In a market defined by fragmentation, flexibility, and digitally empowered consumers, traditional airline loyalty models are under pressure. Frequent flyer programs today are struggling to keep pace with the modern traveller’s expectations and behaviour.

Here’s a strategic provocation: What if an airline offered loyalty incentives to travellers who haven’t flown with them yet? Not based on historical miles, but on demonstrated travel behaviour, regardless of carrier. A concept I’ll call: Traveler Status. 

It’s a radical twist on acquisition, loyalty, and data-driven engagement. But it may be exactly what airlines need to win the next generation of high-frequency, low-commitment travellers.

Airline loyalty programs were built for a different time. A time when corporate travellers booked weeks in advance, stuck to one alliance, and were easily incentivised by elite tiers, upgrades, and lounge access. But today:

• Many travellers prioritise convenience, flexibility, and price over brand loyalty.
• They book across carriers based on schedule logic, not allegiance.
• And they frequently use meta-search, OTAs, and fare alerts to optimise each booking.

Importantly, this group includes a large segment of high-value, high-frequency travellers, who remain largely untapped by traditional loyalty mechanics.

The core idea behind Traveler Status is simple: Reward travel behaviour, not airline loyalty.

Rather than requiring customers to prove their value over time, airlines can proactively identify and engage high-frequency travellers, even if those travellers haven’t yet flown with them. Here’s how it might work:

• The traveller opts in to share flight history (via apps, digital receipts, or travel aggregators).
• The airline uses this behavioural data to assess the traveller’s value and preferences.
• In return, the airline extends entry-level benefits (e.g., preferred seating, priority boarding, bonus points, dynamic fare offers).

It’s not about giving away the house. It’s about meeting the traveller where they are and giving them a reason to switch. From a commercial and customer acquisition standpoint, the model is compelling.

1. Data-Driven Prospecting: Traveler Status creates a new segmentation layer, verified, active travellers who haven’t yet entered your loyalty funnel. It’s precision targeting at the top of the funnel.
2. Competitive Displacement: By understanding where travellers are currently spending (routes, carriers, class), you can craft tailored offers designed to win share from competitors.
3. Accelerated Onboarding into Loyalty Ecosystems: Instead of waiting for behaviour to trigger rewards, this model reverses the incentive flow, encouraging new customers to engage meaningfully from day one.
4. Reinforcing a Retail Mindset: Traveler Status aligns with IATA’s modern retailing vision of personalised offers, dynamic bundles, and customer-centric experiences driven by insight rather than inertia.

Of course, introducing Traveler Status isn’t just a marketing initiative, it requires alignment across data, commercial strategy, and digital channels. Consider this:

• Privacy and Data Sharing: Clear opt-in mechanisms and trust-based value exchanges are essential.
• Offer Design: Benefits must be attractive enough to incentivize switching, but sustainable and scalable.
• Behavioural Analytics: Airlines will need robust tooling to analyse shared travel data and generate meaningful, contextual offers.
• Conversion Attribution: Linking Traveler Status offers to actual booking behaviour will be key to measuring ROI.

At its core, Traveler Status reflects a new philosophy: Don’t wait for loyalty. Create conditions where loyalty can begin. It recognizes that the most valuable travellers aren’t necessarily the ones who have flown with you before, they’re the ones who could fly with you next. In a world where competition is one click away and customer expectations are shaped by digital-native retailers, airlines must think like modern retailers too. That means rethinking loyalty not as a reward for the past, but as an incentive for future intent. The opportunity here isn’t just conceptual. It’s first-mover advantage. Traveler Status is a model that rewards strategic bravery. It requires airlines to challenge legacy program constructs in favour of smarter acquisition, deeper personalization, and long-term engagement. For the airline willing to go first, it could mean transforming the very nature of loyalty, from a backward-looking reward system to a forward-looking growth engine. Because in the end, the best loyalty programs don’t wait for customers to be loyal, they give them a reason to start!

