5 questions airlines should ask when bringing their third-party travel sites up-to-speed

view-of-airplane-from-inside-terminal

Airlines and their distribution partners have done a great job generating traffic online.  New ways to search for airline products, such as metasearch engines and connected devices, make it easy for customers to shop for flights. This has dramatically increased the number of requests about flights and availability.

However, this growing online consumer presence doesn’t necessarily mean more bookings, and airlines are struggling to turn requests into sales. The airline “look-to-book” ratio – the average number of search requests before someone actually books a flight – has risen to over 1,000:1 with continued exponential growth expected. This high volume of traffic presents both IT and business challenges.

 To compound the complexity, airlines — in pursuit of enhanced revenue – hope to turn themselves into travel “retailers” and offer more than just seats on a plane. Some of these extras include onboard items, such as boarding priority, added luggage and priority seats, as well as non-air offers such as lounge access, insurance, hotels and rental cars.

Unfortunately, these extra product revenue streams are typically confined to the airlines’ websites and other direct marketing avenues and aren’t typically distributed through the outside channels. Powered by global distribution systems (GDSs), most indirect travel providers are only capable or willing to show the price per seat and limited bundled packages as opposed to prices with a full suite of ancillary products. For legacy airlines, 60 percent of their revenues is generated from third-party sites. So the inability to make complete offers costs the airlines money in lost revenue opportunities and incomplete sales.

To understand how all of these changes in distribution are impacting the business — and what IT can do about it — airlines should start by asking the following questions:

  1. Have you seen an increase in seat availability requests? If an airline has more and more requests, its existing hosted solution may be reaching peak capacity in terms of the number of transactions it can handle and may need replacing.
  2. How much has the growth in transactions increased your costs? At some of the airlines we’ve worked with, the vast majority of host transaction costs are around availability. As the number of transactions increases, so does the cost of maintaining the infrastructure.
  3. How effective is your ability to scale your computing solution to meet demand? Forward-thinking airlines are now looking at migrating off mainframes and creating cloud-native applications. These new solutions further improve transaction speed by taking advantage of “in-memory” technologies. Some of the fastest solutions have leveraged older programing languages (and stay away from .xml) so developers can write the most efficient applications in memory for faster performance.
  4. How often do you think you’re losing sales because of inaccurate information? Because traffic has grown, most third-party travel providers offer cache-based solutions and other ways to collect an airline’s availability without a real-time transaction. The bookings turn over too quickly for the systems to keep up, and inaccurate fares are presented. The customer may have tried to book that $199 flight, but it’s not available. This annoys the customer and the airline loses the flight to another airline.
  5. How many products do you sell besides the seat on an airplane? And how do those products come to the attention of the consumer — only through the direct channel, or do you have a solution for allowing third-party sites to offer ancillary products and bundled packages? Most airlines have done a good job selling ancillaries and bundled packaged via the direct channel. It’s with the third-party sites that the airlines fall flat.

Is NDC the answer for selling on third-party sites?

IATA’s New Distribution Capability (NDC) offers a messaging protocol and vision that will let airlines more easily transfer information on ancillary services and bundled packages to third-party sites. The NDC standard has been in the market for several years and promises to become the industry-sponsored response to this challenge.

That said, NDC requires all parties to participate, and questions linger about its ability to scale and meet the growing number of requests. While deployments are under way at many airlines, the volume of transactions is relatively small compared to the number of tickets sold. The industry still needs to test the ability of the standards and infrastructures to scale.

Moving forward, airlines must fully understand how the request process that executes their technology solution has changed. Today, airline solutions control availability, but rely on the GDS solution to build an airline’s flight schedule and apply a fare. In the NDC world, the airline will directly control its own schedule, availability and fare application. Combined, the solutions will need to handle transaction volume growth along with the additional complexity of managing all the special features.

For NDC to become a viable solution, airlines need to couple NDC concepts with more efficient supporting technology and infrastructure. Successful  airlines will have the opportunity to control the offer and consistently present correct, updated information to their customers across distribution channels. This will create a competitive advantage and start turning a higher percentage of requests from third-party sites into new revenue.


Derek Janu-Chossek headshotDerek Janu-Chossek is an offering leader for DXC Technology. He is part of a high performance team responsible for development of new software solutions to support airlines’ revenue management and digital revenue generation solutions. Specific airline expertise includes: pricing, inventory, availability, merchandise and ancillary revenue, shopping and e-commerce. In addition, in his role he serves as a consultant and industry expert on these topics for airlines and passenger services providers as they implement new initiatives.

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