Introduction:
In the Amazon basin, the Achuar tribe shares their dreams. Dr. Marilyn Schlitz, Ph.D. is an anthropologist who studied their practice of dream-sharing. In her Amazon research, she looked at how people construct reality, and more specifically, how that is done collectively. "Among the Achuar," Schlitz said, "no one dreams for the individual. They dream for the collective.”
Dr. Schlitz’s views on airline eCommerce programs would prove insightful. In an industry that finds it hard to agree on anything, aviation has a strikingly shared dream. And guess what? It is also an ‘Amazon’ one. Only we don’t want to move to the jungle. Instead, pretty much everyone involved in the business of flying passengers - airlines, agents, regulators, intermediaries, and suppliers - collectively have decided they want to be part of an Amazon-like retail experience.
Despite being scattered across the globe, selling like a modern online retailer is a strongly shared aviation industry vision. It is also a long-standing one. Twenty years ago this month, I attended my first airline vendor ‘shopping’ product sales pitch. Years have passed but our goal is still quite a way off. While retail giants like Amazon are registering double digit revenue growths, airlines are still struggling to capture their full slice of the retailing pie. If we all want our Amazon-like dream so much, why has it proved so hard to bring to reality? And why have there been so many high profile failures along the way?
It is not for the lack of business imperative. Our Amazon-like dream is certainly backed by hard economics. According to Ideaworks, ancillary revenues have generally shown strong growth in recent years and a historic high was reached last year, with ancillary revenues accounting for a staggering 15% of total airline revenue. Airlines make less and less money selling seats, and are looking to ancillary revenue to make up the difference. But in order to sell those ‘extras,’ the industry needs to meet modern consumer expectations, which are increasingly set by non-travel shopping experiences through the likes of Uber, Netflix, and of course, Amazon.
So perhaps the problem is not one of vision but lies in the execution. In Coforge experience, four main considerations must be taken to deliver a successful airline retail program
Subheading 1: Understanding the underlying complexity .
First, technical complexity and breadth of scope must not be underestimated. When fully scoped, an airline retail program includes not just ‘Shop’ but also ‘Order’ and ‘Pay’. That means becoming a true airline retailer significantly impacts not only the website but also most of an airline’s underlying commercial, ticketing, pricing, and revenue management systems. Besides, it also impacts the creation of a uniform shopping experience across all channels. Furthermore, if that offer is to be timely and personalized, far richer sources of data and new decision support systems are also needed. Finally, building the capability to fulfill and reconcile that order impacts several airlines’ finance and payment platforms. An already big project probably needs to get bigger.
Subheading 2: Looking at a hybrid approach
Second, whatever vendors say, there is still no single airline-off-the-shelf ‘Shop Order Pay’ solution. NDC provides a great standard but of itself is not a solution. Some airline suppliers have made extremely optimistic promises as to how quickly their systems can become 100% NDC and One Order compliant. This almost always ends in tears. Alternatively, taking an eCommerce platform from another industry and trying to adapt it to an airline has also proved an expensive mistake. The airline seat ‘product’ has many more variables than high street retail lines, and with further unbundling it is becoming more complex still. Take New York to London as an example. According to Sabre, once fares, ancillaries, and brands are included, there are now a staggering 63 billion combinations a day from which to choose. Just a few years ago, that number was 5 billion. Having no single off-the-shelf solution means that a hybrid approach with COTS, bespoke development, co-creation, and best-of-breed integration are inevitable.
The sourcing strategy for an airline retail program needs to be very carefully thought through.
Subheading 3: Alignment with business
Third, just as legacy technology has proved hard to shift, so has longstanding airline business architecture. Networked business practices developed in the 1960s are deeply embedded and highly resistant to change. An airline retail program cuts across multiple airline business silos whose targets and agendas are rarely in sync. Technical investment without governance, organization, and process alignment will fail. There is also a fine balance between input and engagement on the one hand and scope explosion and fragmentation on the other. Maintaining business alignment and business buy-in during the course of a long program is easy to say, but is much harder to actually do.
Subheading 4: Taking an incremental approach
Lastly, airline retail implementation strategies have often been flawed. Airline digital teams have immediate and aggressive sales and channel-shift targets and, understandably, little patience with traditional IT projects. Digital teams that hoped to work separately from their IT colleagues have learned the hard way that the ability to unbundle and then repackage to create a relevant offer cannot be developed in isolation from core systems. Standing still is not an option. But unconstrained and visionary revolutionary transformations with no realistic checks or concrete plans will almost certainly fail. Whatever the pressure for a 100% solution, a well-planned incremental approach, targeting areas of highest return, is much more likely to succeed. This means for some time to come airlines will need to prosper in a hybrid world: even those that move to NDC-standard offers will continue to use the traditional process for parts of their operation, such as interline fares.
Conclusion
For the Achuar of the Amazon, dreaming also served a strong practical purpose. In their collective dreams, Achuar elders were warned that in seven years their forest and way of life would be under threat, so they must seek a partnership with committed people from the modern world. This was the vision behind the founding of the Pachamama Alliance, whose assistance is enabling the Achuar to preserve their forest and way of life. Having a clear vision for an airline retail program is vital. But in Coforge experience, unless it is coupled with a pragmatic execution strategy, it will remain only a dream.
