Last week, IATA held its first Dynamic Offers Forum in Geneva — gathering leaders across airlines and IT providers in an active discussion about the path to airline retailing.
The creation of this event is a clear sign that we, as an industry, are no longer looking at a vision. Both carriers and vendors are moving at full speed towards a much more customer-centric environment and building the foundation for the next big industry change: the world of offers and orders. IATA is driving transition, leading, and supporting the industry in removing challenges and regulatory barriers.
Being a retail enthusiast, I wanted to share my key takeaways from IATA’s two-day forum on how airlines can prepare for the new world. Take a look below and reach out to me after - I’d love to hear your thoughts on these topics.
Define the Business Model
There are many innovation initiatives driven by IATA, IT providers, and airlines themselves to enable a dynamic offer environment. And one thing is clear – before putting in place a new piece of technology, airlines must be clear on their business model. Without a transparent vision across the C-suite that is communicated and adopted across all departments, innovation initiatives are set up for failure. Innovation is driven by people who identify with the company’s vision, brand, and goals to drive its success.
Adopt the Retail Mindset
The new world requires introducing new ways of doing business – new processes, new talent, new structure… you name it. This means adopting a mindset that embraces change as a positive thing to impact both carriers, their distribution network, and their customers. In an industry where safety and security are top priorities, this is not an easy shift. But there is a clear understanding that retailing must create an environment where testing and controlled failure fuels data-backed learning on what drives higher revenue. As the department that’s infused with science and expertise, revenue management is to be leading the change embracing broader responsibilities under its wing — like offer optimization across all boards – individual, group, ancillary sales, etc.
Move from Static Fares and RBDs to Dynamic Offers
The matrix above is IATA’s industry framework for dynamic offers and presents a common talking ground for what these could look like. Airlines can be in different quadrants of the matrix at the same time, depending on their strategy across markets and channels. In a world of offers and orders, the main revenue generator is product differentiation where airlines are in control of product and pricing in real time. The definition of ‘dynamic’ is much more linked to relevance then to the diversification of every single offer. By delivering relevant dynamic offers in terms of products, services and price, airlines can realize diverse benefits: increased conversion, revenue optimal prices, and new profitable partnerships.
Invest in Transition and Scalability
We are in the transition phase today where the old and new worlds co-exist. While building the structure for dynamic offers, both airlines and their IT vendors must ensure that any form of dynamicity, be it continuous pricing or ancillary personalization, is able to seamlessly be consumed by legacy and new infrastructures, while growing scale across sales channels. As demand grows and airlines take ownership of their offer creation, it is also crucial that carriers evaluate the extent to which they want to respond in a dynamic manner. Would all channels, partners and anonymous flyers need the same level of dynamicity with every single request?
Put the Customer Experience First
Whatever strategies for dynamic offers that airlines deploy, keeping track of the customer experience is crucial. Travelers outside of frequent flyers and airline enthusiasts rarely understand the world of booking classes, fares, change, and cancellation policies. All they need is transparency and trust that they are getting the right product at the price they are willing to pay, for which customer experience during shopping and booking is key. We, as an industry, need to make sure dynamic offers are created but also presented with the customer in mind in order to set for success of the next generation of airline retailing.