IATA, the international industry trade group of airlines, has come out with a new report identifying major trends that are transforming the travel and specifically airline distribution landscape. As part of that 35-page report, done by the erstwhile Atmosphere Research Group for IATA, a very interesting part about alternative distribution channels caught our eye, and we’re extracting it below, with permission.
Pay Attention to “CAGFA”: Concur, Apple, Facebook, Google, and Amazon
By Henry Harteveldt
The traditional primary focus of airlines’ distribution attentions have been their own channels and those of key third-parties, such as GDS, metasearch, and ofﬂine and online travel agencies. These channels continue to merit airlines’ attention — but they cannot be carriers’ sole focus.
Atmosphere asserts that a new “gang of ﬁve” warrant airlines’ ongoing scrutiny. None of the ﬁve are traditional airline distribution players. The ﬁve companies: Concur, parent of the TripIt itinerary management tool, Apple, Facebook, Google, and Amazon — CAFGA for short.
Why should airline executives pay attention to these companies?
- Concur may know more about your travellers‘ trips than you. Thanks to buying TripIt in 2011, Concur is positioned to become a gateway between airlines and their passengers. TripIt lets travelers upload their ﬂight, hotel, and other travel reservations to a consolidated itinerary. As a result, TripIt can create a “super PNR” of its users’ trips, and Concur can integrate user data into a comprehensive data warehouse — made even more powerful if the traveller also uses Concur’s expense reporting software. Concur sits on massive volumes of customer data and insights. Atmosphere believes Concur will leverage this by selling data to airlines — data that may include insights such as market share, fare paid, purchase channels used, and more — and through TripIt-based marketing solutions.
- Apple’s Passbook may be a wolf in sheep’s clothing. If you think Apple is a benevolent business, ask your local music store how they feel about iTunes. Passbook, Apple’s new mobile wallet, can store a traveller’s loyalty program account information, boarding passes, coupons, and more. Apple built iTunes into a fortress that drove brick and-mortar stores out of business, while cementing millions of people to Apple hardware and software. Atmosphere believes Passbook has the potential to threaten the airline-passenger relationship, due to how Apple designs applications that are easy, enjoyable, and nearly effortless to use, and which provide the user with enormous utility. Atmosphere sees Passbook as Apple’s “Trojan Horse” into the travel space. Apple won’t be a travel retailer, since travel doesn’t offer the same margins as entertainment, and selling travel brings with it customer service burdens. Instead, Atmosphere believes that Apple will use Passbook as the media and ﬁnancial “toll booth” that airlines will have to pay to reach their passengers.
- Facebook knows how your passengers live their lives. With more than one billion users worldwide, Facebook has become the global “town square.” Passengers worldwide ﬂock to Facebook, using it to search not only for friends, but brands, destinations, interests, and more. Facebook’s semantic data, search data, and advertising insights, coupled with its ability to process reservations and its growing capabilities in mobile, make the site powerful due to the data it is aggregating. Atmosphere believes Facebook will attempt to aggressively monetize its users by using real-time bidding (RTB) algorithms that will pit airlines against intermediaries to reach travellers. If there’s an upside to Facebook, it’s the site’s promise of strong consumer targeting capabilities.
- Google will do everything but ﬂy your aircraft. Whether it’s to dream about, plan, shop for, book, or manage a trip, Google participates in almost every aspect of airline distribution, eCommerce, and marketing. Google’s Chrome web browser is the world’s most-used. Google has the top general search engine. It offers metasearch, through Google Flight Search. It owns ITA Software, which sells airline pricing and reservations software. Google offers several social media platforms, including Google+, Picasa, and YouTube. Google markets its own laptop computers, smartphones and tablet devices, created the Android mobile operating system, and operates the Google “Play Store,” where users can download mobile apps. Google’s mobile wallet can help travellers pay for their purchases. Google Maps and Google Earth can help travelers plan and navigate through their destination — including airports “Google Goggles” will serve as navigational devices, with lenses that present geolocation-based information and offers to their users. Google offers many excellent technology products, and it is a genuinely creative business. Google can use its power and reach to facilitate or interfere with the relationship an airline and passenger have with one another. Even if it chooses to facilitate the relationship, Google can make that access extremely expensive, or force an airline to use a certain product if the airline wants to reach to passengers through a speciﬁc channel.
- Amazon is the world’s retail marketplace. Amazon’s global websites, with their extensive offerings and “one click” buying, deﬁne the consumer digital commerce experience. Amazon may not sell travel directly, but its Amazon Web Services division hosts various transactional websites. While market share of its Kindle tablets may be small compared to Apple’s iPad and devices that run the Android operating system, Amazon gains a commerce short-cut to Kindle users’ wallets through the devices’ integration with its digital stores. And, like Google and Apple, Amazon is entering the mobile wallet space. Amazon is a powerful, mighty retailing hub, and is positioning itself to be a factor in how airlines sell, and how passengers buy, air travel.
Henry Harteveldt recently joined Hudson Crossing as its travel industry analyst. Prior to this, Harteveldt led the travel industry worldwide consulting and research practice at Forrester Research and, more recently, co-founded Atmosphere Research Group. Throughout his distinguished career, Mr. Harteveldt has either worked for or provided consulting and research to some of the worlds leading hotel brands, airlines, online travel agencies, global distribution systems and key industry associations. Henry’s industry background includes marketing, planning, and distribution roles at TWA, Continental Airlines, The Trump Organization, Fairmont Hotels, and GetThere. More on him here.