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The Travel in Motion and Oystin teams attended Aviation Festival Asia this week. We had the opportunity to catch up with industry colleagues in warmer climates, and the opportunity to taste some fantastic local dishes too! Though there was one experience that we rarely get to trial at home in Europe: the super app.

Super apps are prominent here in Southeast Asia and China. They offer a wide range of financial instruments and online-to-offline services such as food delivery, package delivery and transportation. These super apps position themselves in their user’s daily life and create a marketplace around just about anything. The apps are typically connecting buyers with suppliers that, until now, may not have had a digital presence, for example taxi drivers, takeaway houses, and laundrettes.

The super apps have the similar measures for success: user acquisition and retention. It’s all about user activity (and accompanying revenue, of course). They prioritise having access to the right content overlaid with making a customer’s shopping, booking and fulfilment experience excellent. In doing so they increase their share of sales with the supplier, putting them in a superior distribution position. For some services they even set the price, for example with ride hailing.

Customers who find something easy to use return time and time again, often no longer giving the competitors a second look. The super apps are a snowball, the value users place in their brands are increasing and the more daily users they acquire, the easier it is to launch a successful new service.

Airlines too have capitalised on their well-known brand to become part of a user’s daily life, albeit in a different way – the loyalty programme partnership. Your wallet may contain a credit card with an airline logo, your supermarket may advertise the opportunity to earn points and whilst you top up fuel for your car, you may also be topping up your air miles account too.

Whilst airlines are striving to become better retailers, a super app is an extreme form and its value versus cost is unproven. Here are some questions to consider before going down this path:

• “Is it a feasible proposition for an airline to execute on? Would it lead to positive daily experiences with its brand or lead to negative brand impact?”,
• “Why would consumers choose an airline over Grab, Uber, WeChat etc…?”,
• “Should an airline offer these additional services and become a more integral part of users’ daily lives?”,
• “Does the current loyalty play, where airlines partner with everyday brands, already go far enough to build brand loyalty and affinity to the airline?”, and
• “Would it lead to consumers valuing the airline brand so much that they don’t shop for flights elsewhere?”

Super apps are built on a deep motivation for excellent user experience, consistency, and commercial policies which promote an ease of doing business. To meet these expectations, super apps have modern, fast, and scalable systems.

One question that arises is whether super apps pose a risk to an airline’s distribution and commercial strategies, could a super app change the airline market in the same way it did for ride hailing. Very few super apps offer public transportation services today. Air Asia’s super app does sell flights and hotels. However, it is powered by an online travel agency (OTA) so the experience is limited to what the OTA can provide, which in turn is often limited by the functionality of the airline. Uber has recently launched trains and coaches on its app and has shown an intent to sell flights too. However, they obtain their content, they are likely to face the same issues as Air Asia, the experience they can provide is limited to what the airline’s capabilities are.

So, should an airline enter this space too? Are they at risk of missing out? Airlines have a lot of competing priorities to contend with, such as their own financial stability as they recover from the COVID-era. Purists may argue that airlines should focus on efficient, safe, and enjoyable transportation. Others within the airlines are focused on a diversification of income streams by leveraging the airline brand. An example of where this has been successful is the airline loyalty business units. They were able to raise funds during COVID, which for some airlines provided a significant lifeline.

Travel in Motion’s (TiM) opinion is that running a consistent experience across multiple services is not for the faint-hearted. This takes considerable focus to get it right, and that will lead to less attention on the airline’s core business. However, we do believe airlines still can learn a lot from the super app experience to guide their own digital offering. Offering relevant and personalised offers, easy-to-use booking systems and a well-designed digital experience to accompany the physical travel journey is extremely valuable to a growing segment of customers.

Airlines have already started down this path by pursuing modern offer and order management systems, a key enabler to meeting the modern customer’s expectation. Those systems could help airlines become a super app. However, we at TiM believe there are many areas airlines will choose to improve once they have a modern technology stack. In doing so they will strive to improve customer satisfaction, revenue, and de-risk being commoditised.

