The opportunity for airlines and online travel agencies (OTAs) to capitalize on air travel demand has never been greater — but in an age of increasing uncertainty, creating a business strategy centered around technical agility is key.
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The airline industry is making significant progress on the road to recovery. According to Skift Research, air travel demand is on pace to finally surpass 2019 numbers in 2024. However, optimizing revenue continues to be a major challenge amid unpredictable booking patterns, labor shortages, supply chain challenges, and shifting traveler expectations.
Most companies know digital transformation is the answer to meeting disparate traveler needs and driving long-term growth, but they may not know where to start and how to prioritize their time and resources.
“There has been an industry-wide wake-up call on the importance of having a flexible technology platform,” said Nevra Onursal Karaagac, chief sales and marketing officer at Hitit, an airline and travel solutions company that offers a turnkey airline IT software suite through its Crane brand. “More and more airlines are realizing the value of creating their own flavor of unique products and services, not just as a crisis-management tool but also to differentiate themselves in an increasingly crowded market enabled by offers and orders.”
SkiftX spoke with Karaagac about the benefits of accelerating digital transformation, the rise of offer- and order-based retailing, and the initial steps airlines and OTAs can make along the digital transformation journey.
SkiftX: What are the key benefits of accelerating digital transformation for airlines, OTAs, and travelers?
Karaagac: With digital transformation becoming more widespread across the industry and with more players introducing new technologies and adopting forward-looking standards, the industry as a whole offers more opportunities for all stakeholders.
Think of all the advancements over the last several years: digital credentials, contactless travel, hyper-personalization, artificial intelligence and machine learning (AI/ML) applications, and the shift to offer- and order-based retailing. Travel companies across the spectrum benefit from a “network effect” of other parties developing similar solutions and services they can integrate with.
One of the main benefits of digital transformation is that it enables airlines and OTAs to tailor offers to travelers throughout their entire journey, spanning a wide range of products and services beyond the standard “boarding ticket, extra bag, and car rental” formula. Instead, imagine accessing in-flight Wi-Fi alongside an eSIM with a local data plan, all seamlessly included as part of your business travel booking so you can stay connected throughout your journey.
In the future, your personalized profile may travel with you, automatically booking your preferred seats and meals regardless of which airline you’re flying, and breezing you through bag drops and smart gates at the airport. We’ve been dreaming about these advancements for a while, but now we actually have a tangible path forward.
SkiftX: Why is it important to offer one integrated platform solution for both full-service and low-cost carriers?
Karaagac: We’ve always been proponents of the hybrid airline approach — the blurring of the lines between full-service and low-cost business models — as this allows airlines greater leeway in how and when they introduce new products, services, and offers.
Over the last decade, it became clear that airlines had to be able to move with shifting industry trends and customer expectations without being limited by the capabilities of their technology platforms, especially with the rising importance of varied and personalized service offerings and omnichannel distribution.
This need for technical agility that can keep up with rapidly changing business dynamics became even more pronounced during Covid when airlines had to scramble to not only accommodate new regulatory processes but also come up with new and creative ways to entice passengers back to fly with them. While there have been notable success stories, we’ve seen many airlines develop smart ideas only to be let down by their legacy systems.
We have great respect for the companies that pioneered technology solutions for the travel industry in the 20th century. They achieved great things with the tools they had, and it’s no wonder many of them still persist today. We think of Hitit as the next evolution, not just in technology, where our products are fundamentally built upon modern capabilities with a mobile-first approach and a service-oriented, cloud-based architecture, but also in how our solutions seamlessly combine into an integrated platform that supports airlines of all types and sizes throughout the entire airline business lifecycle — from planning to distribution, operations to cargo, and everything in between.
SkiftX: How should airlines and OTAs think about the shift from traditional passenger service systems (PSS) into offers and orders?
Karaagac: The shift to offers and orders is shaping up to be one of the most fundamental changes in how we do business since the demise of paper tickets. It promises true air retailing and omnichannel distribution for airlines and OTAs and offers the ability to sell anything, anywhere.
We’ve developed an action plan with our partner airlines and OTAs: First, they need a clear vision of what they want. For example, do they want to go “vertical” and enrich their own offerings, or “horizontal” by introducing additional products and services from other providers? Are they going to chase an omnichannel rollout from the get-go, or phase their products over different channels? The desired end state is usually a combination of these considerations, but it is important that airlines know how they want to get there.
Second, they need to understand that their plan will require constant reevaluation and adjustment. Business processes and technical capabilities need to go hand in hand, and establishing “minimum viable product” milestones that can act as stepping stones to the desired final outcome is key.
By following this iterative path, airlines and OTAs can reach their intended offer and order management outcome with the minimum amount of pain and maximum realized benefits.
SkiftX: Making this shift requires a significant investment in time and resources. What are a few practical and useful “halfway point” steps airlines can make along this transformation journey?
Karaagac: It depends on the specific objectives and priorities of each airline, but we have observed that instead of going for an “omnichannel big bang,” most of our partner airlines prefer an iterative approach, starting with channels where the efforts would be minimal or the potential gains could be maximized. For example, pushing to replace legacy indirect channels with new rich-content capabilities, or improving customer self-service and mobile channels first.
One crucial aspect of offer and order management transition that is often overlooked is the “order” part of things: While rich offers are definitely eye-catching and usually easier for executives to wrap their heads around, robust order management throughout the whole value chain is the true driver of scalable growth. After all, if an airline or OTA cannot reliably and seamlessly deliver on what they have sold, they will struggle to generate customer loyalty and repeat business — no matter how flashy their offer catalog may look.
A sensible “halfway point” strategy would look something like this: Choose which channels and touchpoints of your business to transition first, keeping in mind the ease and potential gains of the transition. Start out at your own pace so neither technology nor business is left behind and a proper foundation suitable for further growth can be established. Observe and iterate as needed, and don’t forget to build out your order management in line with your growing offer capabilities.
For more information about Hitit’s airline and travel solutions, click here.
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