This month, the FareTrack team exhibited at the World Aviation Festival, connecting with industry leaders, engaging with numerous airlines, and gaining valuable insights into the future of aviation. Here are some of the key takeaways from the event.
1. Data Usage and Control
Data remains a critical asset, but concerns around its usage and control were a central point of debate. John Mangelaars, CEO of Skyscanner, discussed how machine learning (ML) has become pivotal in reverse-engineering pricing models and predicting future fare trends.
Rajesh Naidu, SVP and Chief Architect at Expedia, pointed out that while OTAs have excelled at collecting and utilizing data, airlines are lagging behind in effectively capturing and using this vital information. The gap between OTAs and airlines in data utilization presents opportunities for innovation, but also poses risks for airlines that fail to keep up.
2. Personalization: The Future of Customer Engagement
Personalization emerged as a major focus, with Skyscanner emphasizing its commitment to delivering personalized offers based on airlines’ inventory. The promise of NDC was highlighted here, as airlines and platforms look to tailor their content to individual travelers.
Expedia is taking personalization a step further by leveraging large language models (LLMs) to analyze hotel amenities for personalized content. This technology will allow travelers to receive highly customized recommendations based on their preferences, raising expectations for personalization across the travel journey.
3. Demand Prediction: Where Will People Fly Next?
Understanding and predicting demand is crucial in a post-pandemic world. Skyscanner tackled this issue by examining events and trends, to gauge where people might travel next and why. The question of where demand will arise tomorrow was central to discussions, as airlines and OTAs look for new ways to anticipate traveler behavior based on emerging global events and sentiment shifts.
4. NDC: A Differentiator and Growth Driver
The potential of New Distribution Capability (NDC) was a recurring theme, particularly in its ability to offer content differentiation and drive growth. Rogier Van Enk, SVP Customer Engagement at Finnair, provided a clear rationale for focusing on retailing, citing NDC’s ability to increase customer satisfaction (MPS) by 7-10% and reduce costs through automation.
KLM echoed this sentiment, noting that while their NDC program is still small, it is the fastest-growing area of their business. Tiddo Veldhuis, VP of Offer Management & Ancillaries at KLM, highlighted that 50% of passengers view airlines as interchangeable, which underscores the need for NDC to provide differentiation in both products and services.
OTAs, too, are investing in NDC, with Expedia looking forward to expanding its partnerships with airlines beyond ancillary products, including integration with lodging, signaling the broader potential for cross-industry collaborations.
5. Revenue Management: The E-Commerce Approach
The evolution of Revenue Management (RM) was another hot topic, with airlines increasingly adopting e-commerce tactics to optimize their pricing and offers. Finnair shared an interesting perspective, comparing its website to a major e-commerce platform, larger than Amazon in Finland, requiring A/B testing and other strategies to optimize revenue management.
KLM went further, suggesting a rethink of RM around the customer. Rather than focusing solely on flights or seats, KLM believes that revenue management should revolve around the entire customer journey—including dynamic bundles of services and personalized offers. This shift will require a retooling of traditional RM systems to be more customer-centric and agile in adapting to real-time demand.
Key Takeaways
- Data Utilization: Airlines must catch up to OTAs in capturing and using data effectively.
- Personalization: NDC and machine learning are enabling more personalized travel experiences, with opportunities to tailor offers based on individual preferences, enhancing customer satisfaction and loyalty.
- Demand Insights: Predicting where demand will arise is a top priority, with tools like event-based sentiment analysis helping companies gauge where future travelers will go.
- NDC Adoption: NDC is more than just a cost-cutting measure—it’s a key differentiator that helps airlines create unique offers and improve customer engagement.
- Revenue Management Innovation: Airlines need to adopt e-commerce principles and build RM strategies that focus on the entire customer journey, moving beyond the narrow view of flight and seat pricing.
The World Aviation Festival highlighted the ongoing transformation in airline distribution, as airlines, OTAs, and technology providers alike grapple with how best to leverage data, personalize customer interactions, and adapt to new distribution models like NDC.
