2 days ago
With modern airline retailing, airlines can sell a lot more than a flight ticket, become integrated travel platforms: IBS Software head
A big shift is on the horizon in how airlines look at their retailing strategy with 'modern airline retailing', which put the consumer at the front and centre of the retail process, leveraging data and technology to provide a seamless and personalised shopping experience to flyers for a lot more than just a seat on the plane. According to VK Mathews, founder and executive chairman of the IBS Software, modern airline retailing is 'the single biggest change that will take place' in how airlines will sell to flyers in the not-so-distant future.
For IBS Software, a global software as a service (SaaS) provider in airline passenger services, air cargo management, loyalty management, to flight and crew operations, modern airline retail is a critical growth segment with immense potential. The company, while having a number of global airlines as users of its various products, its footprint in India has been rather limited. But with India's aviation sector booming with double-digit growth in passenger numbers and now with financially stable large airline groups, IBS Software sees the country as a market with significant potential and modern airline retailing appears to be a key focus area in its India ambitions.
From a consumer perspective, modern airline retailing involves carriers turning into a one-stop-shop solution for the passenger—for booking flight tickets, ancillary services, and other services like lounge access, hotel reservations, cab bookings, car rentals, and even travel experiences, among others—based on individual needs and preferences. Think of it like a modern e-commerce platform, like an Amazon, but for travel with various products and services related to the trip available and integrated seamlessly on one user-friendly platform driven by latest technology and tools—artificial intelligence, New Distribution Capability (NDC), real-time data analytics, blockchain, internet of things (IoT), and more.
'When it comes to modern airline retailing, there's a huge shift taking place…Airlines would like to tell customers that if you think of travel, think of us, not just for the seat, but anything and everything related to travel. The technology and the standards are now available for making that happen. They can offer anything and everything you could probably think of, even things that may not be directly related to travel. Systems are now available to procure and aggregate, package, price, and deliver it to the customer and see through the delivery, making sure all service levels are met,' Mathews told The Indian Express.
While online travel booking portals do allow travelers to book flights and other services on their platforms, these services are usually individual bookings made with different service providers with little to no operational synchronization and coordination. And that is where modern airline retailing is touted as a superior product and retail strategy as it promises end-to-end solutions to passengers that work seamlessly and adapt on a real-time basis. Airlines in the coming years could turn into fully integrated travel platforms that not just facilitate trip bookings but also actively manage them.
'You can book a car or book a hotel along with a flight ticket through the OTA (online travel agency) website, but what happens if your flight gets delayed? You then have to individually manage those other bookings. What will be possible with this (modern airline retailing) is that all the associated services you purchased get automatically amended and service providers will be notified about the changes real-time. It makes the airline the merchant of record for your other purchases as well,' said IBS Software's CEO Somit Goyal.
'One of the biggest trends that we are seeing among airlines is disintermediation. Airlines would like to go directly to the end consumer, removing the non-value adding intermediaries…They (airlines) would like to know the customer a lot better. Instead of being just a carrier, you have to have the conversation and a dialogue directly with the consumer. And if airlines want to go directly to consumers, they have to offer what the OTA is offering, and much more,' Mathews said.
But why would airlines want to invest in offering so much more than just their core services to passengers? It is a multi-pronged rationale—increased revenue opportunities through partnerships and sale of other services and products, deeper engagement with passengers, opportunity to have dynamic pricing at a deeper level, and better understanding the customer in order to offer tailor-made and personalised packages of services and products.
According to Mathew, an airline that can execute modern airline retailing well stands to gain on various fronts, including generating more ancillary revenue and raising its average revenue per customer. 'One of the challenges for Indian aviation, which is probably the most unknown as well, is that globally, an average ticket price or segment fee is about $163 as of this year, while it is between $90-100 in India. And the cost in India and overseas is almost the same,' he said.
