#1 – 2024 is the year of Offer & Order Implementation
The industry’s transition to 100% Offers & Orders has been a huge topic of discussion in recent years, however, we’re only starting to see airlines take action this year. According to Datalex’s Chief Technology Officer, Brian Lewis, 2024 is the year that the industry will actually see airlines transitioning to Offers & Orders – and with that, we’ll see a seismic shift in technology and architecture.
The need for airlines to become more customer-centric is greater than ever and is one of the main driving forces that is fueling this new era of modern airline retailing. Importantly, as spelt out in the IATA Offers & Orders Business Case, there is a significant revenue opportunity available to airlines for both offers and orders.
Datalex is already working towards a legacy-free future with our airline partners around the world, including the Americas where we are trusted by JetBlue, LATAM Airlines and Air Transat. Datalex’s Offer & Order Management System is a cloud-based, scalable solution that works with or without the PSS and is enabling airlines around the globe to cut through legacy complexities and continue to put the customer at the centre of all processes.
#2 – NDC has taken the American aviation industry by storm
This year, we're seeing airlines push the boundaries towards modernizing the way they distribute and sell their products and services. Across the United States, many carriers have abandoned GDS full content agreements in favour of direct channels and NDC – with American Airlines making their direct channel more attractive for corporate travellers all while working towards its goal of 100% internet-based bookings. Likewise, United pulled basic economy fares from non-NDC channels and including corporate fares on their website only.
In addition to that, and during a recent IATA Modern Airline Retailing webinar, Air Canada’s Managing Director Customer Digital & Distribution, Keith Wallis, spoke to the airline's NDC strategy and aspiration to get 25% of its indirect volume to come through NDC by the end of 2024. However, on the other side of the spectrum, we're seeing carriers such as Delta Airlines doing exactly the opposite. The Georgia-based airline announced that it will not be following suit and instead will be launching a product that unlocks value for its customers and focuses on servicing.
Another NDC-related observation is that no American based carriers are on NDC 21.3. A large number of airlines across North America are still on 18.1 – one of the industry's most tried and tested versions, as it has been in use for a number of years. However, Schema 21.3 has been heralded as a milestone version for a number of reasons including its robustness and consistency of messaging, backwards compatibility, and reduced costs. At Datalex, we’re proud to be an IATA ARMi partner and a certified 21.3 Schema version technology provider.
The race is on amongst the American carriers… who will get to 21.3 first!
#3 – Better Merchandising is high on the agenda
The ancillary revenue opportunity is hot!
Ancillary revenue is on the rise with US airlines reporting a +30-40% uplift in ancillary revenue – reaping almost $69 billion in revenue. A recent IdeaWorks and CarTrawler report detailed that airlines are increasingly cashing in on extras such as checked luggage, extra legroom seats and priority boarding. Datalex recently sat down with industry expert, Jay Sorensen, who stated that “Delta has led the way recently by promoting its success at capturing more spending for premium services. This trend defined the industry for 2023 and will influence it for many more years to come." According to Jay, increased wealth and spending in the United States is the main driver for this trend as well as higher demands for personal space since the pandemic, influencers and social media increasing the desire for luxuries, and better retailing amongst carriers is making it easier impulse spending.
When it comes to Merchandising, Datalex’s Senior Product Manager, Jeremiah McAuliffe stated that in 2024 airlines are becoming more data-focused, prioritising being better retailers and turning their attention to bundling – air and ancillary. Through bundling techniques, airlines can increase their conversion rates by offering their customers the right bundle at the right time and at the right price. To learn more about Datalex’s bundling capabilities, visit here.
#4 – American based carriers are pushing the Loyalty boundaries
Across North America, airlines are no strangers to the benefits of loyalty programs – rewarding frequent fliers and introducing concepts such as subscription payments. European carriers haven’t been as quick to catch on to this trend, with Ryanair CEO, Michael O’Leary, recently rejecting the idea of loyalty benefits and instead urged passengers to “get a dog” if they want loyalty. However, American based carriers are demonstrating why loyalty is important.
Frontier Airlines is an example of an LCC (Low-Cost Carrier) that is investing heavily in loyalty and doing it well. The airline recently revamped its loyalty program which is now rewarding passengers for every dollar spent on Frontier-branded products. For every $1, passengers are rewarded with 10 miles making it quicker to build up points. Likewise, Frontier is set to introduce its subscription payments program with the launch of its Summer 2024 Go Wild program that allows passengers to purchase seasonal, monthly, and annual all you can fly passes.
American Airlines is another example of an airline that is doing loyalty well through its AAdvantage program and reaping the revenue benefits of it. American recently announce that 65% of its revenue was driven by members of its AAdvantage program in 2023 and are now expecting that it will jump to 80% in 2024. Only passengers booking directly on American’s website or through preferred travel agents are eligible for AAdvantage miles and loyalty points.
#5 – AI; No longer optimising the legacy of today
As the industry moves to a world of Offers & Orders and become less reliant on traditional ways of filing, we’re going to see airlines take control of their offers. AI-Powered Pricing can be viewed as a ‘quick win’ or ‘value driver’ for airlines – ensuring business continuity today while also readying digital strategies for the future. Likewise, there is an application for AI that goes beyond pricing into the world of dynamic offers or dynamically bundled air offers, through to order management, and generative AI in airline call centres and applications.
With products like Datalex Pricing AI, airlines can go beyond the static price tag to a world that never sleeps. With revenue uplift of 2-4%, airlines can transform their revenue management strategies and build competitive advantage by differentiating through data in real-time and at scale. Learn more about the possibilities of AI-Powered Pricing here.
Request a meeting today with our team of experts!
Interested in learning more about how Datalex can help your airline cut through legacy complexities and better connect with customers? Request a meeting today with a team of our experts.
Attending the Aviation Festival Americas event on 15-16 May in Miami? Get in touch with our Sales Team that will also be in attendance!
Datalex – Who are we?
Datalex's purpose is to transform airline retail. Datalex is a market leader in airline retail technology, offering unique products that enable airlines to drive revenue and profit as digital retailers. Datalex has a strong track record of delivering digital retail transformation for progressive airline brands worldwide. The Group is headquartered in Dublin, Ireland, and maintains offices across Europe, the USA, and China. In 2024, Datalex was awarded the 'Great Place to Work®' certifications. Datalex plc is a publicly listed company, on Euronext Growth, Dublin. Learn more at www.datalex.com