Catarina Silva, Travel in Motion AG

 

 

 

 

 

Dear reader, you can probably guess how much, as a consultant in the travel industry, I am made to travel. Now, add to it a wife determined to discover all corners of the world, and you’ll understand why my body has got more used to an airplane seat than my own bed for sleeping.

This is all to say, I am a frequent traveller, coming with all the usual perks. I know to avoid having any luggage, my laptop bag fits neatly on top of my carry-on, and I have my perfect suite of gadgets for before, during and after the flight, which I have now perfected over the years (yes, that can be detailed in a future blog post).

We all know the airline industry is currently undergoing a massive transformation, leaving the legacy world of EDIFACT distribution and moving into a more customer-centric, Offer & Order world. And I cannot wait to see the Order part of said transition… take flight (forgive the pun).

Better servicing capabilities

The first reason I’m cautiously optimistic, is the new capabilities associated to the Order itself. Imagine landing after a delayed flight, fully aware that you’re too late for your next boarding, and immediately getting notifications containing rebooking options without even needing to go wait in a queue for an agent to handle this. This level of proactive, personalised service simply wasn’t possible in the old EDIFACT world, but it’s becoming the new standard as technology evolves. Also, airlines can now access a more complete view of each customer’s preferences and travel history, which means these rebooked services can be tailored to my preferences (how about offering me a window seat and wifi, as a way of apology for the stress caused).

Better door-to-door experience

A second major benefit is the potential for a true door-to-door travel experience. With richer data and integrated systems, airlines and their partners can coordinate everything from airport transfers to hotel check-ins, making the journey smoother and more seamless. No more juggling separate reservations or wondering if your ride will show up-soon, a single itinerary could cover my entire trip, with real-time updates and support every step of the way. For frequent travelers like myself, this shift promises to turn travel days from a logistical headache into a genuinely enjoyable experience, with a single place to manage all steps of the journey. And, going back to the servicing capabilities: should any delay happen in any step of the travel, that single place should be able to offer options to accommodate them.

Better tracking, leading to better advertising

I have spoken about delays a fair bit in the previous sections, but the fact is, I’m an “early arriver” at the airport. In fact, very often, I end up with at least an hour to wait within the airport, before my flight starts to board. With the new Order capabilities, the airlines will be informed at every step of my journey, including wait times. This should allow for personalised (based on historical data) advertisement, such as special shops and restaurant offers, lounge suggestions, etc… I look forward to receiving an advertisement for a lounge that also guarantees there is still room in said lounge. Like it or not, advertisements are everywhere, and on a personal level, I would rather have them tailored to me, rather than receiving a 5% discount on diapers that I will of course ignore.

The Geeky side

The idea of this transition allowing for a lot more features in an IoT (Internet of Things) concept is extremely interesting. Picture this: after passing the security gate, I receive the indication of where the lounge is, how full it is, and possibly a discount. Plus, while walking towards it, as I pass next to shops and restaurants, I’m getting information about what they offer. All these systems are interacting, sending information from one to another, and working together to offer a more streamlined and possibly personalised journey for the traveller. Oh, and if it can remind me that my wife’s journey is next week and that this duty-free store sells jewellery, all the better. Although one could wonder where to put the privacy boundaries…

The Dark Side

And that’s where this all leads: where is the line? Is it okay that airlines are now getting more efficient at tracking us, using our historical data, and interconnecting information to push better advertisements our way? I do not plan to get into the ethics of things in this blog post –  rather, I share my own views. I don’t mind all this if it ends up enhancing my overall experience. But, as with a lot of these systems, I still recognise that there is a strong need for transparency for the traveller as to what data is used, processed, stored… And the possibility, should the traveller wish it, to turn it off.

Airlines, I hope you are reading this. And I hope, as a traveller, that you will implement these features soon, making my future trips a better experience. We live in a world that has gotten used to being online 24/7, and it is high time that you make full use of it.

