Airline PSS Decisions – Challenge and Opportunity!

PSS Decisions Airlines need to take

There is no airline which has not been hit hard by the current global health crisis. The results for the airlines are challenging and in many cases devastating. Based on all the challenges, it probably is not at the front of the CCO’s mind to think about the Passenger Service System (PSS) right now. Or, maybe for some it is. In many cases, stakeholders are now thinking about how they can make the airline more efficient and, amongst other things, automate more processes to cope with these kinds of situations and reduce costs. Also, with much of the initial hectic related to rebooking and refunds, alongside figuring out where the fleet is and should be going (and not going) now behind us, thoughts must be focused on the future of the airline.

The Cost and Value of a PSS

Generally speaking, there are currently two tiers of PSS solution on the market. The well-known tier one players clearly share a majority of the market, and cater for airlines of all sizes and try to adapt to the different airline business models. The tier two solutions typically address smaller tier 3 and 4 airlines very well, but often do not give larger airlines the confidence that their solutions will serve the purpose in some way or another. 

However, what we also see is that the PSS, independent of size and maturity, is in parts being displaced by the traditional eCommerce and Internet Booking Engine (IBE) vendors with “Offer and Order Management” systems. As a matter of fact, even the traditional PSS providers are bolting on new toolboxes for retailing, offers, order management, ancillaries, etc. As the airlines move to a retail focus, not all PSS platforms are capable of catering for the airline’s needs. That is why there have been considerable market gains for the “retailing system” or “offer management system” vendors. Not only that, but new players are entering this market, and making decisions on how much functionality they will be offering in the future which can be offloaded from the PSS. So we see two directional shifts – the PSS vendors adapting their systems towards retailing, and the eCommerce/IBE vendors adding more PSS functionality. What we are not seeing, however, is either of the vendor types adapting to the needs of the airlines in terms of robust and holistic customer management and servicing, IT process automation or business process optimisation. This is a huge gap currently, which could be closed by third parties or the vendors themselves. The question really is how many vendors airlines want to involve in interfacing and interacting with customer and business processes.

This mismatch between an airline’s needs and the reality of its capabilities does not make things easy for an airline when outlining the future of its commercial systems. Questions as to the “perfect solution” arise, and are difficult to answer. Then, there is always the question of current functionality – typically, airlines will measure the new system based on a comparison to the current system, or based on an RFP with hundreds of lines of requirements. However, what is often missed, is the opportunity to review the business processes and to optimise these, creating a new set of requirements based on how an airline would like to do business, rather than how they currently do business. While Travel in Motion strongly believes that the RFP process is beneficial for airlines, we also believe that prior to this, airlines should review where they are today, and where they want to be in three to five years. An RFP should consist of two parts – commodity (“what I need to do business”) and focus (“what I need to differentiate and be who I want to be”). Further, we believe the RFP should change form somewhat. The “commodity” component can be in the traditional “question and answer” format, while perhaps the “focus” component could be based on posing business problem statements, with the vendor responding with the solution proposal to be implemented (without the same level of detail), giving the vendor freedom in how to achieve a specific goal.

What is my opportunity?

For airlines faced with the reality of changing PSS systems in the next 12 to 24 months, or having the opportunity to either renew PSS contracts or procure eCommerce and digital distribution solutions (including direct, and mobile or NDC), we urge you to consider the process and grasp the chance to review optimisation opportunities. These can, and indeed should be part of the procurement process, potentially in combination with a traditional RFI/RFP. Considering that these contracts are five, eight or even 10 years, the opportunity to optimise is at the time of a change or renegotiation.

How can I go about this?

If you are uncertain how to tackle the challenge of redefining business process or identifying optimisations, and translating those into requirements for a vendor to fulfil, Travel in Motion GmbH is well positioned to support you. With extensive knowledge of the business flows, and having completed digital transformation strategies with various airlines, we well understand many of the challenges airlines face in optimising processes and implementing new ideas. Our strengthened team and group of partners and freelancers allow us to put the right expertise in place to address your needs and be a natural extension to your teams.

We love finding the right solutions by integrating ourselves into your organisation to really understand the dynamics and challenges, as opposed to offering a standard, out-of-the-drawer process which has to fit everyone.

July 2020 by Travel in Motion GmbH