Part I: Airline Shopping and Distribution
Recently, I’ve been reading a lot about airline recovery, we all have. Two articles caught my attention, highlighting the importance of airline digital sales for generating revenue post-COVID-19:
- In this interview, industry analyst Henry Harteveldt shares that leisure travel is expected to recover first, with people emerging from the coronavirus outbreak with much greater understanding, comfort and willingness to transact online.
- In this article McKinsey points out that travel is the second thing people want to spend money on when a lockdown ends. Some of the findings for China indicate that younger generations feel more confident resuming travel, which means that digital-savvy travelers will be the first to start looking for flights.
All of this led me to explore some key capabilities around airfare shopping that airlines can consider in the short- and mid-term to drive demand and capture more direct bookings.
Your Website is Your Storefront
The airline dotcom has not always been the biggest contributor to airline bookings for all carriers. But when demand starts coming back, this will start to change for several reasons. The first and most obvious is cost – airlines’ customer acquisition cost in many cases is significantly lower when shopping happens on the airline website. So many of airline marketing activities post COVID-19 will be focused on driving direct traffic to their digital channels. At the same time, travel agents or cheap flight metasearch engines may no longer be the top of mind place to book, with travelers’ preference shifting in favor of booking directly with the airline.
What this means is that there is a good opportunity for airlines to revamp their website and directly offer more relevant and personalized offers than just the lowest available price while being in control of the customer experience during shopping and booking. This also opens up room for ancillary upsell which, when smartly done, is a win-win for both airlines and travelers.
Make Flight Shopping Easy and Seamless
One of the things I consider important for carriers to do is make flight shopping easy and seamless. Flight schedules are fairly reduced right now and options to get from point A to point B will probably remain limited in the next months. So, if I decide to travel, I want to easily find the destinations that an airline flies to and that are safe to visit. A good way to do that is through affinity shopping that allows travelers to search by travel theme or budget. Another way is to promote destinations with banners, and airlines can do that on their website, as well as on all the digital channels they push flight offers to. Both options are great ways to promote not only the places that are now available with the carrier, but also the prices at which a flight can be booked. Flight offers must be accurate and bookable so that a click on the banner converts into a booking. Take a look at this demo to learn more:
Another way to make sure that travelers stick to the airline dotcom is to prompt their search efforts. What this means is that when I try to search for a flight, I want to see the available origins and destinations with the airline even before typing. A smart search widget can intuitively offer continents and countries that are available for travel, which avoids the awkward situation where I get the “Sorry, no flights available!” alert. This can also be combined with the lowest available prices on the calendar so that I know on which days of the month flights are available and at what price I can book. Displaying that information upfront makes the shopping experience transparent and increases the likelihood of conversion. In this demo you can see these tips in action:
Automate Flight Repricing
A major flight disruption like COVID-19 painfully brought forward the importance of repricing automation and self-servicing. Overflooded customer support lines and long error-prone manual handling of ticket changes and cancellations are a cost burden for airlines. Repricing automation helps reduce this cost but also introduces instantly things like waivers to override change and refund rules. In short, the standard repricing rules can be overridden with many available configurations of the waiver rules around markets, travel dates, and other parameters. Regardless if disruption is driven or not, such capabilities help provide travelers with flexibility and more choice, while handing airlines more control and bandwidth to creatively offer promotions. Watch this demo video to learn more about waivers:
Go Direct in Distribution
The share of indirect bookings might decrease due to the coronavirus outbreak, but it is unlikely to disappear and has always been costly for airlines in terms of GDS fees. With the rise of IATA’s NDC (New Distribution Capability) however, a lot of airlines are shifting to direct distribution to metasearch, OTAs, aggregators, and other travel players. Bringing airline offer creation and management in-house has many benefits – lower cost of sale, better content control, higher upsell probability – all positively impacting the bottom line. In the context of recovery, direct distribution will play a key role in optimizing costs, while maximizing revenue.
In this video I talked to PROS Principal Boyan Manev to understand how NDC and direct distribution can help airlines become better retailers:
In summary, I would like to leave any airline professional reading this blog post with the takeaway that flight demand will come back. When it does, it is the airlines that embrace changing their storefront to make flight shopping and booking a better experience that will convert lookers into bookers.