This post has been published in collaboration with Terrapinn.

Thibaud Rohmer, Travel in Motion AG

 

 

 

 

 

Amman. It’s 1800 on a Friday and I’m making my way to Bangkok for a conference after having a week holidaying. This is an unusual routing for me, and the chance to try out a new airline. However, I have a ten hour stopover, and even after working through the inbox after a week out of the office, there are still eight or so hours to kill before my departure at sometime in the middle of the night. Many of us have been in the industry years or decades and are seasoned travellers – we have our routines, we know how to kill time at the airport. Our experience though sometimes taints our way of looking at the world when travelling. Ten hours, though, gives a lot of time to observe the average traveller – those that maybe only travel once or twice a year, or are not so digitially savvy as some of use.

Looking around me, I see a lot of untapped demand. The airport is typically a place where airlines try not lose money (through delays causing missed connections, lost bags, overbooked flights and so on), while trying to offset this with maximum conversion prior to commencing the journey. Some will remember the excitement around the use of beacons around the airport, tracking passengers and bombarding them with offers as they strolled through duty free. However, that never really took off as the airlines, airports and ground handlers could never agree on “who owns the customer”. Now though, airlines are “going digital” and hoping to open up a world of possibilities to their passengers. So what would that look like, in real terms? For reasons well known, there is an enormous disconnect between the world of airline commercial retailing and the hard reality of life at the airport, particularly at the gate. But there are a lot of needs at the airport, and while the airline can’t fulfill all of these, some could be with a little more integration and joined-up thinking. I’d like to know where my bags are, for one thing. I’d like to be assured that those extra couple of kilos on my hand luggage are not going to cause me a problem. The lady rushing to the front of the plane upon arrival would have really appreciated some info on her connection (and later, on her bags too!). However, is there revenue in addressing these examples? Potentially, yes – directly (I would be happy to pay for extra kilos of hand luggage) and indirectly, through making the travel experience less stressful. Most airline mobile apps, with the exception of a few, are extremely commercially focussed – they are intented primarily as booking channels and also allow you to check-in. If I compare that with my banking apps, that is the equivalent of simply being able to scan a bill and pay an invoice. But my banking app allows me to do so much more – I can block cards if I think I have misplaced them, set up new accounts, change payment limits, usage locations and so on. In an older blog, we talked about airline super-apps and whether they could help airlines take more wallet share, and as a result own (or at least have insight into) more of the journey. The more an airline knows about you and why (and where) you’re travelling to as well, the more it can take informed decisions and interact proactively through channels such as the airline app. However, the elephant in the room of airline siloed data and the lack of realtime integration between airline IT applications remains. We still live in a world of “if only we could…”, which brings up the other elephant in the (rather large) room – the lack of integrated business processes and the organisations that own them. The shift to Offers and Orders aims to change this, however at the moment we (as an industry) have only added a layer of complexity on top (NDC) but this has not yet driven any change downstream. If Spotify were an airline, they’d be streaming to their subscribers from vinyl records – it’s a nice, shiny layer on top of something very outdated (but still dear to many people’s hearts!). Sometimes this is something that goes forgotten when we, as an industry, try to drive change. We can spend an eternity talking about PNRs, tickets, NDC offers and orders, but the end consumer doesn’t care about any of this – they just want the travel experience to get better. The Offer and Order transformation is a huge undertaking for all players, airlines and IT vendors alike, however sometimes we look at it as an enormous IT project rather than a chance to make something … better.

Because ultimately, isn’t that what digital transformation should be about? Taking friction out of the journey. Helping the traveller feel informed, reassured, even delighted rather than simply monetised. When we talk about retailing in aviation, too often the focus is purely transactional: how to push more ancillaries, how to improve attach rates, how to nudge up conversion. But true retailing is about relevance, timing and trust. It’s about putting the right offer in front of the right person at the right moment – and that moment might be during a long stopover, not just at time of booking.

