Airlines Are Finally on the Cusp of Getting Personalized Retailing Right

This sponsored content was created in collaboration with a Skift partner.

Airlines and travel agencies now have the tools they need to push forward with selling and distributing their products in a way that truly meets the evolving expectations of today’s traveler. The sooner they pick those tools up and start leveraging rich data with smart decision-making technology to craft their personalized retailing strategies, the better they will fare against their competitors.

Across the board, it’s quickly being realized that falling behind means missing out on upselling opportunities being presented by a suite of emerging technologies –– and therefore tangible profits.

According to the International Air Transport Association (IATA) and IdeaWorks, seat revenue per passenger declined by a 2 percent compound annual growth rate (CAGR) during the last seven years, while ancillary revenue per passenger saw a 41 percent CAGR. And while strong growth in ancillary sales is a step in the right direction, the decline in seat revenue is still too large to ignore.

A key piece of this shift toward optimized travel retailing is the IATA New Distribution Capability (NDC) standard. This XML-based data transmission standard is designed to transform how products are sold by making it easier for airlines and third-parties to display vastly richer content and improve the end-to-end airline retailing and distribution processes.

Airlines that have already incorporated NDC into their strategies report positive results so far, according to feedback provided to IATA. American Airlines, for instance, said “NDC facilitates the sales of ancillary products such as American’s Main Cabin Extra and Preferred seats Main Cabin Extra, which primarily provide extra legroom, and Preferred Seats, which mainly offer the most sought-after seat locations in an aircraft. Agents can view, select a seat on a seat map, and book paid seats.” American Airlines’ NDC strategy involves offering products through as many channels as possible and highlighting attributes that differentiate American Airlines’ products from other airlines.

The airline industry has admittedly been slower than other industries to adopt emerging tech trends, and this move into personalized retailing is no exception. NDC is one piece of meeting the broader need for greater contextual personalization for every traveler, which will allow providers to create hyper-relevant offers and maximize revenues.

Sabre Labs, a division of Sabre charged with spotting and preparing for future travel technology trends, publishes an annual report detailing how emerging technologies are impacting the travel industry and makes specific recommendations for airlines as well as agencies. In its 2018 “Emerging Technology in Travel” report, Sabre Labs highlights automation, authenticity, and blockchain as being among the key trends to look out for over the coming years –– which are each expected to help optimize the opportunities NDC will bring.

According to Sabre Labs director Philip Likens, “NDC is like moving from the most basic flip phone to a smartphone. It allows airlines to provide far more detailed content about the ancillaries available for each flight and seat. NDC also goes beyond simple text, allowing airlines to include pictures to help agents and travelers better understand their offerings. All of this additional content creates potential complexity that can best be solved through additional personalization, artificial intelligence, and machine learning tools to help with filtering.”

While NDC brings the opportunity to sell richer content across a broad range of channels, emerging technologies provide new ways for airlines and travel agents to engage with customers on a more personal level once they’re through the front door. Airlines that take advantage of NDC standards together with these new technologies will be empowered to more specifically hone their offerings to individual requirements and preferences.

When it comes to artificial intelligence, for instance, Likens points to trailblazers that have truly embraced machine learning to enable personalized recommendations based on who a potential customer is and what they like, such as Amazon, Sephora, Starbucks, and Tesco. “If you’re a company and you’re not showing your best offers first, then you’ll become increasingly irrelevant,” said Likens.

Chatbots, for both text and voice, will also play an increasing role in travel retailing as their understanding and accuracy continue to improve. “If someone has a question and would normally call an agent, putting a chatbot there to answer quickly and allow the agent to deal with more important issues is a win for everyone,” said Likens. But he cautions that any such interface must be programmed to contain contextually appropriate information. “It’s important to know the person and their specific trip context. You’re trying to give the right offer at the right time through the right touchpoint.”

Context for the traveler is always key. Unlike when a customer purchases clothing, a book, or chooses a restaurant online, travel purchases aren’t always related to past purchasing behavior or customer profiles. A traveler can encompass many different personas depending on a trip’s context. The same person could be booking a business trip one month and a family trip to Disney World the next month. These emerging technologies will likely provide greater opportunity to not only analyze past behavior, but understand the purpose of a trip and a traveler’s unique needs for that specific trip.

Caroline Strachan, managing partner at independent travel consultancy Festive Road, agrees that “truly knowing your customer” and tailoring offers to their individual preferences and needs is the single most important aspect of personalized retailing. “I believe that travelers now fully expect their airline and agent to ‘know me, be where I am and tell me only what I need to know’,” said Strachan.

“Imagine a time when the airline and travel agent work seamlessly together to deliver truly personalized traveler experiences, presenting only the most relevant services for purchase, based on previous travel history, within the consumer’s preferred channel. This is what will truly define the next generation of airline retailing.”

Travel companies are on the precipice of providing a revolutionary retail experience that will undoubtedly result in increased profits and satisfied repeat customers. They just need to take that leap.

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 making the best possible use out of new technologies as they emerge.

Sabre is already working with airlines who want to utilize the IATA NDC standards and enable the sale of the full breadth of their content via both direct and indirect channels. And it is committed to providing travel agencies access to new, richer air content without having to redesign and invest in additional technology infrastructure. To learn more about how Sabre can ensure airlines and agencies achieve a smooth and successful transition to this new world of retail, click here.

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