they’re looking for. These enhanced offers could include upgrades, flight ancillaries, exclusive fares and promotions, limited time offers and travel packages with both air and non-air components (from third party vendors).
2. Dynamic pricing
Sell products and services at any price point
Dynamic pricing is a departure from traditional, static filed fares and instead provides the flexibility to charge any price at any point in time. It can help airlines provide intelligent, tailored offers to different customer segments, taking account of both internal and external variables (e.g. the airline’s revenue management controls and data signals on the current competitive marketplace).
3. ONE Order
Seamlessly fulfill traveler requirements
Complexity is the root cause of many of the struggles faced by airlines in trying to sell and service consistently throughout the travel experience. That complexity manifests in various ways including multiple reference numbers for different trip elements, slower customer service as a result of different systems and processes for each trip element, and constraints when making changes to an itinerary.
TECHNOLOGY
4. Open, modular platform
The flexibility to meet evolving customer needs
The flexibility to evolve and adapt is critical to long-term success, and to do this, airlines must be in control of their tech platform, it must be an open ecosystem and it should be modular.
The concept of ‘openness’ – of airlines being able to select and combine modules developed in-house, built by Sabre or procured from third parties to create a customized solution – promotes innovation across the industry and aligns with the needs of travelers while opening new revenue opportunities for airlines.
5. Scalability
Keep pace with demand to maximize conversion opportunities
The airline industry should expect significantly higher volumes of air travel shopping requests and for those requests to require vastly more complex responses. The solution: cloud infrastructure. Creating compelling NDC-enabled offers is crucial for success, but it’s equally important that airlines present those offers quickly to travelers.
6. Data, AI/ML and experimentation
Use data intelligently to build competitive advantage
Capturing, storing, analyzing, interpreting and applying data in a meaningful way to anticipate the needs of customers and drive competitive advantage is a critical piece of the airline retailing jigsaw puzzle.
ORGANIZATION
7. Lead from the top
Top-down inspiration is needed to effect extraordinary change
Sabre has worked closely with Boston Consulting (BCG) to understand the organizational enablers of a successful airline transformation to modern retailing. First and foremost, we believe there’s a need for transformation to be driven from the highest level in an organization; for ‘top-down inspiration’.
8. Functional adaptation
Redefining functions, roles and skillsets for retailing success
When it comes to which capabilities are needed for the future, Offer Creation and Order Management feature high on the list, with some airlines building a dedicated team to create and price bundles, real-time contextualized offers, and other products and services and to sell them to the most relevant customer segments. This is a move away from traditional pricing practices in favor of a stronger data-driven customer focus and product orientation.
Join the conversation
Did you miss Skift Live: ‘Are airlines ready for a new era of retailing?’. Watch the replay to hear industry leaders from Sabre, Oman Air and Travel in Motion discuss airline readiness to embrace offer- and order-based retailing and practical guidance on the transition path that lie ahead.
About the Author
Andrew Thorpe is part of the Sabre team exploring what the future of travel will look like and how airlines can succeed with offer- and order-enabled retailing.