Imagine an airport experience where your app knows your context. You’ve just landed, your next flight is eight hours away, you’re tired and a bit hungry. Your app suggests a shower room, offers you a discount at a lounge or lets you bid for a business upgrade that might help you get some sleep on the next leg. It tells you where your bag is, gives you real-time updates on your gate and nudges you when your flight is starting to board – not because a timer says so, but because you’re seated at the far end of the terminal.

These things sound simple, even obvious – but they require a level of integration and intelligence that we as an indus are still working towards. And yet, these small details are valuable. A less stressful experience means a happier customer, more receptive to offers, more likely to return. That’s how we start turning the airport from a source of cost and chaos into a place of opportunity – for both revenue and reputation.

So maybe the goal shouldn’t be just to “go digital”, or to “implement Offers and Orders”, or “modernise airline retailing”. Maybe the goal should be to make travel feel less like a test and more like a treat. And if we can do that – thoughtfully, collaboratively, with the passenger truly in mind – then maybe next time I’ve got ten hours to kill, it won’t feel like killing time at all.

 

Nick Stott, Travel in Motion AG

 

 

 

 

 

The Importance of Airline Payment

Airline payment remains a prominent topic of discussion within airline commercial and financial teams.

As McKinsey[1] summarised back in 2022, airline payment costs sum up to USD20 billion annually, representing up to three percent of airline revenues – a significant value in an industry that often only achieves a very low profitability. The volume is huge, with about three billion transactions per year facilitating a turnover of about one trillion dollars.

It is too easy to view airline payment simply as a cost factor. The handling of payment is an important part of the customer experience, and McKinsey also assumes that up to USD12 billion in additional revenues can be achieved for airlines annually if consumers can make payment more easily and efficiently in numerous ways.

Of course, the true values of these numbers can be discussed, but it is obvious that airlines need to focus on their capabilities to receive payment in an easy, inexpensive and safe way.

Airline Payment as an Enabler for an Airline’s Strategy

To achieve this, airlines often implement “payment strategies”. Personally, I am struggling a bit with the term “strategy” when it comes to airline payment. After running numerous airline payment engagements, I believe that there is no “airline payment” strategy per se. Payment need to contribute and be embedded into an overall airline commercial strategy and is a key business enabler ideally increasing conversion while reducing cost and risk.

Airlines’ overall strategies can be fundamentally different, such as if the airline follows a full-service carrier (FSC) business model or, at the other extreme, that of a pure low-cost carrier (LCC) with no frills. This has direct implications for airline payment and needs to be assessed case by case.

In addition, there might be shorter term airline strategies that have an impact on how to run payment. An airline may decide to enter a new market and therefore focus on high conversions by taking a higher payment risk, as well as for instance enabling local APMs, leading to higher complexities.

In essence, these approaches are defined by the airline’s strategy and not by the payment process. Therefore, they cannot be regarded as solely a payment strategy since airline payment is “only” the enabler of the overall strategy.

However, how is a payment set up embedded into the overall commercial strategy? Let me share a real-life step-by-step project approach, which has delivered the desired results.

 A phased Approach to embed Airline Payment

First, we analyse and audit the current payment setup, by taking a closer look at the balance between conversion, risk and cost. It also makes sense to investigate the organisational setup of the payment team, e.g., does it reside in finance, e-commerce, distribution or even sales? Addressing other questions such as how the payment architecture looks, who are the main payment suppliers and how they are governed, is also essential. By benchmarking the results, airlines will often be able to gain some tactical quick wins.

In the second step, the overall airline commercial strategy is taken into consideration. What are the guidelines and requirements for payments to enable the overall commercial strategy? What would a strategically fitting payment setup look like? What are the gaps between the desired state and the status quo? How do we get there?

Thirdly, the exercise should focus on implementation and execution. With the view on the current set up, the desired state for payment fully supporting the airline commercial strategy, a detailed roadmap to close the gaps can be established and executed, through change management. At this stage several questions can be addressed such as organisational structures, make or buy decisions, vendor and partner selections, just to name a few.

