Data, flexibility and Active Distribution: the future of flights' selling
As IATA reported in The Future of Airline Distribution, written by Herny Harteveldt from Atmosphere Report, and with valuable testimonials from key industry players: airline distribution is switching to a new distribution model that will allow companies to sell more flexible.
In fact, if we compare how flights are being retailed with other industries or with key retailers such as Amazon; the difference is abysmal especially concerning customer experience and purchase technology. And despite personalization is not an essential part of current distribution efforts – in part because airlines executives know it cannot be - by 2021, 88% of airline executives say personalization will matter. So the Personalization as a significant trend will have a huge impact also in the Airline sector.
The current third-party distribution systems don't allow the flexibility needed. “Airlines need to create and control their gateways. Each airline should have sole control to sell the way it wants.” points the report. “Airlines have ceded selling control to the GDS operators and, to a lesser extent, PSS vendors for decades. The selling processes used in 2016 are disappointingly similar to how airlines sold in 1966”. For that reason, despite the prevision is that GDSs will continue to have an important role for the next ten to fifteen years; NDC and other technology advancements will reinforce more agile channels. Airlines Industry will switch towards new and flexible selling processes known as Active Distribution.
But before, Airlines have homework. There is a key topic they will need to address if they want to successfully switch towards this Active Distribution and a personalized and flexible sell to their customers: data. First of all, data will be crucial because the Active Distribution will be intensely reliant on data and more concretely in customer data, and despite Airlines have a significant amount of data related to their customers, the problem is its quality and consolidation. In a 2015 study of 56 airlines around the world, Atmosphere Research learned that airlines have passenger data stored on 35 databases and data warehouses, housed both within the carrier and at vendors, located in 14 countries. In the same study, asked to rate the quality of their customer data on a 10-point scale, where 10 equals “Excellent/World Class,” airlines scored their customer data an average of 5.2 – a sad reflection of this mission-critical asset.
So lack of quality and cohesion in the customer data is painful for Airlines, who already know their systems are inadequate for the data capturing, management and analytics they need if they want to improve this area. When we started our conversations with Vueling, a few years ago, we identified a clear pain point for them in the gap of information they had regarding the customer behavior while booking (requests received from all their sales channels, the conversions, the most searched routes, etc.). After starting to gather hidden data in decision making with Datumize Real Demand, some new route opportunities were discovered, and the offer and product could be adapted to their demand thanks to a better understanding of their customers based in quality and consistent data. That’s just an example regarding how data is a pivotal piece to achieve the customer insights needed for a personalized and flexible selling strategy.