Datalex’s Chief Product Officer Conor O’Sullivan outlines the low hanging fruit that airlines can take advantage of today to be prepared for tomorrow
At a recent industry presentation, Conor O’Sullivan cautioned airlines by stating that “the cost of doing nothing cannot be underestimated,” referring of course to the transition to Offers & Orders. The moment of truth comes when you stop investing in the past and start investing in the future. At Datalex, our products are architected deliberately for an Offers & Orders compliant future. We know however that the transition to this state will not happen overnight, but will be a gradual, piece-by-piece approach. The future is calling right now, and all an airline needs to do is to simply pick up the phone – airlines need to start somewhere.
We know that airlines can start that journey easily today and we’ll outline what value drivers are available to airlines today so that they can operate in ‘hybrid’ approach; that is ensuring business continuity today, while at the same time also readying their digital strategy for the future. We cannot emphasise enough the importance of making sound architectural and technological decisions today that will prepare an airline for a digital future at scale.
Experts at Datalex are regularly pressed by airlines for ‘the typical airline pathway to Offers & Orders,’ but we will never give a generic answer to this. The reason is that every airline is different and that is a key differentiator of Datalex in-market, as many IT providers tout their ‘airline transition pathway’ as if it could be applied to any airline. The fact of the matter is that every airline’s starting point is different, and their end state or end goal may also be different to others, and we need to account for that.
1. Getting started with Dynamic Bundling
The first value driver airlines can implement in the short term for optimisation purposes, whilst also facilitating long-term digital transformation is Dynamic Bundling. Today airlines are stuck with the same set of static bundles and fare families day-in, day-out with very little movement. Legacy processes means that airlines are stuck filing fare classes and lifting these from their fare sources, using this as their starting point for bundles.
Airlines are letting these air fare classes remain the primary source for bundled offers and perpetuating a cycle of generic and unpersonalised approaches to customer segmentation. Recent Datalex research saw 7 in 10 travellers surveyed state that they are more likely to complete a booking when several products are bundled together, meaning that the opportunity for personalisation is wide open.
With Dynamic Bundling, airlines can stretch the offer by adding ancillaries seamlessly to an air fare, leaving the air fare untouched. Bundles are dynamically created at the time of the request based on real-time data. The unlimited bundling configurations make it easy for airlines to bundle ancillary offers with the air offer at an opaque price. The reason Dynamic Bundling is so essential to the future of Offers & Orders is because by bundling ancillaries to fares dynamically, the idea is that it is no longer just adding a new product to be offered – but with the view to being serviced, ordered and everything that goes along with that. Typically, servicing of Bundles is made difficult as rebookability and refundability rules are tied to the air fare which limits your capability around true dynamic bundling.
In addition, most airline’s existing systems don’t have an order management system capable of dealing with non-air products and services. It is a crucial first step in digital transformation that within Dynamic Bundling you include the concept of “right to fly” which allows the offering, order creation and servicing of the air product and the ability to create more relevant and personalised offers through contextualisation and personalisation. Bundles are dynamically created at the time of the request based on real-time data. This can build on top of an airline’s existing systems, making it easier than ever before to bundle products right down to segment level.
2. Reassessing your pricing processes
Now that we’ve tackled bundling, what is stopping airlines from pricing effectively? The culprit is legacy technology, with RBDs restricting the true revenue that airlines could generate and unlocking unlimited numbers of price points in between each fare class. Legacy technology is preventing airlines from taking full control of their in-house pricing strategy. Airlines are restricted in their abilities to strategically price their flights at scale, make quick or real-time data and remain consistently competitive.
In a recent global survey of airline executives by Datalex, 69% of airline executives believe AI-powered pricing should enhance revenue management rather than substituting it. Datalex Pricing AI works as a collaborative team member with revenue management at scale decision-making, making it smarter and in real-time. Airlines can move beyond the static price tag to a world in which pricing never sleeps and AI-powered dynamic price tags are continuously generated in real-time and scaled across the airline’s network. With this product, airlines can benefit from AI models that feed exclusively on real-time data, meaning they are completely unique to that airline. Once the suggested price is predicted, our market-leading reasoning works its magic by simulating human intuition to generate the optimal price.
Datalex Pricing AI completely circumvents the legacy system in the offer stage and then uses the legacy systems again to solve for the order side. In a PSS world Pricing AI will compare the original filed fare and to get over e-ticket stage, we’ll pass it through as an adjustment to get past that point of order management. Crucially this is completely independent of ATPCO in both a PSS world and a PSS-free world. This is because from the beginning it is not an ATPCO optimiser that has no association with the underlying filed fare. In this way it can be implemented at any phase of an airline’s Offer & Order journey as it is architected for both worlds. AI-powered pricing allows airlines to benefit from incremental revenue previously unavailable to them.
3. Speaking to Datalex
Datalex are currently in the middle of several high-profile airline activations and digital migrations and understand the pressure that airlines are under to get their digital upgrades right. Airlines are historically used to legacy technology stacks where large scale activations are dealt with in advance in anticipation of a ‘big switch,’ but digital activations must be seen as a piece-by-piece project that is gradual. Airlines however generally bite off more than they can chew, mainly because they want as little disruption as possible and do not want multiple opportunities for disruption to occur, fearing that if you change too much too quickly, this will cause the disruption of services.
A componentized approach therefore offsets this and is enabled through modular products. Our journey to Offers and Orders is baked into our DNA, through the foundational principles of our product strategy. Through our cloud native approach, agnostic offer sourcing, servicing and an independent OMS as the single source of truth we have a clear path forward that we can lead airlines on.
Datalex is committed to delivering against its Vision for Offers and Orders and has a clear transition path across all phases from initial optimisations for Modern Airline Retailing towards 100% Offers & Orders. Because our products are architected for the future, airlines can achieve a hybrid by optimising their digital retailing today, whilst also future proofing for tomorrow. What Datalex offers the market at the moment is extra capabilities that give you the potential to address downstream issues in the future. As our products are architected for the future you are already one step ahead.