Of course, there is no recipe that fits all airlines when it comes to their payments. But with the overall approach summarised above, airlines can enhance their payment process through enhancing conversion while reducing cost and risk, with the ultimate goal to be the enabler for the airline’s commercial strategy – payments are there to support, but they are not a strategy by themselves.

[1] McKinsey Sep. 2022 – Airline retailing: How payment innovation can improve the bottom line

This post has been published in collaboration with Terrapinn.

Boris Padovan, Travel in Motion AG

 

 

 

 

 

 

 

 

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:

• LivePerson, Take flight with AI: https://www.liveperson.com/blog/airline-digital-transformation/
• The New Stack , It’s time to start preparing APIs for the AI Agent Era: https://thenewstack.io/its-time-to-start-preparing-apis-for-the-ai-agent-era/
• Play, AI Agent APIs: A Comprehensive Guide: https://play.ht/blog/ai-agent-apis/
• Convin AI Voice Agents for Flight Search: https://convin.ai/blog/flight-ticket-booking-online
• Cognigy, AI Agents for Customer Service: https://www.cognigy.com/solutions/airlines-travel

 

Thibaud Rohmer, Travel in Motion AG

 

 

 

 

 

 

 

 

An important step towards a greener planet: Since 2023 Travel in Motion is operated in a CO2 balanced way. This means that our greenhouse gas emissions are reduced as much as possible and that we offset the remaining emissions with equivalent climate actions. We are only a very small organisation – however we travel a lot by air for our work with customers and partner. Therefore, also our contribution to stop climate change is important!

 

 

 

 

No doubt, commercial airline operations are going through one of the biggest evolutions in decades. Disintermediation continues to take place as traditional GDS-based distribution is increasingly replaced by distribution through new, often NDC-based, channels. In addition, customer-centric airline retailing is removing the legacy concept of trip-based commercial processes.

This leads to the replacement of well-established system environments such as Passenger Service Systems (PSS), which have been around for often thirty or forty years, by modern Offer and Order-based airline retailing platforms. These platforms are built on modern modular architectures, consisting of numerous single components. Therefore, the evolution of our industry is not only going through a path towards modern and customer-centric retailing, but also through a strategic path to substitute legacy, monolithic PSS by modern and modular systems.

In the upcoming world of Offers and Orders, airlines truly have the possibility to execute a “best of breed” approach when it comes to choosing components for their commercial IT landscape. In the traditional legacy PSS world, most of the commercial systems are provided by the PSS provider. Of course, there have always been individual components where solutions from highly specialised providers were used, such as Revenue Management or Revenue Accounting, but it is true to state that most of the commercial applications were provided by the PSS supplier. Therefore, airlines had little opportunity to bring together a solution environment that was provided by a heterogeneous vendor community. The need to integrate solutions was limited, business continuity was the job of a single supplier, and an airline CIO only (more or less) had to manage a single, albeit dominant IT partner. The legacy world was easy, but choice was limited.

Now we aim for a different paradigm. Modularity is key when it comes to Offer and Order-based commercial systems. Different components need to be integrated and work with systems often from competing suppliers, service levels need to be maintained in a multi-vendor set up, all based on an enterprise architecture which needs to be owned (or at least controlled) by the airline. However, this also leads to opportunities for airlines. Airlines can execute a real “best of breed” approach, choosing those systems and components that make most sense for them. The bespoke modular set up enables airlines to better differentiate and, in all consequences, also to provide “their flavour” to the customer experience. It is yet to be seen which airlines will make best use of this new freedom, as they individually need to balance complex, heterogeneous systems and the best individual set of solutions.

