Why should airlines care about Offers and Orders?
In part one of our new series, we examined how transitioning to an Offer and Order model would greatly enhance the traveler experience by addressing key pain points. Now, we turn our attention to airlines, exploring how technological advancements could help unlock significant revenue opportunities – estimated at $40bn by 2030 across the airline industry according to a 2019 study by McKinsey & Company.
Here, we demonstrate how Sabre and IATA’s shared vision for Offers and Orders will free airlines from the constraints imposed by today’s standards and systems. Instead, airlines will be able to sell and service a wide range of new and personalized NDC-enabled offers to drive incremental revenue while adding value for their customers. When combined with the cost savings and service level enhancements that can be realized through more efficient management of orders, the business case for change becomes unquestionable.
What are Offers and Orders?
Offers include the different pieces of an itinerary that come together to form a trip. Today, offers primarily consist of airfares and air ancillaries. Over time, offers will expand to include other types of content – for example, lodging, ground transportation and other ancillaries.
Once a traveler selects an offer, it becomes an order. The order model sets the stage to simplify a variety of long-standing processes related to fulfillment, settlement and reporting, which can help airlines reduce costs and save time.
Today, airlines…
- Have limited visibility into individual traveler preferences
- Face difficulty selling and servicing a broad range of personalized offers
- Struggle to manage complex partnership agreements due to inadequate system capabilities
Enabling airlines to better meet the needs of travelers will enhance differentiation in a crowded marketplace, promote loyalty and ultimately deliver profitable, sustainable revenue growth.
In the future, airlines can…
- Create, fulfill and service more personalized and higher margin content
- Use real-time data flows from Offers and Orders to grow revenue and reduce costs
- Embark on new partnerships for air and non-air products, improving choice for customers
The Offer and Order model opens new growth opportunities and gives the travel industry more flexibility in terms of what can be sold, merchandised and managed.
In our next installment, we start to bring Offers and Orders to life by exploring the fundamental building blocks of a retail-led solution for airlines. To receive updates when new posts in the series are available, click here to leave your email at the bottom of the page.