Amadeus on changing business models, tech ROI and NDC

Business strategy evolution is as critical as technology revolution according to a senior executive from Amadeus.

In the sidelines of IATA’s World Passenger Symposium in Barcelona last week, tnooz spoke to Gianni Pisanello, strategy director Amadeus IT Group, on progress in travel IT infrastructure.

He also shares what airlines need in order to see a return on their investment in technology.

One of the core benefits of strong IT infrastructure for airlines, which can immediately justify the expense, is being able to manage mass travel disruption in an efficient way, Pisanello tells us.

“For example, the volcano in Iceland which grounded thousands and thousands of flights, with millions of people needing to be relocated.

“Our system can do that in an automated way, in a matter of minutes. We’re automating all of the disruption, using AI, business intelligence, all on our PSS.”

But disruption in the popular sense of changing business models—of the kind delivered by Uber and Airbnb—requires more than technology to deliver a return, Pisanello adds.

“On the ancillary side, we invested a lot of money to make it happen only to realise that airlines weren’t ready with their marketing strategies.

“Some were, but the majority were not and there wasn’t a critical mass. So when you go to the travel agency and you tell them, ’Offer these ancillaries to customers when you book them,’ they say: ‘There’s no critical mass, you’ve got one airline or two. I can’t go through the work of integrating this if there’s only a couple of airlines.’

“And it took a while before the airlines were ready to ramp-up their marketing. So, before technology there has to be a business strategy. That, to be honest, was a big issue for us, because we spent a lot of money and it’s only now that we’re seeing a return on that investment.”

NDC integration

While—like Sabre and Travelport—Amadeus committed to NDC integration by 2018 at IATA WPS, Pisanello points out that NDC is an element of a broader need to update airlines’ digital strategies and is not a silver bullet.

“What NDC allows is for all of that [integration] to be easier. XML is an easier format to play with than others…

But, by the way, XML, in a few years, will be obsolete and we’ll move on to something else. We’ll move to JSON, or something else. JSON is used primarily for mobile applications, so if we’re moving to a real mobile world then it’s likely we’ll be seeing greater adoption of JSON.”

“What is done with NDC could have been done with existing infrastructure. This is more proof that it works. It’s putting in production the reality of NDC. There’s a lot of talk in the industry about companies doing pilots and doing a booking on NDC, and that’s great, but what matters is doing things at scale.

He points to the work Amadeus has done with Finnair and Skyscanner as a good example of this.

Taking to the cloud

Pisanello believes that the adoption of open systems and cloud technology will have a greater beneficial impact for the industry in the long term, in terms of flexibility.

“The cloud is going to be part of the solution. The cloud is in every business, in every industry, especially in travel when you’re talking about all of the shopping stages, it’s billions and billions of transactions taking place. So we need to find efficient ways to processing all of that.

“Part of that is access to very stable platforms like Amazon web services and Google cloud.”

The company has already helped Lufthansa in this direction.

Collaborating to reduce risk

While there may be concerns over security with open platforms, Pisanello believes that security is a risk for all systems and constant vigilance on cybersecurity has to be a priority for aviation.

“There is always going to be a risk. Determined entities are going to find ways to do this. So we have to protect ourselves the best we can.

“In Amadeus, we have very serious processes of how we deal with that, and we have to unite—all of us, all of the technology players and all of the companies that use these technologies—to deal with this risk and to make sure that all of the weakest links are strengthened.

“It only takes one employee to have a moment of inattention for something to happen. I think it’s a massive issue and we—I think everyone else too—are going to be investing in it.”

One of the criticisms of airlines and aviation technology specialists floated during IATA WPS is that the mindset of targeting adoption for a particular date automatically builds-in adoption delays.

If you say that universal adoption of NDC will take five years, for example, then people will take five years to accomplish that, even if it could be done sooner.

Responding to whether this is a fair criticism of the airline industry, Pisanello says:

“It’s not about trying to be pessimistic [on what can be accomplished]. It’s based on experience. We’ve done e-ticketing model, and the EMD transition.

“It’s just the knowledge of all of the participants, of doing the migration to a new system of IT technology. There will be lots of bugs and things you have to figure out. As you iron those out, those things take time. I don’t think you should look at that in a negative way.

“The great thing about the airline industry has been the fact that the standards have been so strong. IATA has played a really important role in that in the past and I hope it continues, in an industry where there is so much interoperability between airlines.

“There are things happening between airlines that are not happening between other participants in other industries. That’s a unique trait, I would say, of the airline industry. They have to keep that.

“As we move on, it might take a little bit more time than someone doing it by themselves, but we’re going to move the whole industry and reach a new level. So let’s go towards it and do it right.”

Managing change

Pisanello returns to the core idea that any systems change is not just a matter of deploying technology willy-nilly, but that technology must evolve to fit a need.

This means that airlines must first evolve their business strategies and find the technology to support those strategies. Technology companies, for their part, have to build their own business case for investing in systems updates.

“As with the ancillaries, there’s no point in us investing in designing the best car if no one is going to drive it because they don’t have a license. Everyone has to evolve in terms of maturity and capability.

“The argument now, based on our learnings, is that we match our evolution to the maturity of the market. We’re going to deliver things slightly earlier than that, but we’re not so far ahead that nobody can use it.

“It’s not just the technology, it’s the business strategy and the economics of it. We all work with shareholders and we have to show the ROI.

“The right investment goes with the right economics for everyone. We have to show where the return on investment is.

“If we’re doing things to be disruptive, just for the sake of being disruptive, just for the sake of using technology, we’re going to fail and that’s going to cost us all a lot of money. That’s why our approach is more agile, working with the customer, and moving forward.

“We’re involved in many different areas and we’re going to support our customers in this digital revolution. When you talk about NDC, these are small parts of a much bigger picture, which is the digital transformation of an airline. We want to support airlines in that transformation.”

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