However, what does this mean for the IT vendor community? Until now the PSS market has been dominated by two major providers, Amadeus and Sabre (not considering Travelsky with their local dominance in mainland China). While this may be over-simplifying things a little, the commercial airline IT world could be separated into “Amadeus carriers”, “Sabre carriers” and “all others”. Providers of point solutions had to either integrate into the one or the other, if they were chosen over the PSS provider for a specific solution. Integration was often based on the APIs and other standards the PSS provider enforced.

And with Offer and Order management? Of course, on the vendor side of the equation, the big market players are aiming to provide a solution stack that covers all (or at least most) of the functionality an airline requires for their commercial operations. However, a lot of airlines are planning to make use of the new freedom of components and plan to choose solutions from different suppliers. This is driven by both a desire to break the transition into manageable chunks as well as constructing the ideal portfolio of solutions. Besides the complexity that the airlines need to handle for such a construct, the IT vendors also now need to re-think their interaction with their peers:

• Vendors need to become more open to collaborate with each other, including joint project planning and taking joint responsibility towards airline delivery.
• There is a difference between modularity and openness. A system environment provided by a single supplier can be modular but not open to third-party solutions. This applies not only to technical capabilities such as interfaces or open APIs, it also covers commercial terms. We have often experienced that the utilisation and integration of a third-party solution has been made commercially unfeasible by the main supplier, through extra (sometimes hidden) fees or other contractual terms such as weak service level agreements.
• IATA is defining the standards for Offer and Order management systems, but are they detailed enough for vendors to easily integrate on a module level?
• Airline first. Just as airlines are focusing on the customer, vendors should fundamentally shift their focus to serving the airline, even if this leads to some (short term) missed revenue opportunities. In the long run, airlines will most probably honour this, and it will be to the benefit of the vendor.

We will see over the next three to four years if modularity leads to openness and real airline-focused vendor cooperation. Or to put it differently, how will the new balance between “the winner (vendor) takes all” and “true collaboration in an open and modular world to best support airlines” play out? Whether you’re an airline, a vendor or just would like to explore this journey further, feel free to reach out to us!

 

 

This post has been published in collaboration with Terrapinn.

Boris Padovan, Travel in Motion AG

 

 

 

2024 has been an exciting year in airline distribution, with major developments for airlines and the travel tech industry.
Read Oystin‘s Distribution Insights 2024 to learn more about these developments and our take on upcoming trends.
Click here and download our comprehensive Distribution Insights 2024.


Our Distribution Insights contain:
– Our take on future trends
– The major airline developments in different regions of the world
– Deep-dives into American Airlines’ and Ryanair’s distribution strategies
– A comparison of GDS and their recovery since the pandemic
– A spotlight on the major tech providers, aggregators, and travel sellers

We hope you enjoy the Distribution Insights 2024, and we look forward to hearing your feedback. Wishing all a joyful holiday season and a great start to 2025.

The industry has made progress

Over the past years the airline industry has been working towards the concept of Offers and Orders to support the initiative referred to as Modern Airline Retailing. For the uninformed, there are plenty of articles and papers outlining both, so we won’t explain the two terms in this article.

Over the past two months, there have been three major industry conferences focusing on the airline commercial areas – retail, distribution, loyalty, payments, ancillaries and other related topics. What has become apparent is the progress which has been made in the last 12 to 24 months in these areas. Both the airlines and the solution providers are working towards the aim of business process re-engineering and moving in the direction of solutions which are more like ecommerce and digital retail solutions.

A perspective on how the domains will develop

While TiM uses its own solution capability blueprint with a somewhat more refined set of domains, for the sake of simplicity we will refer to the common four – Offer, Order, Settle and Deliver. The status of maturity of these domains varies considerably, with Offer being the most mature, followed by Order. Both Settle and Deliver are less developed, from both the perspective of vendor products as well as business process re-engineering. This gap is largely attributable to the flow of events in the retail, deliver, settle and fulfilment chain of events.

