“Future Innovations in Airline Distribution” Condensed

Here are the highlights from my recent presentation at CASMA titled  “Future Innovations in Airline Distribution”.   The original deck has about 50 slides, but because it was designed for a live 60-minute speech, it’s hard to get the meaning of many of the slides (nearly all pictures) by themselves.  So here’s the 3-minute version:

Channels have limits.

Distribution channels are essential to commerce, but they have limits.  The Panama Canal has to build wider locks to accommodate the newest and largest cargo ships.  This is a metaphor for the GDS distribution channel, as it cannot handle the “wider” content that airlines want to distribute today.

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The GDSs are good at moving simply-structured data.

GDSs have been built to display rows and columns of data.  That works fine for the basic airline content of seats, fares and availability.

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But airlines now need to sell more than just commodity seats and fares.

Today, airlines are keenly interested in selling non-seat merchandise.  The problem is that these new items don’t fit neatly into the rows and column structure of the GDS pipes.   GDS technology is pretty old – old enough to not have the flexibility needed to package and display the new content that the airlines want to sell.

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The early results of some of these efforts look like this:

It’s a messy process right now.  The airlines are struggling with what to sell, whether or not to bundle merchandise into fare families, and how to price all this stuff to their various customer segments. (Click the photo to see the text in the arrows).

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But customer segmentation is not a strong suit of the airlines.

Airlines have traditionally dealt with passengers by focusing on getting a name, an address and a frequent flyer number into their reservation data.  Other industries know much, more about their customers.

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The industry is already working on building new shopping carts that will hold the new forms of airfares and related merchandise.

They’ll need a new aisle, meaning a new distribution channel…and they are working on this in the form of  “direct connect” pipes between the airlines and the larger travel management companies and online booking tools.  The challenge for the GDSs is to build out their own new carts and aisles so that the GDSs don’t lose high volumes of transactions and the associated revenue.

The airline industry also needs to develop a much richer understanding of its customers.

It’s not hard to imagine using a passenger’s social network information, along with other opt-in tidbits, to help an airline do a much better job of understanding a customer’s wants and needs.

Google has recently made inroads here.  See this post on “Social Search”, which shows how they can leverage your social networks.

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Finally, I offer the idea of  “Social PNRs”.  PNR stands for Passenger Name Record, and is the backbone of travel reservation and booking systems.  Today, PNRs don’t mix and mingle very well, especially if they have been created in different booking systems. 

TripIt has done a great job of integrating these stand-alone PNRs, in the form of itinerary components, for passengers who want all their travel reservation information in one place.

But there’s much more that can be done with this concept to make things easier for the traveler,  as this slide suggests.  (Note that I assume this would be done on an opt-in basis).

Well, that’s the short version of the presentation.  There’s more in the original deck that deals with past innovations and future factors that will impact the travel industry.  I’ll send those out to anyone who asks.

Meanwhile, I’ll be delighted to hear your thoughts about this subject!