This past year has seen considerable activity in airline travel distribution in what has been an effort for many airlines to initiate a change to a more retail-focused behaviour.
This is not a change forced by airlines; it is brought upon airlines by consumers, digitisation and the retail market, and will continue to change the face of the industry into the future.
In their paper ‘An Outlook into Airline Retailing in 2018’, Travel in Motion looks at various aspects of airline retailing over the next 12 months, addressing each aspect with observations, predictions and a forecast of what may not happen as expected or hoped.
Aidan Brogan, CEO of Datalex, sponsor of the Travel in Motion paper, said:
“With technology at their core, successful platform businesses deliver products and services with exceptional precision while optimising their operations.
I believe 2018 will be the year that airlines continue to experiment, to grow revenue and profit sources, and to take their place as critical players in the rapidly evolving travel retail ecosystem.”
The outlook is split into five sections, covering the consumer, trade partners including OTAs and metas, distributors, the airlines and finally the technology.
We have seen considerable change in consumer behaviours and expectations over the past ten years. Today, the continuing trend and expectations for things to “just work” is ongoing, as well as the expectation of the consumer to be able to do everything on-the-run and with more “me-focus” – personalisation. This “uberisation” of travel buying – reducing a process to the most simplistic interaction model – is what consumers are getting used to.
But, whether for purchases of goods or services, this simplicity has not yet reached the air travel industry.
In this area, we foresee airlines simplifying their mobile and web user interactions, with many launching new mobile sites and apps, but few succeeding in making it simpler for the consumer.
With Facebook Messenger, WhatsApp, Line, WeChat and others, messaging-type interactions are increasing, and the consumer has a heightened expectation of what can be expected from messaging type services we call “chatbots”.
A small number of airlines and travel agencies are currently engaging technology companies to provide chatbots. This will continue and increase in 2018. Chatbot capability and intelligence will improve, but will not reach a high level of maturity just yet.
There is a growing expectation among various demographics that the travel provider – either the airline or travel agency – will not only be able to provide a door-to-door travel product but also accompany the customer on the journey – at least virtually. The ability to communicate with the supplier for support or more personalisation will be expected by the consumer. Some airlines and agencies will be able to provide this service level – albeit at a slow rate of adoption from these entities.
The trade partners
A general trend which we feel will get even more focus in 2018, especially over self-service channels such as OTAs and self-booking tools (SBTs), is inter- and multimodal travel. Consumers are expecting this increased ease of booking door-to-door travel, and an increased level of service such as baggage pick-up at home or other services which make travel easier.
In 2017, there was a slight shift towards direct distribution between travel management companies (TMCs) and airlines, but also between the publicly available SBTs from TMCs aimed at the small to medium sized enterprises. This trend will continue. We are convinced that, even while many major TMCs do not yet utilise direct-connects for airline content, there will be increased activity in this space.
The concept of a travel concierge service to support with travel planning before, during and after the journey will grow for many agencies. This requires access to even more amenities, ancillaries and services from the airlines. While the agencies will largely continue to use the GDS as their main distribution partner, we may arrive at a hybrid model where some agencies connect to airlines via NDC for ancillaries only. Further, it may convince an (admittedly small) number of agencies to use NDC aggregators rather than the GDSs to connect to airlines.
- OTAs – Online Travel Agencies
While new OTAs continue to emerge, some of the major ones have started to stagnate in growth. And while the user experience of these big portals still falls short, the breadth and width of their offerings is impressive. There will not be much change here in 2018. Smaller and specialist OTAs may try to integrate with airlines for better content and lower fares. If this will drive a huge shift to NDC is doubtful, however a small shift may be visible.
Meanwhile, airlines such as Ryanair and JetBlue which are becoming retailers are competing more directly with the OTAs. This trend will continue, especially as we see more airlines implementing sophisticated omnichannel retailing platforms.
The relationship between airlines and metasearch engines has changed, with the number of direct connects between airlines and metas expected to grow. Airlines will be expecting the metas to accept more branded content through their NDC connections and to show differentiation on value, not just price and availability.
Google’s move to shut down access to QPX shopping and pricing for third parties via the APIs could lead to some significant changes. We are not in a position to make a prediction related to Google, but Travel in Motion does believe that the larger metasearch engines are well positioned to become Googles of Travel over the next year(s).
The travel distributors – mainly the major GDSs and to a much, much lesser extent the new-found NDC-based aggregators and more traditional consolidators – play as important a role today as they did several years ago.
The airlines’ push towards a more direct distribution model, or at least one which they hope will result in lower costs and thus may include alternatives such as NDC aggregators, has had some effect on the GDSs.
A few years ago, the major GDSs publicly announced their support for NDC, but not much happened. Will that change? We believe it will. We believe there are three factors which GDSs are taking into account, and which have led to a renewed, and perhaps more serious commitment to NDC
- The increased number of airlines changing their commercial relationships with the GDS.
- The overall uptake – albeit somewhat slow – and acceptance of NDC in the market, especially in the corporate travel space.
- The GDSs needed some time to understand their position in the new distribution landscape and to see it as an opportunity rather than a threat.
While currently it is safe to say that there are a few somewhat established aggregators, there is not one who has really made the huge breakthrough.
The airline and the technology
To continue reading about the airline and the technology, click here to access the complete Travel in Motion white paper ‘An Outlook into Airline Retailing 2018’.