Looking into 2025 for each domain our expectation for each of them is as follows:

Offer – Airlines will continue to work towards higher offer maturity with a focus on dynamic offers – more specifically, dynamic and contiuous pricing. Increasing offer maturity is an “easy” revenue case to make, and there are plenty of solutions in the market. The vendors are enhancing their solutions in the same area, with some focusing additionally on segmentation and contextual selling as well as more advanced bundling capabilities. Another focus area in 2025 will certainly also be the Product Catalugue and the Stock Keeper.

Order – There are a handful of airlines experimenting with increasing the use of Orders. This is being driven either by airlines using a vendor which already supports components of the order, or their PSS vendor has built initial order structures independent from the PNR, ETKT and EMD as part of their roadmap. We use the term “experimenting” as there are no (full-service) airlines using the order fully yet, including servicing, feeding the order data to accounting and settlement flows, managing involuntary changes and doing journey management with it. The coming year will see an increase in maturity and the first airlines expanding the use of Order Management from a pure order storage to having the ability to work with the order.

Settle – In this domain, there are a number of very solid proof of concept implementatons with integration between Order Management Systems and Order Accounting solutions. The first airlines are testing the use of order accounting capabilities by not issuing EMDs for certain ancillaries. This simplification will help the Order Accounting vendors solidify their solutions and give the airlines the opportunity to learn new processes and truly identify the benefits, especially in terms of revenue leakage avoidance.

Deliver – In TiM’s opinion, this is the domain which will still require the most focus. The Deliver domain also has added complexity as it is closest to the airline’s operations and must work extremely reliably. Furthermore, there are potentially the largest number of other stakeholders which will influence this area – ground handlers, airport authorities, governments, biometric solution providers and many more. However, there are also a great number of opportunities here when we think ahead to the “touhchless airport” of the future, where dwell time is minimised or, for those who wish, dwell time is turned into a shopping, productive or relaxation experience as opposed to queues of people at check-in, security and immigration.

What are the vendors up to?

The logical answer may be that they are developing the solutions above. While this statement is indeed very true, the picture is not quite as straightforward as that. Various vendors are taking different approaches, with some having decided to go “all-in” and develop across the four domains (and beyond, in some cases). Others have decided that they are better focusing on a few key components (the ones they know best) and look for partners in others, building an ecosystem of like-minded solution providers. Others still have taken the risk of advancing into new areas, trying to expand to cover areas such as payment or the Deliver domain. In addition to this, we are still seeing a lot of new entrants, especially for niche or partial solutions. A lot of these new entrants focus on the use of artificial intelligence, especially in the pricing and revenue management domain.

While we think each vendor is unique and has business drivers and strategies guiding their direction, TiM believes that there must be a greater level of collaboration amongst the vendors. We understand the vendors compete with one another, and this must remain so. However, as an industry, we need to ensure that we don’t all run in different directions when building out new capabilities or components. How such an alignment between vendors, for example to agree on intra-component interfaces would look, is food for thought for us and the vendor community.

TiM’s Take

The journey to Offers and Orders is a long one, and we may well publish outlook articles like this for a few years to come. While not all areas are progressing at the same speed, we do not feel that is currently an issue. Most airlines that we work with directly or are discussing the transition with are taking a step-by-step approach. Typically, airlines start with some component of Offer as this is where it is easiest to demonstrate value, and most solutions are available. Offer enhancements are then followed by Order, often to enable even more progress on the Offer side. With a base level of Order competence in place, the airlines will then start considering both the Settle and Service Delivery domains. This is very much in line with the maturity scale, and we can assume that the maturity of the different domains has been driven by customer needs – meaning the airlines’ needs and requests to the vendors.

For airlines who have not yet started at all but would like to get familiar with Offers and Orders, we are more than happy to offer our two-day primer – an onsite training session covering all the basic understanding necessary, including risks, challenges, guidance on how to define a business case, future-state scenarios, the state of the industry and finally, how a transition could be planned.