In the meantime, whether you are attended Aviation Festival Asia or not, consider downloading a super app and experience what your customers are experiencing on a daily basis.

This post has been published in collaboration with Terrapinn.

(Jason Balluck, 7. March 2023)

We are happy to publish our first whitepaper in 2023, sponsored by OpenJaw. This whitepaper provides a comprehensive overview about opportunities in airline retailing. Our authors have taken a deep dive into modern airline retailing in combination with a view on customer’s expectations and also focussed on how to compete with LCCs – the “inventors” of airline retailing. We invite you to download a copy of the document here.

We at Travel in Motion have already published numerous blogs, white papers, and podcasts about, hopefully, relevant subjects in our industry. But until now we have only once discussed blockchain and this was quite some time, ago. Are we missing out on something? Or are we “clever” enough to know that blockchain is simply a buzzword and will disappear like many others that were once hype and are now out of sight, out of mind? I think it is a case of “neither one nor the other”. As many others, we have mixed feelings about the relevance of blockchain technology in commercial airline IT. Thus, we are simply not yet confident enough to take a definitive position.

Maybe it would be helpful to summarize what blockchain technology really is and where it makes (or could make) the difference in comparison to “traditional” systems, such as databases. For me a good, but non-scientific start to get a high-level understanding of a new topic has often been Wikipedia, which describes blockchain as:

“a distributed ledger with growing lists of records (blocks) that are securely linked together via cryptographic hashes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (…). The timestamp proves that the transaction data existed when the block was created. Since each block contains information about the previous block, they effectively form a chain (…), with each additional block linking to the ones before it. Consequently, blockchain transactions are irreversible in that, once they are recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.”

Comparing blockchain technology with traditional database technology shows that it delivers advantages. IBM provides an informative and easy-to-read summary on their website, which I have used for this blog:

• Enhanced security: as the records are distributed over numerous entities with an end-to-end encryption, fraud-like manipulation of data and other unauthorized activities are simply not possible.
• Greater transparency: as a blockchain uses a distributed ledger, all data and transactions are recorded identically in multiple locations. Thus, all participants see the same information at the same time, leading to transparency.
• Instant traceability: through blockchain the provenance of data is documented and can be audited.
• Increased efficiency and speed: compared to traditional paper-heavy and manual processes blockchain technology can lead to faster and more efficient execution.
• Automation: through “smart contracts”, transactions are automated when pre-defined conditions are met. Smart contracts are programs stored on a blockchain that run when predetermined conditions are met.

As I am not a computer scientist, I am still not 100% sure if I understood all the above, but it has at least given me a view of where blockchain technology may provide advantages over traditional database technology. In a traditional database setup, data is stored in tables and can be modified any time. Blockchain is more secure, more or less immune to fraud, transparent and does not require a centralized third party to secure the system. Through this, blockchain as a technology creates confidentiality and trust without being managed centrally.

The probably best-known use of blockchain technology is cryptocurrencies. I must admit that the volatility of values, stored in and managed through cryptocurrencies does not impress me – it even makes me suspicious. But cryptocurrency is just an application that uses blockchain technology and it is probably the best proof point that the underlying blockchain technology really works.

So, what does this mean for commercial airline IT systems? Our ecosystem can also be characterized as an environment where participants are globally distributed, representing different interests with a need to cooperate, and where values are shifted through digitalized channels, requiring the highest security and traceability. Doesn’t this ring a bell? Aren’t these the characteristics that also describe the advantages of blockchain technology? Blockchain is exactly a technology that meets the requirements described above. The issue is only that these requirements already existed long before blockchain became available – and not only that, also these requirements have already been solved long before blockchain appeared on our radar screens. So, is blockchain a wonderful technology that addresses issues which have already been solved in our industry? I think there is an element of truth in this. Replacing legacy technology and processes for the sake of using modern technologies has always been a big challenge and an issue in our industry. Or in other words, while blockchain promises a lot and has also proven to deliver what it promises from a technological standpoint, what are the potential areas of use in our industry? What are the killer use cases for blockchain technology in commercial airline IT? In settlement process? Or distribution perhaps? Or perhaps even a combination of NDC; offer and order management together with blockchain – doesn’t this sound more like a nightmare to some of us?

