The airline industry is embracing a new era of opportunity driven by changing traveler behaviors and dynamic technology. This momentum for change shows no sign of slowing down - from transforming operations and upgrading the technology stack, to redefining relationships with the traveler, with data and with an ever-increasing circle of potential partners within the industry and beyond.
With airlines looking to elevate their business to new heights, the imperative for transformation is even stronger today, and the rewards for differentiating the offer greater.
In order to succeed in an increasingly digitally driven world, it’s key for airlines to start “thinking like a retailer”.
Today, we continue advocating for the retail transformation of airlines, but we’re drilling down deeper into what this transformation will require – hence our focus on Offer and Order transformation and our commitment to developing next-generation systems for this new era.
A new operating foundation
The Offer and Order transformation will require what’s best described as a new customer-centric operating foundation, built on open systems, automation, optimization, artificial intelligence, and personalization. Beyond this, other areas of operation – revenue management, partnerships, product, distribution – will evolve in the Offer and Order world.
The move to Offers and Orders ushers in a new operational framework that allows airlines to sell more so they can develop and commercialize new, rich, differentiated offers (new itineraries, new products and services, new bundles, and open new partner revenue streams quickly and easily) personalized to the preferences of the individual, segment, or market. This fundamentally changes the way Offers are constructed and optimized.
Meanwhile, theOrder transformation will remove and simplify many time-consuming, manual, non-value-adding processes. This means moving to a Modern Order Record that overcomes the deep-seated limits caused by the industry’s collective dependency on PNRs, tickets, and EMDs that have constrained airlines’ systems and processes, and thereby their growth and impact. The new Modern Order Record brings consistent and coherent system behavior across the airline ecosystem, facilitates seamless customer experiences across the end-to-end customer journey and delivers significant operational efficiencies through simplification and flexibility.
Furthermore, this transformation unlocks new value potential for airlines as it enables 100% digital self-service for customers to manage their complete trip, automating the underlying system processes that drive the customer care proposition. It also allows real-time reflection of service delivery and enables real-time revenue recognition.
The technology behind dynamic offers will support smooth interoperability between brands within an airline group or with partners; it will widen the type of products that an airline can offer by making partnerships easier to monetize, introduce new ways to sell such as gift cards or subscriptions, and encourage a paradigm shift in how airlines work with travel agencies. Offers can be distributed consistently across all digital retail channels and made available across more points of sale.
The net result is that airlines can generate new revenue opportunities by dynamically optimizing offers in every retail channel they want to be active in, prioritized according to their business strategy. In this context, with the agility enabled by the new systems, speed to value both for products and partnerships improves, which can also increase margins, NPS and loyalty.
The new systems and standards capable of generating a single integrated order record to streamline the distribution, delivery and accounting for offers are under development. The Offer and Order transformation is also backed by IATA, as outlined in itsAirline Retailing Maturity index . Its intent to “gradually phase out” PNRs, e-tickets and EMDs, the traditional protocols upon which many of the industry’s systems are based, is paving the way towards dynamic offers and modern orders. The provisional target date for the move to 100% offers and ordershas been set for 2030 .
Ultimately with this move to Offers and Orders, airlines can build the most profitable offers using advanced data science; that is context, market and competition aware and applied dynamically to create the optimal priced Offer set at every shopping transaction in every channel. They can optimize their distribution mix to expand their channel network reach, and exercise their channel/seller strategy quickly, easily and automatically according to ROI and other performance metrics. Moreover, airlines can deliver frictionless purchase and self-servicing proposition to customers wherever they are, with simplified financial flows -all of this brings speed to value.
The Finnair example
IATA has set an aspirational goal of100% Offers and Orders by 2030, but has indicated this to be very “ambitious and complex”. When Amadeus hosted 350 airline and technology leaders at itsAltitude 22 conference in Dubai, one of the most talked about sessions featured Rogier Van Enk of Finnair. The airlinehad announced in September 2021 its intent “to end all legacy EDIFACT distribution by end of 2025 to drive more customer choice.”
Delegates at Altitude were told that part of Finnair’s targeted outcomes of the move was to ramp up its retailing capabilities. Rogier Van Enk said the airline has been working on its transformation since 2016 and that its Android and iOS smartphone app will become “the Offer and Order engine” – where customers search, shop, book and buy their dynamically priced and personalized product, access their loyalty scheme, self-service all components of the offer and where the airline (and its partners) communicates with travelers before, during and after the trip.
This vision is now being brought to life with Amadeus - both companiesrecently announced a collaboration to build the next-generation airline retail offering, bringing personalization and real-time insights through the adoption of Offers and Orders. Finnair, therefore, has already started its Offer and Order transformation, investing, and partnering with experts to provide personalized, smooth, and more enjoyable experiences across digital touchpoints to travelers.
“Better retailing capabilities including dynamic pricing, upselling, cross-selling, bundling, and unbundling also support our target of boosting revenues and improving profitability. We are excited to continue this journey together with our long-standing partner Amadeus”. Antti Kleemola, Finnair’s Chief Information Officer
The future of the airline industry
Bryan Koh from Singapore Airlines was another speaker at Altitude. He shared that NDC has created the opportunity to allow the carrier to make available many features that until that point had only been available on its airline dotcom. These include paid seats and excess baggage. The carrier is working on more features such as the possibility to book its own dining experience onboard which is very popular with its corporate customers. It has also been testing continuous pricing.
Even though Singapore Airlines and Finnair are relatively advanced in terms of their NDC journey, any airline that wishes to participate in the Offer and Order transformation can do so today - even airlines for which NDC is not a priority can identify use cases within the transition and start to take their first steps with confidence.
This transformation is under way at many airlines, with roadmaps and use cases and revenue targets as varied as the industry we all love to work in. It is a significant undertaking. Adoption can be done gradually, but this is where business continuity becomes particularly crucial, with dual systems requiring the involvement of industry experts. Amadeus is fully invested in this transition – working with IATA, with airlines, with fellow travel technology suppliers and those outside the sector – and is 100% committed to helping airlines successfully transition to modern Offers and Orders.
Ultimately, the Offer transformation is the vehicle for differentiation and will lead to airlines becoming more customer-centric, with simpler processes and better IT, leading to increased revenue opportunities and market share.
TO TOP