3 ways airline retailing will transform the industry

Over the past few months, my wife and youngest have been traveling a lot, on a mission to find the right college fit for my son. They’ve experienced the good, bad and ugly of airline travel, and have gained a greater appreciation (and sympathy!) for the traveling part of my job. Most important though, they have come to understand why I enjoy working for Amadeus, a company committed to making travel easier.

I started my career in revenue management for American Airlines nearly 30 years ago. By far, the most dramatic change I’ve seen over three decades is the explosion of the online channel. As online booking, researching and purchasing has become status quo, the rise of online travel agencies and meta-searches has made it significantly easier to shop, compare and choose the right travel solutions. New online booking tools have also made it easier for corporate travelers to make selections. I’m happy to say I’ve worked with – and for – companies who have embraced this transformation, and I’m excited to see how Amadeus continues to lead the way.

The tipping point is close

There has been much discussion regarding how travel companies must get to know their customers better and improve their performance as retailers. I believe we are finally at the tipping point of making this a reality. We are advancing the modernization of technology with industry initiatives like New Distribution Capability (NDC), One Order (replacing the legacy PNR), Offer Management (creating tailored offers based on individual traveler personas), new loyalty products offering dynamic pricing (using miles, points and dollars), and the rising popularity of purchasing fare bundles.

All of these innovations are exciting, and here’s why.

  1. Corporate travelers will benefit.

As a traveler, I have multiple personas. For those who know me, I’m fairly frugal. This plays out in my work and personal personas, but in different ways. For my work travel, schedule and flexibility are essential. I need to be in certain places at certain times, and often my travel plans change at the last minute. Therefore, I value features that support my need for a fluid schedule, such as flexible “day of travel” changes, seat assignments and upgrades. These preferences usually tie me to a preferred airline. In the world of retailing, multiple airlines will have the ability to offer products that neutralize the playing field and deliver me more options.

On the personal travel side, it’s important to use my benefits (miles) effectively. This feature is currently static on most airlines. Yet new technology will make it easier for individuals to dynamically spend their miles, making those miles more valuable to them. Airlines also have the ability to package miles differently, creating more options that could generate greater traveler loyalty.

  1. Other travel groups will benefit.

Not everyone travels the way I do. Some people travel only a few times a year, yet they will gain access to better products, essentially having the ability to buy the components that matter most to them. This will give travel partners more flexibility to market their products to different generations. Millennials are all about the experience, thrill of travel, and ease of use. Cost can sometimes be less of an issue. They are demanding new products tailored to their needs, such as experience shopping (“I want to go skiing this weekend, and I want someone to plan it for me,”) and budget shopping (“I have $500 to spend, where can I go?”) As these shopping methods become more mainstream and refined, interest will spread to other groups.

  1. Travel partners will benefit.

All of these changes are real, exciting and forthcoming. In each of these areas, Amadeus is actively working on projects with several of the world’s most innovative airlines. Although innovation certainly takes time, the technology used by airlines to book travel will change dramatically over the next ten years. Airlines will take advantage of the latest technology to interact more easily with other travel partners. For example, Artificial Intelligence (AI) will enable us to use voice commands to make the travel process easier. Machine learning will help our partners adapt more quickly to changes in individual travelers’ purchasing personas. Blockchain and crypto currencies will make the transactions easier and more secure.

Ready for a new travel experience

I’m excited about the future of retailing. So is Amadeus. And so are the airlines and travel partners across the travel ecosystem who envision a brighter future alongside us. With so many changes on the horizon, travelers are getting excited too – including my wife and Generation Z son. While there’s still much work to do, we also know that all of these changes will ultimately make travel a more rewarding, fulfilling and seamless experience for everyone.

What other travel industry transformations do you look forward to?

 

One comment

  1. Very insightful article, Mike. I’m particularly excited about AI in the future – the opportunities are virtually endless!

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