But as of today, most of us still feel that blockchain is a technology that is rising and becoming more mainstream, but we do not yet know how it will be utilized and what impact it will have. Therefore, I come back to the point mentioned earlier in this blog. We at Travel in Motion are not yet confident enough to take a definitive position. This time we need your help: how do you see blockchain in commercial airline IT? Where do you see a value add? Where do you see use cases? We are looking forward to receiving your thoughts!

This post has been published in collaboration with Terrapinn.

(Boris Padovan, 6. February 2023)

Airline distribution is evolving faster than ever. Fuelled by advances in technology, communication standards such as NDC, and more recently by the disruption of established GDS commercial models, traditional channels are being complemented and challenged by new ways of distribution. This has triggered a fundamental change in the airline’s commercial business processes and a shift of the power play of offer creation and customer ownership to the airline.

Together with Oystin we have been actively supporting airlines to master and make full use of these opportunities. Through multiple airline engagements, as well as actively driving the change through our engagements with IATA’s distribution and innovation teams, we provide not only insights into best practices, but also thought leadership.

We look forward to sharing our learnings, views and actionable insights. Thus, we invite you to our Airline Distribution Masterclass. During this half-day event we will discuss the following topics:

• Pushing the limits of your existing GDS agreements
• Overcoming the GDS vs. NDC dichotomy: Evolving GDS commercial models
• Increasing NDC adoption – overcoming the hurdles to get to critical mass
• NDC implementation and operational challenges – what to look for

On a recent podcast, Daniel Friedli discussed these topics and the general state of distribution in Asia.

The Airline Distribution Masterclass will take place in

• Singapore on
• February 27^th, 2023,
• from 14:00 till 17:30, 

just prior to the Aviation Festival Asia. After the hard work, we invite you to join us for a drinks reception for a further informal exchange.

Please register for this event – space is limited to 40 participants and for airlines only, therefore we will immediately work on your confirmation.

REGISTER NOW!

Once a year, when I’m not busy helping airlines figure out their latest integration challenges around NDC or their IBE, I like to go scuba diving and snorkelling. If you’ve never been, I really recommend you give this a try – the underwater world will blow your mind. While scuba diving is allegedly an “adventure” sport, what I like to do most is just lay still in the water and watch the fish go by. It’s fascinating to watch the interactions between the fish, and soon you come to realise that a reef is a real community. The place is usually teeming with little fish going about their business – which usually involves avoiding being eaten by the big fish! However, the little fish also help to keep the reef clean, and some of them even clean the big fish of parasites contributing to a healthy ecosystem. All the fish have to get along, so it’s not simply a case of the big fish eating the little fish (luckily for them!).

One day I got to thinking about the plethora of airlines we have in the world, and all the various systems they choose to use for their various services. In total, there are more than 5000 airlines in the world and about 25 providers of what we would typically call “PSS” services. Here, just like in the underwater world, we also often have big fish and little fish happily living alongside each other. Smaller airlines have very different needs to a larger airline, but often use some of the same reservation system providers – small and big fish in the same big pond. Usually these are the bigger system providers, although there are also some pretty big airlines that use smaller, more niche providers. So, what motivates an airline to be a small fish in a big pond, or a big fish in a little pond? Let’s start with the small airlines, who essentially have two choices: one of the smaller, more niche providers or one of the big two providers of “classic” PSS services. While in earlier times the choice of vendor may be influenced by the airline’s chosen business model (LCC vs. FSC), there is less of a clear demarcation here these days. Most airlines operate a hybrid model with aspects of both an LCC and FSC, and as such need flexibility. The smaller providers tend to be more focussed on the retail aspects of distribution with extensive ancillary product and bundling capabilities in their base product offering. This matches well with the needs of the airlines, who also have to be nimble enough to react to changing market situations with great flexibility. New products can be defined on the fly, while cloud-native applications allow safe, rapid deployment of new features.

