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Sometimes a small deal underscores a big trend. That’s the case with Thursday’s news that Amadeus, the travel tech colossus, and Points International, a provider of tools for travel loyalty programs, have signed a commercial and technical deal to sync their airline loyalty systems.
For Points, based in Toronto, this deal is a coup. Points will be able to piggyback on Amadeus’s broad customer list to sign up more airlines to its tools for servicing frequent flier programs.
Points International has relationships in place with more than 60 loyalty programs worldwide, with the majority of them being airline programs. Amadeus has more than 80 airline customers — roughly double the number of summer 2017 —using a selection of its Amadeus Loyalty Management and Awards services.
For Amadeus, based in Madrid, this integration is just one of many it has done with much smaller partners. That said, the deal bolsters its loyalty and redemption servicing tools, which Amadeus has been offering since its 2013 acquisition of the customer relationship management unit of tech provider Hitit.
Indirect Benefits for Flyers
For consumers, the deal between the public companies may eventually help airlines offer easier ways for frequent fliers to earn and burn their miles.
“Historically, airlines have a patchwork of systems, and that can lead to pain points where, say, a passenger might not see their points arrive in their accounts for three days after a trip,” said Dominic Matthews, head of loyalty, airlines, at Amadeus.
“We can avoid consumer frustration by implementing real-time data exchanges,” Matthews said. “In the first quarter of next year, our engineers from both teams will scope out how to streamline integrations.”
Amadeus’s and Points.com’s systems are cloud-based which, when synched, can offer real-time data updates and backups more consistently than the on-premise data centers still used by many airlines, the companies said.
Competition Heats Up
The nuanced point is that airline IT is becoming a hotbed of investment and software development. Airline adoption of the cloud is driving the trend. Internet-based systems communicate using more flexible methods of data exchange than former on-premise data centers. This new reality has encouraged more non-traditional airline IT players to offer services in a dynamic that has sparked innovation and competition.
For example, Amadeus and Points are among the vendors who provide tech that intends to help airlines provide better service to members of frequent flier loyalty programs, but both have only made a big push in this sector in since 2013. Some IT companies that are moving more assertively into loyalty management tools include IT services firm DXC, marketing enterprise software provider Kobie, and Chinese global distribution system TravelSky via its 2016 acquisition of OpenJaw.
Marketers may want to promote a product, such as an opportunity to receive a bonus for a particular type of travel, by providing different awards based on which tier a flyer belongs in their programs, such as platinum or gold.
Airline IT Becomes the “It” Girl
For the industry, the deal represents a change in where the most crucial data gets crunched.
The deal highlights the rising importance of airline passenger services systems and related software applications loosely described as “airline IT.” To an extent, these systems are taking over some of the selling work that used to be the mainstay of so-called “distribution” tech systems.
We’ve written a lot about how Amadeus and its rivals Sabre and Travelport have been improving their reservation systems for travel agencies.
Another side of the sales puzzle, however, has been the growing prominence of airline operational systems.
Airlines need IT systems for services such as revenue management, the accounting of passenger sales revenues, and loyalty program management and servicing. These systems all have an impact on airline sales efforts but happen in a different part of their so-called tech stack.
To be sure, both airline IT and distribution systems will continue to work in concert. They both help airlines sell better.
However, the growing sophistication of airline IT systems means that, when airline executives want to boost their selling games, they’re turning to these systems first to implement changes because they can instantly test the results directly on their mobile apps and other direct channels.
Until now, Amadeus and Points offered separate loyalty systems to airlines. Points would often offer its tech wares to an airline only to discover that the airline was already using some different but related loyalty solutions from Amadeus.
In that case, Points would have to go through a back-and-forth between its team and the airline IT department to complete the integration, said Christopher Barnard, president of Points.
The new integration between Points and Amadeus means that work has already been done in advance, so to speak.
Airlines that haven’t used either one will now have a one-stop process to add tools from both Amadeus and Points without having to split the work into phased commercial and technical talks.
Airlines wanting to configure more complex marketing promotions for their loyalty programs generally need better tech than their in-house systems, which mainly manage accrual of balance totals and dispersals.
On Thursday, Amadeus and Points talked about immediate opportunities. It’s easy to imagine future ones, though.
Amadeus could look at addition synergies between the two companies’ product suites. It might also look one day at offering the advanced loyalty services beyond the users of its Altea suite of passenger service system to also include the primarily low-cost carriers that use its passenger service system Navitaire whose loyalty management tools are rudimentary today.
Points International also offers loyalty management tools to other types of suppliers, such as hotel chains and rental car companies. Amadeus also has business relationships with many of the same companies.
In the near-term, the deal helps Barnard of Points bolster the case he makes to investors in roadshow presentations that Points International has escaped its past doldrums and is on a growth trajectory.
The loyalty tech game and the broader airline IT investment it represents will only be heating up from here.