A panel of senior industry figures discussed the challenges of airline distribution and changing how a carrier sells its services.

AIR Symposium

In fireside chats with three leading airline distribution experts at the AIR Symposium in Rome, it was agreed that becoming better retailers is essential to a stronger financial performance.

Moderated by the BBC's Tanya Beckett, the panel featured Xavier Lagardere, Group Head of Distribution, Lufthansa Group; Alison Taylor, SVP, Global Sales and Distribution, American Airlines; and Campbell Wilson, SVP Sales and Marketing, Singapore Airlines.

Lagardere noted that IATA’s New Distribution Capability (NDC) has been underpinning retail efforts. “It means the depth and transparency of retailing achieved in direct channels reaches to indirect channels,” he said.

NDC has helped the Lufthansa Group in such areas as continuous pricing. Like most other airlines, Lufthansa once had about five steps in its pricing strategy—starting cheaper and becoming progressively more expensive as the flight date drew closer. 

American, for example, is partnering with Alexa. By 2020, voice search will account for 50% of all searches, making the collaboration indispensable.

But Lagardere said this blunt pricing method limited customer and partner access to the product as the step hike meant many potential customers weren’t given the value for which they were looking.  

Now, thanks to NDC and retailing facilitating data exchange, offers can be made all along the value curve. It is win-win-win as customers invariably get a cheaper price, partners are able to construct better offers, and the airline has improved revenue management.

The panel noted that partnerships were at the core of these personalization efforts. Customers must be able to book the way they wish, be it direct or via a travel management company.

Taylor revealed that while 85% of American’s customers only travel once a year, they provide 55% of revenue. The top 15% may contribute 45% of revenue but clearly “appealing to all our diverse customer base is vitally important.”

American, for example, is partnering with Alexa. By 2020, voice search will account for 50% of all searches, making the collaboration indispensable.

Wilson explained that the only way for customers to understand the multitude of products and services on offer is by partnering across the board. “It is not about cutting back products and simplifying, but about conveying the full breadth of what we offer and why it is value for money,” he said. “We want to expand both choice and relevance.”

A customer is not just an airline customer but also a customer of companies such as Netflix and Amazon and “they expect from us what they get from them,” said Wilson.

It is not about cutting back products and simplifying, but about conveying the full breadth of what we offer and why it is value for money

Partners can also help with innovation and the speed of implementation, major challenges for many airlines. Another obstacle is introducing the necessary scale to any concept. Here, artificial intelligence (AI) will be transformative as only technology will be able to work through the data and boil it down to personalized offers. 

“The whole concept of personalization as we are envisaging it cannot be achieved without AI,” Wilson confirmed.

The panel concurred that developing the technology to differentiate is essential, otherwise airline seats will remain a commodity. But that doesn’t mean conversations dictated by algorithms. On the contrary, technology must enable a human response.

“Every interaction has to be personal,” concluded Wilson.

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