The obvious choice for a larger airline would of course be one of the larger PSS vendors. These may not be as flexible in terms of speed to market or modern airline retailing capabilities, as they tend to still rely on legacy artefacts such as PNRs, e-tickets and EMDs for booking, fulfilment, and settlement. However, they do make it work through add-on components and, if your airline has been in business for a few decades, this probably makes perfect sense. While this is not “wrong” per se, it does imply some upstream and downstream complexity within distribution and the afore mentioned processes. Complexity in IT systems typically equates to cost, and as such smaller providers may be able to offer more attractive pricing. On the other hand, the larger providers have the benefit of economies of scale and are often perceived as “a safe pair of hands” (the old adage “nobody ever got fired for buying IBM” springs to mind).

However, the industry is moving in a different, more modern direction with NDC, ONE Order and the transition to offers and orders, pushing the vendors to evolve. Some have embraced this change and are moving forward where they can, while others have been rather hesitant; big fish are not always the most nimble. There are also some airlines that are realising that modern airline retailing is the way forward and are also pushing where they can. But this is change that is of more an evolutionary nature, and as such will take time to show tangible benefits. Together though, airlines and vendors large and small must drive this change forwards and continue to innovate and evolve. Smaller providers have this in their own hands and need to invest in their products and show innovation in driving this transformation forward. The larger vendors have traditionally built-up capabilities based on the needs of their community of users. Here, the onus is on the airlines to communicate their expectations towards their providers in terms of industry change and ensure that the industry as a whole keeps moving in the right direction.

Considering all of the above, it really seems that, just like the coral reef, there is a real community within airlines and vendors, and the fish all need each other to get along, survive and indeed thrive. Without the smaller airlines and providers, the innovation needed to drive lean operations and enable airlines to grow would be missing. Without the bigger airlines, the economies of scale would not work and (at least in the case of some larger airlines) the thought leadership to drive the industry towards modernisation would be lacking.

Working for more than two decades in the industry, jointly my colleagues from Travel in Motion and Oystin Advisory have worked with airlines of all sizes and business models and discovered that the biggest challenge is not necessarily choosing the right PSS vendor – at least not initially. It is about understanding and formalizing the airline’s business needs and challenges based on the overall strategy. Part of executing this strategy is then to choose the right set of products for an airline to suit their own unique needs and enable to them to survive, thrive and drive their business to the next level. Based on this, and unlike the fish in the sea, you have the choice of ponds you want to swim on. Either, as a small fish in a big pond or as a big fish in a small pond. Or, you can even make your own pond.

This post has been published in collaboration with Terrapinn.

(Nick Stott, 5. January 2023)

What does that mean to me?

I keep reflecting on the concept of customer centricity in the context of airline passengers. For a long time, I only saw it from the perspective of an airline loyalty programme, because having a particular status meant I got extra benefits to make my trip more comfortable (sometimes). Over the years, however, I have come to realise that this has little to do with the concept of customer centricity, but rather is used as a vehicle to bind a customer to one particular airline (or group of airlines). It is a one-way street that lures the customer in with the promise of benefits and privileges that are actually becoming less and less valuable as airlines reduce the level of service in order to reduce costs. Indeed, I can often get most of the common airline loyalty benefits with a branded credit card.

