Global distribution system Amadeus believes consumers should be able to compare apples-with-apples on any channel

As airlines improvise with distribution, they need to embrace technology solutions that enable them to sell ancillary services across all channels with a fully integrated search, shopping and booking workflow and all based on industry standards to boot. At the same time, the key to optimising airline distribution strategy is to ensure that there is a consistent traveller experience across every sales channel.  

Here EyeforTravel’s Ritesh Gupta talks to Gianni Pisanello, director, airline distribution marketing, Amadeus, about how an established entity approaches the distribution of airline content across all channels.

EFT: This is a fast-paced environment. What changes do you see happening in the online travel industry today?

GP:  There are a couple of significant changes taking place. Firstly, there is a move from a low fare search culture to an attribute/inspiration culture. As a result, boundaries are blurring between direct and indirect channels. We estimate that 70% of traffic to an airline website now comes through an intermediary such as a search engine. This trend will change the way airlines think about the cost of distribution: if an airline needs to pay an intermediary to drive traffic to its website, this should be considered part of the cost of sale in that channel, and there is no longer such thing as ‘direct distribution’’.

Secondly, travel providers are realising that it’s more important to focus on the customer, rather than the channel. The traveller views, on average, between three to five websites when shopping for travel and, thanks to the rapid rate of smartphone and tablet adoption, they are doing so across multiple channels, including mobile.

This means that airlines are changing the way they think about their distribution channels. Instead of focusing on the channel, airlines are now focusing on the customer, and viewing the channel simply as a tool to reach this customer.

It’s also worth noting that as the traveller’s shopping and search needs become more complex and more demanding on airline systems, airlines need the technology that will help to enhance this shopping experience.

EFT: Airlines have been talking about supporting a single connectivity distribution strategy through multiple indirect channels. Can you elaborate on challenges faced in this arena?

GP: The logic of a global distribution system is, in fact, to provide this tool for distributing airline inventory to a wide range of travel agencies across the world, using standardised solutions for connectivity.

The challenge always, in a very fragmented and competitive market, is to enable aggregation and flows of information so that it makes sense to travel agencies, their clients and end consumers. Airlines developed the GDS model together to access economies of scale savings. Today, GDSs offer many other benefits, but economy of scale savings can be seen in three main areas: IT systems, data processing and commercial relationships (including servicing travel agencies).

Without the GDS model, airlines would need to connect to the numerous travel chains and independent travel retailers around the world in order to access higher yield bookings and to drive bookings in markets where their direct brand penetration is low. Today, Amadeus connects to over 100,000 travel agency offices in 195 countries globally, allowing airlines to make these multiple connections with one commercial agreement.

To connect directly to so many retailers is not feasible from a commercial and cost perspective, as it would require huge IT effort from every airline.

EFT:Airlines say they need to compete on services offered as well as price. Would you agree?

GP: The ability to offer ancillary services to the traveller is a priority for many airlines worldwide. Perhaps the most important consideration for airlines when it comes to ancillary services is the need to achieve a consistent customer experience, by ensuring that ancillary services can be shopped for and booked by the traveller across all distribution channels – whether direct on the airline’s website, or in the indirect channel via a travel agent.

We are focused on making it easier for travel agents to book ancillaries through development of a unique interactive catalogue which clearly displays the range of additional airline services available allowing travelling agencies to view, book and upsell ancillary services quickly and efficiently.

EFT: In this challenging environement, where should the industry be focusing its energy?

GP: To power the sale of ancillary services, we believe the airline industry needs to adopt Electronic Miscellaneous Documents (EMDs) – the EMD for ancillary services is comparable to an e-Ticket for a fare. Amadeus was the first GDS to have EMD certified through the billing and settlement plan (BSP), and an Amadeus airline was the first airline to issue an EMD through the travel agency channel (Finnair in its local market). Last year, we implemented the first interline EMD transaction with Egyptair and Finnair allowing both carriers to facilitate payment and delivery of ancillary services across their partnerships and alliances. Previously, the only way the operating airline would know a customer had purchased an ancillary service, such as extra baggage allowance, was through a paper document provided by the traveller at the airport.

EFT: There is one argument for airlines sharing their ancillary fee data with all distribution partners. Do you agree?

GP: Amadeus believes that ancillary services, like preferred seating can be an important source of revenue and differentiation for airlines, and choice for consumers.  

However, the practice of unbundling also makes the process of selecting a flight more complex for consumers and raises the question of transparency. Amadeus favours a clarification of regulation on price transparency to ensure that consumers and travel buyers can compare offers on an ‘apples-with-apples’ basis in the indirect distribution channels airlines choose to use. The practice of unbundling, if done incorrectly, can make it difficult for consumers and corporates to know the final price of travel or to compare competing offers in the market.

We believe that there are certain core services fees that must be identified to the travel buyer, so that an ‘apples-with-apples’ comparison of alternative offers is possible across all distribution channels. We believe this should include applicable fees and conditions for payment, seat selection, check-in, boarding, and baggage. We also believe that it will be in the interest of the airline industry to adopt a consensus standard approach to this.

It is critical that travel buyers can book or purchase these services with their flight, so they are not forced to visit another website to find out if they can actually sit together with their children when taking the family trip. It is one thing to be aware that an extra charge may exist. It is quite another to be able to act on that knowledge.

There is, of course, another reason for this kind of price transparency: it makes business sense to make it easier for customers to buy services you want to sell.