Shopping and Pricing Solutions that Bring Business Strategy to Life
Airlines are grappling with search traffic that is increasing exponentially each year. Responding to search requests is hard enough; are you employing the right response strategies? Are all metasearch engines the same? Do all channels deserve to know high-quality availability in real time? Should you offer the same ancillary products to all channels? Watch this session to learn how we are deploying solutions that empower airlines to serve up availability, pricing, and upsells to different channels that fit the right business strategy.
About the Speakers
Dimitar Kamenov is a highly experienced travel industry technology professional with over 17 years of experience in delivering solutions for airline e-commerce and distribution. For the last 13 years, his focus has been on building the PROS best-of-breed shopping and pricing engine and the products needed to enable airlines a path to digital transformation and direct distribution of their products.
Neli Radulova is a highly experienced aviation professional with over 25 years in various roles across the industry. Prior to joining PROS, Radulova held key management positions in Bulgaria Air, leading the Revenue Management and Pricing Departments. In her role as the Product Manager for PROS Merchandising, Radulova is developing the product that enables airlines to maximize ancillary revenue and is strongly focused on delivering the best retail practices across the solution. Her experience in pricing and revenue optimization processes is combined with a thorough market and competitive knowledge to help understand better customers’ business needs and identify the key functionalities that bring added value to airlines. With her strong focus on delivering the best results, her expertise spans across a wide range of activities: from product development, positioning, pricing, and go-to-market, through to extensive support for marketing launches and campaigns, sales enablement, and customer trainings.
Full Transcript
Dimitar Kamenov: Good day and thank you for joining us. My name is Dimitar Kamenov and together with Neli Radulova we will talk about distribution, direct and indirect channels, offer management and why is it important for the airline to own and control the offer creation process. And by control, what we mean is enablement, giving the airline the authority and the means to determine the type of offers that reach the distribution channels. Still, traditional GDS is the dominant distribution channel for many airlines [inaudible 00:00:44] and that's not necessarily a bad thing. Yeah, there are many middlemen between the airline and the traveler, which makes difficult for the airline to personalize the offers that reach the traveler and [inaudible 00:00:01:00]. We can't ignore the fact that the GDS is in effect the opera creation engine or we engross and set up that rarely much the airline distribution strategy....
In fact, often the airline is forced to align its strategy with the capabilities of the GDS. As a result, the GDS may return not the best offer for the travelers. There are challenges in today's world that airlines are facing when it comes to GDS distribution. We can summarize those as no control on the offer creation, high distribution costs, low level of personalization and also untapped revenue. Even NDC is not adopted to its potential by GDS imposing limitations to reap the benefits of NDC. For these reasons, more and more airlines are moving away from the GDS and looking to shift to a distribution model they control. The pandemic [inaudible 00:02:08] more highlighted the importance of changing the distribution model.
Changing the distribution model is defined by IATA NDC, will enable airlines to transform the way air products are retail by addressing the industry current distribution limitations, product differentiation and time to market, access to reach content and finally transparent shopping experience. This change demand the change in the architecture behind the distribution model. So if you compare the legacy architecture and the new direct one, the difference that really stands out is who is responsible for the offer and all management. We still have few indirect and direct channels, but who is controlling that, who is creating the offers? GDS offloading these responsibilities to the airline, becoming aggregators in the new architecture and TSS role is decreasing to the core functionality.
In the Legacy Architecture, the offer creation for indirect channels is a responsibility of the GDS, and for the direct distribution channels of the airline, it is the PSS offer creation capabilities that are used. Moving to the new Airline-Led architecture, the airline gains more control to be less dependent on the PSS to create offers. Airlines can choose openly to connect to providers depending on their needs and be module to design their offer and order architecture. So in a way, the difference between indirect and direct is worrying because the airline is the entity that is responsible for creating offers for both channels.
Dimitar Kamenov: PROS Retail solution for airlines enables airlines with offer and all capabilities by giving care lines the control to generate and manage independently or forcing orders depending on the channel. The Orchestration layer in the solution, on that you see here on this little diagram here, is responsible for the distribution of offers to the channels. The granular setup and configuration of rules per channel allow the airline to manage effectively the offer creation and offer distribution according to the channels. By managing this distribution process, there are a few key benefits for the airline; have control over the cost of sale, be responsible for the content in the offer that reaches the traveler and pricing the offers in the context of the shopping request and passenger details. In the next few minutes of this presentation, we're looking more details in each one of those benefits.
Well, let's start with control the cost of sale. This is one of the key benefits that we have found [inaudible 00:05:25] and there are two main drivers, lower distribution costs, yes. PROS solution here was bypass the GDS and optimize the sky distribution costs. Redirecting bookings to the airline PSS, realizes a significant cost saving. Connecting directly to channels allows airline to determine on their own, the distribution fees they want to pay. In addition to the cost decrease, there are also revenue opportunities. Revenues from direct bookings grow because of the reduced distribution costs and the improvement of the content deliver, better accuracy, better speed. All these matters when we talk about shopping because these are driving increase in the conversion ratios, converting lookers into bookers. When the booking is done directly with the airline, the airline has all the booking key information and can identify the travelers.