As an airline, when it comes to judging the loyalty of a customer, there are many factors that need to be considered beyond the simple mechanism of miles or segments flown. Am I really only judged as “important” to an airline if I flew a lot with them within a fixed timeframe? This is a potentially flawed assessment, particularly considering that, regardless of how much I paid for those flights, I might not actually have paid for them myself if I travel a lot for business. In this case, the “customer” may be the company paying for the travel, however “customer centricity” still focuses on the individual travelling. How should lifetime value be measured and assigned between the customer and the traveller when these are not identical? What about my changing needs and behaviours as a traveller, particularly as airlines evolve their product offerings? The airfare for a journey may be optimised to generate the highest possible revenue, but total spend is often not considered. Ancillary products such as more bags and seats typically have higher margins, however loyalty is often only rewarded on the fare paid or distance flown. The view of measuring loyalty over an arbitrary time period may not be the right way for all customer segments. If I only travel a lot every other year, is my total customer lifetime value not worth anything? By stripping benefits through the loss of a status level, airlines run the risk that customers may be less inclined to remain loyal to the airline, rather than recognising that loyalty spans more than a period of 12 months and providing incentives to keep wallet share even when customers are not flying.

My reasons for travelling are usually different for each journey – even if there are similarities. However, the service I receive (as a loyal customer) is almost always the same. While airlines cannot read my mind, does it always have to be the same service I receive when my needs are constantly changing? There may be clues in my travel patterns and behaviour that can be used to give direction when trying to become more customer centric. However, picking up on these subtle hints can be difficult and actioning them even more so. Maybe, as a result of my status, I get to take a second bag on a short business trip. While I may appreciate the extra luggage if I’m travelling long-haul for two weeks, I don’t need two heavy bags when traveling alone and using public transport upon arrival at my destination.

Recognising such situations is not difficult, but usually airlines do not take time to join the dots and figure out what I might really appreciate. The needs of every traveller are unique, and my needs are different almost every time I head off on a journey. However, there are patterns that are not necessarily common to me as an individual traveller, but rather to my demographic (“segment” or “cohort” if you prefer). Through tracking decisions and actions taken (or not taken), airlines can begin to make sense of a collection of seemingly random data points. If we then apply some machine learning to this and ask the right questions of this data, perhaps things become a little less hazy. When airlines begin to action some of these findings is when I will start feeling that the airline is focussing on my needs. Then I will finally start feeling the customer centricity, and can choose the additional services according to my needs. These needs may, or probably will, be specific to each journey. I may want to forgo the lounge because I prefer a short transit time to get to my destination faster. I may want to take two carry-on bags so I don’t have to go to check-in or risk the bag not arriving. I always want the option to upgrade my flight with miles or for cash if there is space on the flight – I always ask, so why do airlines not ask me, especially if there are premium cabin seats available and I have sufficient miles? Having to wait until I get to the gate only to be told there are not enough meals loaded is neither customer centricity nor good business sense. I am not unique with having these same behavioural patterns, but if we never look for patterns, we will never find them.

Travel is a journey rather than a flight between two points, and as a traveller, I make dozens of decisions along the way. I decide how I get to the airport, how I take my luggage, how comfortable and pampered (or not) I’d like or expect to be on board, where I stay when I get to my destination, how I get there. I make decisions about what I buy and what I don’t buy. And very importantly, I decide on whether I was satisfied with what I bought or whether my needs were not met. Did the airline ask me how I found the service on board or how the booking and check-in process was?

There is a vast ocean of data available on every single airline customer which can be collected from the time of shopping for flights and throughout the customer’s journey. Many customers will be happy to share even more data with airlines if it is used for their benefit and not just for maximising revenues for the airline. This is a call-to-action for airlines to rethink their customer-centricity processes, their availability of the related data, and for the airlines to collect and use the data to improve customer service and create personalised or tailored product offerings.

While I understand that airlines constantly have to balance customer centricity with operational and financial efficiency, a lot can be done with presumably manageable effort and investment. However, unless all organisations within the airline agree on what the airline’s goal and business model is, will there ever be agreement on what customer centricity means?

This post has been published in collaboration with Terrapinn.

(Mona Kristensen, 5. December 2022)