AI is here. Are airlines ready for it?

I know, I know. Yet another article on AI. Believe me, I am as fed up with these as you, but bear with me a second, as I truly believe this is an important topic to be discussed. In short: AI is here. Whether you’ve used it to generate an image of a panda bear riding a bicycle on the moon, for work purposes, or read AI-generated text, chances are, you have already interacted with it many, many times.

Similarly, chances are, you are at least a bit familiar with airline processes. And of course, the airline industry is also subject to change, due to all these new AI practices.

In this article, we will focus on Airline Distribution, from the shopping, to the servicing of airline tickets. In other words, if you came here to read how AI is going to replace pilots, sorry, but you’re in the wrong place.

1. Selling, upselling and servicing through AI

Offer Generation

As with any new IT-based technology, the first focus for AI has been increasing sales. As such, AI is now being shoehorned into dynamic pricing and dynamic offer solutions, allowing for better, more granular customer segmentation and ensuring a more relevant offering to be presented to the end customer. Due to its massive power on data analytics, including customer preferences, booking history and market trends, airlines can dynamically adjust their shopping responses to better fit the requests, thus increasing conversion rates and total revenues. This approach also allows for more automation, making the airline’s fare filing more lean, allowing for fewer rules updates and less granular fare management.

Customer Care

Airlines intend to be more customer-centric. At least, that’s one of the main buzzwords we hear at the various conventions we attend. Part of this comes from the airline’s tailored offerings, as mentioned earlier, while next comes the handling of said customer. We all have wasted hours of our life, listening to a five-second music loop, waiting for a customer care agent to finally hear our complaints. Airlines intend to solve this by re-introducing chatbots, now AI-powered. These chatbots allow for guidance on the exchange or cancellation of tickets, ancillary sales and general questions an end user may have regarding their booking. Natural language processing is getting better and better, including multiple languages, allowing for airlines to serve a larger set of customers. One example of this approach is LivePerson, which already provides such capabilities for Azul Airlines, even allowing for upsell through a chatbot interface. Naturally, this does not remove the need for actual customer care agents, but allows for a “first filter”, replacing that oh-so-annoying music with actual discussion and letting agents focus on relevant use cases.

2. AI Agents

AI-ready API

More and more airlines nowadays provide an NDC API to interact with their content. AI agents are a new technology, capable of interacting with APIs. The first examples might seem small, such as being able to order an Uber by asking Gemini. These AI-based agents learn API interaction through various manners, one of which is machine-readable documentation. For a smoother integration, airlines should ensure all documentation is up-to-date with detailed examples, as these allow AI agents to be quickly trained and to interact with your NDC API.

Convin is one such example, offering voice-based search and flight reservations. But do not mistake voice recognition and AI: AI agents can also be triggered by text-based inputs, and chatbots are now being reinvented with AI to better understand requests and search through airline offerings.

3. The impact… Shopping volumes and OTA impact

Airlines have recently discovered what it means to be an API provider, through NDC. One of the constraints that come from offering APIs is that the airline is not always in control of API usage. In other terms, that dreaded look-to-book ratio is an important factor to consider when providing a shopping API to agencies and aggregators.

AI will now bring a new spin to this, as these AI agents will go through the web for every single search, greatly increasing costs associated with API management and, yes, look-to-book ratios.

The combination of airlines wanting to provide dynamic, tailored offerings, and AI agents scouring the web will result in an increase of look-to-book that few airlines are prepared for today.

While we are here focusing on the airline view of these AI agents, OTAs have been taking a close look at them as well. PhocusWire has a great article, presenting their risks for OTAs: https://www.phocuswire.com/ai-agents-future-of-online-travel-agency .

In short, the airline industry is now entering (willingly or not) a new era of distribution. AI agents scouring the web, looking for AI-created offerings and end-users being served by AI-based chatbots will soon become the norm, and, ironically all with the intent to become more customer-centric. Airlines that do not have AI-ready APIs may end up not integrating properly in AI agents’ search results, potentially leading to revenue loss through missed sales opportunities. And the ones that are not ready for the surge of search request created by these agents may see a huge increase in associated costs. So, airlines…

AI is here. Are you ready for it?

References and great reads on the subject:

 

Thibaud Rohmer, Travel in Motion AG

 

 

 

 

 

 

 

 

February 17, 2025 Boris PadovanAggregation, Airline Retailing, Airlines, Homepage, NDC, NDC Aggregation, ONE Order, OOMS, Uncategorized0 comments

Leave a Reply

Your email address will not be published. Required fields are marked *