This allows airlines to more successfully upsells within series. Even in the cases where the agencies, the middleman, the airline should be the owner of the customer and needs to be able to determine what content to offer to travelers with the agency being the one to execute. For airlines, it is important to have control over both, the content that reaches traveler, but also the content that reaches each distribution channel. The airline.com and the GDS in this context are also considered to airline distribution channel. PROS solution enables airlines to determine on their own what content to reach to distribution channel. For example, this can include things like award fares, flight combinations with specific carriers or interlining to be displayed. What availability to be used? [inaudible 00:07:28] to be offered? What bundles, at what price? And so on. All of this is entirely managed by the airline.
Let's see how is the offer content defined per channel and then distribute. The airline orchestration component in PROS solution has two main responsibilities. It recognizes the channel that is sending the request and it is responsible for the generation and the delivery of the respective help depending upon the channel, this can be a website, mobile, storefront, it can be an API to power such UI, UX, or it can be a direct API by an NDC, XMA or a Pros Json format, whatever, depending on the channel needs. Since the orchestration layer has a recognized the channel, this information is propagated to the offer management component where offers are being created. Now the offer creation process takes into account the channel and any specific rules defined for that channel or apply.
Dimitar Kamenov: The offer creation rules include such that control the wide itineraries, itinerary rebuilding groups, widows wide itineraries B, only direct flights or you're going to offer also connecting journeys, what partner airlines you want to include as part of the offers, how you want to rank those flight journeys and so on. Then we have also a set of rules controlling brands, brand at first, first fare family definitions. So what type of brands and fare feminist you want to offer to that specific general. Connection to the airline availability? There are also rules for reusage of the collected availability information in order to reduce polling costs or channels that generate high traffic of shopping requests. The airline also has a control over the type of fares, the private fair access, modification of the filed prices, the files first in ATPCO.
And then we go to the merchandising cross, where we talk about where we have rules that control the NC ricotta works, or what series to be offered depending on the channel, how you price those some ancillaries and series motel the applicability rules of Dawson's theories. The theory bundles that you want to create an offer to the different distribution channel. So there are really a right variety and trenches for different opera management rules that the airline can use and configure depending on the channel.
All the configuration, all these rules can be done for each channel, as you already said, but the ROI can go even more granular down to a sub channel. Like in this example where we have two different OTAs that belong to the OTA channel here, and each will receive different offers, due to the different strategies the airline has decided to implement. And all other OTAs part of that channel will receive offers as per the channel configuration.
Personalization is one of the advantages of the airline led offer creation. In this example, orchestration layer is identified based on the search request attributes that the request is for a specific user or a customer profile. This information is sent to the offer management and your offers are created without context in mind. So user X will be getting different offers than the travelers part of the customer profile.
Dimitar Kamenov: Following the same analogy, we can use another example. Let's take, the medicine change in general. So here med search engine one will receive non-branded offers only the worst price per quite with [inaudible 00:12:09] journeys limited to the airline prime flights, and [inaudible 00:12:13] too will receive branded offers because it can consume this information and presented the end customer. This is done by orchestration sending information to the airline offer management saying, "Hey, this is the med search engine one, and this is a sub channel. So please use the rules for that sub channel med search engine one." Symbolize using PROS solution, the airline can easily differentiate its offers for a channel and distribute those through a defined offers created rules for general sub general interior customer profile. To further explain that concept, we have prepared two use cases, and Nelly will walk you through those.
Neli Radulova: Thank you, the Dimitar. So we would like to give you a better idea of how PROS solutions for shopping, re-shopping and merchandising can help your airline to sell flights and [inaudible 00:13:20] in a more dynamic and personalized way. And as an example, we will look at two different use cases for distribution to online travel agencies. In the next slide, you will see how an airline can differentiate their offers or the content for each agency separately. This can be done by the airline itself by creating and managing a variety of business roles in real time. The rules are configured directly in prosingle web admin platform, giving your airline direct control over the pricing and the rich content rules per channel. Just as my colleague Dimitar presented earlier, the benefits for your airlines are control over the cost of sale, control over the offers and control over the pricing.
So let's have a look at the use cases. For the first online travel agency, which we have named Cheap Flights, the airline has specific rules configured for the offers that are processed and returned. The airfare and the flight offers are built based on specific market as an example, we took a few German speaking market with a set of itinerary rules to return direct and flights with maximum one connection only. Which can be operated or marketed by the main carrier and its interline and code share partners. Dear fare offers are built using only the airlines public fares. And on top of that special seasonality discount has been created through the price modification functionality in our shopping solution.
