This article is part of the Airline Retail Transformation Series, covering key topics on airline Offer and Order Management. Learn why airline executives should embrace commercial autonomy, how AI is transforming revenue management and airline retailing, and how to reap the benefits of airline-led offer creation, optimization, and distribution outside of the GDS.
To speed up retail transformation efforts many airlines are undergoing significant changes for more content and distribution control:
- the Lufthansa Group went live with continuous pricing during the biggest crisis the airline industry has ever seen;
- American Airlines pulled approximately 40% of its content from legacy EDIFACT GDS technology;
- Air Canada and Singapore Airlines are yet another two carriers that implemented a higher GDS distribution fee, the latter also pulling some of its discount fares from the legacy channels.
The ultimate goal of such activities across pricing and NDC distribution is to win more commercial autonomy (read more about The Commercial Imperative for Airline CCOs) to retail more effectively with better focus on the end customer outside of legacy limitations.
In this blog post you can explore four benefits of airline-led offer creation by detaching offer distribution from the GDS. Watch the 2-minute video below instead to learn more:
- Lower distribution cost and cost of sale
For decades airlines have had a middleman–the GDS–to create and distribute the airline offer on indirect non-airline owned channels. Although this legacy approach ensured increased reach and coverage for the airline brand, it also handed airlines rising distribution costs.Today, carriers can become the single source of truth for their offers. By implementing a standalone shopping (offer) engine for your NDC needs, independent of your Passenger Service System (PSS) and detached from the Global Distribution Systems (GDSs), your airline can have full control over shopping transactions, offer creation, and distribution. The direct benefit of this is reduced distribution cost and cost of sale from the high GDS booking fees, allowing you to invest the unspent resources into revenue generating activities like dynamic pricing or ancillary offer management.
- Control over channel distribution strategy
With full offer control, you are now well equipped to strategize across channels of sale. Channel distribution control is a must if you want your airline to successfully manage revenue streams. In an NDC world, all distribution channels are connected directly to the airline. And it’s your airline that controls content, including availability, for each distribution channel and individual sellers.For example, not all metasearch engines might need access to all your brands and premium cabins, but they do require the same level of offer accuracy and speed as your dotcom. Channel distribution optimization is key to driving costs down while increasing conversion on intermediary sales channels.
Check out how PROS has helped the Lufthansa Group successfully manage direct offer creation and distribution to their entire metasearch network, leveraging the power of continuous pricing to drive incremental revenue.
“The goal was a single streamlined solution for the entire Lufthansa Group (LHG) with a direct connection to LHG availability which gave us back the offer control and allowed us to place dynamic offers, granting us high accuracy and high conversion rate.”
Janine Hoerburger – Manager Distribution Solutions, Lufthansa Group
- More content and better performance
Just because it’s not your dotcom, doesn’t mean that offers across indirect channels should suffer bad quality, be it low shopping speed or poor accuracy. Shopping performance is key to driving conversion, yet many airlines sacrifice content (offer) quality for indirect channels due to high transactional costs for distribution. By breaking free of the legacy distribution model, you can have it all.Airline-led offer creation through NDC requires offer and availability technology that allows you to scale across a growing number of distribution channels and sellers without the need to sacrifice content quality. Distribute at high speed and top accuracy across online travel agencies and metasearch engines. Showcase more than your cheapest fare, because through direct requests you now know who is shopping for travel. Make use of the shopping data and send the right offer based on context. No sell discrepancies, no revenue leaks.
Check out this video and learn how you can protect revenue with accurate last seat availability across any channel or interline partners, eliminating dependency on real-time inventory data feeds.
With a great shopping experience in place, a natural next step would be to boost ancillary spend of travelers. In order to achieve this, you airline should be exploring merchandising and smart retailing techniques like ancillary pricing and bundling. Airline-led offer creation enables you to oversee your ancillary revenue strategy on the dotcom, as well as across NDC-connected partners. This helps ensure ancillary offer availability and consistency across direct digital and NDC channels, so customers can purchase extras like baggage and seat assignment regardless of where they shop for flights. At the same time, it allows your airline to have a differentiated and revenue-optimal ancillary strategy for different phases of the traveler journey.
- First step toward dynamic pricing and offer optimization
The commercial freedom that comes with airline-led offer creation will power retail innovation for decades to come. Therefore, the first must-have step for any retail innovation is to gain control over offer creation and distribution. It provides your airline full control over product, pricing and NDC, so you can start paving a roadmap toward offer optimization.Then, regardless of where you choose to go–in the direction of continuous pricing or ancillary optimization, your independent retail infrastructure to get innovation out on the market across any distribution channel is already in place and working at scale. And you’ve completed the first prerequisite for modern airline retailing: bringing offer management in-house.
Check out the video below to learn about best practices from the journey to offer optimization of leading carriers Emirates and the Lufthansa Group.
Read the next article in the series to learn how to optimize offers on metasearch engines (MSEs).