Daniel Friedli, Travel in Motion AG

 

The airline industry has started moving from legacy Passenger Service System (PSS) focused commercial IT operations to a customer-centric offer and order-based retailing environment. Through our engagements, we know that this is a complex undertaking involving internal airline departments, traditional distribution entities and partner airlines, just to name a few stakeholders, often with conflicting interests and agendas. And, of course, IT plays an important role here and is often a key entity when it comes to decision making.

Sometimes it is not very explicit that the migration to offer and order also manifests a fundamental change in IT architecture: from monolithic environments to a modular set up, from functions to services, from legacy IT to modern architecture and from classical hosting in dedicated data centers to cloud-based IT operations.

When I started my career in airline IT, running a PSS host was the highlight of every data center operation. The Swissair data center was the core of its airline IT and the pride of most of Swissair’s IT staff. The (at the time mostly) guys running it were some of the most reputable individuals in the IT department of the company, sometimes quite similar to the cast of pilots in the flying part of the airline.

However, the current evolution to offer and order is also core to triggering or accelerating the move to a cloud-based IT environment. The advantages of the cloud are widely known, such as scalability to grow and “breathe” with volatile market requirements, highest availability of services combined with a latency that is now negligible, all operated in a highly secure environment and driven by continuous improvement processes. These advantages also come with an relative overall reduction in CO₂ emissions when compared to the on-premise hosting model. Of course, big cloud data centers create large amounts of CO₂ as well, but it is generally accepted that the overall volume is lower than having the same computing power operated out of numerous smaller entities. Therefore, the need for an airline to operate a dedicated data center has vanished. The head of IT does not need to keep the data center secure and alive by “refreshing” it every three to five years to e.g., avoid security issues. This has also enabled the evolution of company IT leadership. The role of a head of IT or CIO has evolved into a role that drives enterprise-wide innovation by making an airline digital and customer focused.

However, moving to the cloud is more than optimizing IT operations. It is also a key element of the commercial transformation of an airline, because it can only become a true retailer if its IT system and application landscape enable this fundamental change. Both transformations, the “IT infrastructure” and the “commercial” one need to go hand in hand. The move to offer and order management is a particularly critical factor if this dual transformation: the airline becomes a retailer through its cloud based commercial IT systems.

Both transformations will not happen without initial efforts of finance, resources and management. They resemble the famous hockey stick picture – there is a lot of investment before the gains can be realized. However, the gains may come in earlier and at an increased rate, if a voyage is chosen where leveraging early commercial benefits might flatten (though probably not fully compensate) the required IT investments. Therefore, a business case should take this into consideration and frame the sequence of the transformation activities. We will probably not reach a scenario where the revenue increase of becoming a retailer will immediately pay for the IT transformation in full, but it may be able to contribute a lot, particularly in the early stages. This proves again that it can be very beneficial to look into the transformation from a holistic view, taking both the commercial and technological aspects into consideration.

The major vendors of airline offer and order management platforms and the big cloud providers manifest these interdependencies in their own partnership strategies. The three big cloud providers (Amazon Web Services (AWS), Microsoft Azure and Google Cloud) are very active in the airline IT sector, especially in the offer and order management segment. They all not only have airline clients, but they also support major airline IT providers: AWS, who seems to be the biggest player in this area, works closely Accelya and IBS, Microsoft has a strong collaboration with Amadeus and PROS in place and Google works closely with Sabre – just to name a few publicly-known partnerships.

Will we ever reach cloud nine, as it is the place we want to be? Transforming an airline’s commercial and IT landscape is full of challenges, while fully making optimal use of it is an ongoing effort. But both challenges should be addressed jointly, and airlines should not sell themselves short by only considering the transition to offer and order or only looking at the IT cloud transformation. They should go hand in hand, based on an overall transformation strategy. Both paths need to be taken simultaneously and interdependently to reach ONE cloud nine – being a fully retailing airline driven by a cloud-based infrastructure.

This post has been published in collaboration with Terrapinn.

Boris Padovan, Travel in Motion AG