So going to the repricing and the re-shopping scenario for this online travel agency, the airline has defined specific tax codes as non-refundable and non exchangeable. Wherefore the others, this restriction is valid only if the journey is partially flown. Now let's have a look and move to the merchandising configuration. For the auxiliary offering, the airline will use only their ATP code file services. On top of the prices which are filed and distributed in ATP code, specific rules are created in merchandising to additionally influence the offers for certain periods like summer and winter vacation, and also applicable for weekend city breaks.
Neli Radulova: In addition, when those are created directly in merchandising solution to offer special city break packages for seats, meals and flounce services. And for the ATP co-products rich content has been diversified for specific markets and specific passenger profiles. So let's move to the second use case. The second use case is to show you a different set of rules configured for the offers that are returned for an online travel agency, global travel. For this online travel agencies, the markets are slightly different and the flight ancillaries were built to return both direct and connection flights regardless of the number of connections, again operated and marketed by the main carrier and its interline and code share partners.
The fares that are available for this specific online travel agencies are public and private, private fares which are filed by the airlines using category 25. Also a diverse set of discount rules were created like special discounts applicable for frequent flyer, with the possibility for payment with a combination of miles and cash, or only with miles, special offers for family traveling and voucher discounts. In the repricing and the re-shopping scenario, we can see the specific ticket rules have been created for non repricing later than four hours before departure. And also the airline is allowing waving penalty change fee applicable only for specific flight number and only for a certain travel period.
Now, let's look at the merchandising. So for merchandising this agency, the ancillary catalog will support both ATPCO co file services and non ATPCO services. The non ATPCO services are the services which can be created directly in the merchandising solution. The catalog has discount for certain time, day of week, travel periods and different point of sales. There are rules also created for the possibility of cash and miles payment based on the frequent flyer to your level and also promotional codes. In addition, the airline has created two bundles and for this agency, the bundles are applicable for business and for leisure travelers with the agency. And to gain the rich content has been diversified for specific market and specific passenger profiles. The rich content is distributed in this case for both ATPCO, non ATPCO ancillaries and the bundle offers.
Neli Radulova: To sum up with the high level of configurational granularity and flexibility, the PROS offer management solution provides your airline will be able to completely take the control of distribution across different channels and to meet your specific business needs. PROS can book these offers for the above mentioned agency directly in the PSS. And in case your customer needs to do any post booking changes or tickets refunds, PROS repricing solution is here to help you with defining and calculating all the relevant possibilities, providing your end customers with an exceptional and seamless travel experience.
Dimitar Kamenov: PROS provides high level of configurability, because we have already saw that. So our airlines have many leavers to prove to manage pricing across fare seats and ancillaries. Well, PROS pricing keys done outside of the PSS, it is fully industry compliant or ATPCO and IATA rules are for, to ensure highest accuracy and no discrepancies. PROS customers use our solutions across all their channels, their own websites, mobile apps, different agency channels, med search engines and so on. PROS enabled rule-based discounting as well as we are the pioneer in continuous or dynamic pricing strategies.
So we know how to support the PSS for few months of those strategies. In addition, PROS provides flexible and ancillary pricing capabilities like modifications of ATPCO file services and managing pricing of our card products, creating bundles of individual services, putting pricing groups for those bundles. In this area PROS pirated personalization by employing AI or ancillary ranking as the first step. The end goal for airlines is to revenue manage the total price using science, and this is the part that PROS has always supported is our co-expertise. We support it today and to support going forward.
At the end of our presentation, I would like to summarize the value of the direct offer creation and distribution. None of those should be a surprised, and we already touched on those points during our presentation. With direct offer creation, the airline is having a full control on the content of the offer on the price, how the offer is packaged and presented. Unlike the indirect offer creation where someone else is doing the creation using its rules, [inaudible 00:22:33] rules. Also, we should not underestimate the flexibility and speed of change the airline has to be able to amend offers based on variety of factors either by using PROS or AI.
And so what we are proud of with our management solution is really, user-friendly a web interface that the airlines can use 24/7, go amend and control the offers for the different distribution channels, sub channels, different profiles and so on. Then there is the cost reduction coming from shifting bookings from the GDS to a PSS. Differentiating the offer content across distribution channels, sub channels and customer profiles, allows the airline to improve the personalization and increased conversion on all the distribution channels. And finally, when the airline is owning the offer creation and distribution of those offers across channels, the airline decides on upsells strategies, bundling of products and effective shopping basket control.
Dimitar Kamenov: And this is the end of our presentation. We really hope that you find it useful. If you want to find out more about PROS offer and order management, shopping and merchandising solutions, you can visit us in the innovation center or contact us directly. Thank you and enjoy the rest of our digital outperform.
Neli Radulova: Thank you.