Skift

Why Context is Key in the New World of Airline Retailing

  • Skift Take
    The global distribution system and next-generation retailing solutions will play pivotal roles in helping airlines and agents offer contextual, personalized products that NDC-enabled content presents, allowing them to step confidently into the future of retailing.

    Imagine an air travel booking scenario in which the customer is presented with a suite of curated options in an easily digestible, comparison-friendly format that’s tailored to their individual tastes and requirements –– from the exact size and location of their seat, to the components of the meal being served, to the onboard movie selection, to the availability of inflight Wi-Fi.

    The customer’s travel experience is personalized and enhanced, increasing the likelihood that they’ll be loyal to a particular airline. At the same time, the airline gets the chance to upsell a range of ancillary products and new, individualized services during the reservation process, while the travel agent can vastly improve its vital comparison-shopping function by hand-picking and presenting the best and most appropriate recommendations for each individual traveler.

    In other words, everybody wins. This is the future of airline retailing and, as born aggregators, the global distribution systems (GDS) will play a key role in helping players from across the travel ecosystem to not only adapt to this new reality, but to flourish.

    The International Air Transport Association (IATA) New Distribution Capability (NDC) standard is expected to transform how products are sold by making it easier for airlines and third-parties to display vastly richer content across all channels, but the new standard comes with a complex landscape of both opportunities and challenges. In the indirect channel, GDS platforms are uniquely positioned to help assist airlines and third-parties taking on this new phase of airline retailing and ensure that travelers do not become overwhelmed with choices that are not relevant to them.

    More Choice is Great, but Not Without Context

    “In any industry, and certainly in travel, the more fragmented the market becomes, the harder it is for customers to find what they want. In that world, aggregation actually becomes much more valuable. If you think about the GDS, we were a born aggregator. This is what we do,” said Kathy Morgan, vice president of product management, strategic initiatives at Sabre and a leading industry voice on the future of airline retailing.

    “Our job has always been, and will continue to be, aggregating content from a variety of sources, applying additional sophistication from a shopping perspective and, from a retailing perspective, being sure that we get the right offer out at the right time to the right customer,” explained Morgan. “That becomes even more important in a world of NDC, where you have content that is much more fragmented.”

    The risk of bombarding travelers with too many unrefined choices was recently underscored by Nathaniel Giraitis, director of strategy at design company Smart Design, and a specialist in taking customers’ emotional and behavioral needs into account when designing business strategies.

    In a speech to delegates attending April’s Aircraft Interiors Expo in Hamburg, Giraitis said, “The issue is that infinite choice is paralyzing to the human psyche. As the amount of choice increases, the effort of choosing increases and confidence that the selection was the right choice decreases.” Giraitis stressed the importance of knowing the context and engaging people at just the right moment, noting that personalization “can cut through the noise when dealing with lots of choice.”

    The travel industry can take cues from front-runners in the personalized retailing space such as Netflix which, as Giraitis points out, has “14,000 titles and counting” but has figured out how to put only the most relevant choices in front of its customers.

    Morgan agrees that Netflix and other digital entertainment products such as Spotify get it right when it comes to “analyzing consumer buying behavior to predict and influence future purchases.” The challenge now is for the travel industry to emulate their success.

    Unlocking the Airline Personalization Opportunity

    Such opportunities in the travel world remain as-yet untapped, but Morgan points out that because Sabre has access to such a wealth of data, as well as the ability to analyze that data and provide decision-support capabilities, they are in “a great position to be able to unlock that value.”

    “We’re doing a lot of work around harnessing the power of the data we have inside our ecosystem to drive new types of retailing and personalization capabilities. Things like trip purpose customer segmentation to predict, which with high degree of accuracy, why a traveler is traveling, without any personal information. There’s so much intelligence you can glean which allows you to start thinking about retailing and personalization in new and different ways,” said Morgan.

    Additionally, Sabre’s deep analytics around shopping and market data make it possible to dynamically price and create smart bundled offers considering an airline’s strategy, the consumer’s preferences and willingness to pay and the market context.

    Morgan explained, “That’s super important because if you listen to what airlines want to do, the holy grail of personalization is understanding why a person is traveling. Being able to infer the types of products, services, and experiences they care about allows you to get a highly relevant offer out and increase your opportunities for conversion.”

    In the future, for instance, travelers at the point of booking will be able to determine –– and pay accordingly for –– the particular aircraft seat they are allocated, with specific seats in the same economy class coming at different price points. Understanding their reasons for traveling could play a key role in presenting them with the right choices.

    “We expect this from any other venue. If you go to a concert, they show you the view from each seat before you book. In the future, every seat on a plane will have a different value. If you provide a more granular offer, which is what platforms like Amazon do, consumers get exactly what they’ve paid for. So if I paid $10 less to sit in the back row, I’m not mad because I knew what I was getting,” said Tim Haynes from Sabre Labs, a division of Sabre charged with spotting and preparing for future travel technology trends.

    This seat-selection capability is not as far into the future as you might think. Spanish technology company Renacen has designed a product called 3DSeatMap, which displays an immersive 3D, 360-degree view of an aircraft cabin during the booking process, enabling travelers to see exactly what each seat looks like. The product will be launched by Emirates Airline across its digital channels.

    Innovations such as this, and the extra revenue opportunities they present, are just the tip of what could turn out to be a very large and lucrative iceberg for the travel industry.

    Sabre is committed to supporting airlines and agencies and investing beyond NDC by delivering a true end-to-end retailing solution across all channels in a way that helps solve travel complexity and makes the best possible use out of new technologies as they emerge. Learn more about the evolution in airline retailing –– both the challenges the industry is facing today and the solutions now available to turn a complex travel environment into a rewarding experience for the future.

    This content was created collaboratively by Sabre and Skift’s branded content studio, SkiftX.

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