“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.

Channels Have LimitsDistribution 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.

Apples and Pears in Rows and Columns

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.  Vegetables for sale 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:

Yard Sale with LabelsIt’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.

Passengers or CustomersAirlines 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.

Need for New Cart and AisleThey’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.

Rich Customer Profile 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. Social PNRs

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!

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12 Responses to “Future Innovations in Airline Distribution” Condensed

  1. Pingback: The Future of Airline Distribution « Gillespie's Guide to Travel Procurement

  2. William says:

    HI
    I’m interested by the full deck of slides …
    I agree with you concerning the PNR centric need! What is needed also is to be able to attach complex services to this PNR, and evealuate them often. For example, on pre-trip, if a flight is less expensive before the ticket is printed, then, try to modify/cancel to get the best price.
    We can also imagine to have a more simple federated way of receiving miles. I have so many cards today, I would like to have one by group of companies (Skyteam, etc.).
    Concerning social, I’m not sure you want to share too much with your colleagues. But, you can use social technology to link to your car provider and let them push you offers.

    • Scott Gillespie says:

      You make a very good point here. The services associated with a shared or sociual PNR could become more sophisticated (and so more complex) than the simpler list mentioned in the “Social PNR” slide. It is intriguing to imagine what those services might be…well worth a separate post!

      I’ve just now sent you a pdf file containing all the original slides from the presentation. Please let me know if I can clarify any point associated with images.

  3. Tom Stoklosa says:

    Hi Scott,

    I loved your presentation on the Future of Airline Distribution you gave at CASMA in Las Vegas. Best slides I have seen in a presentation in a LONG time. They provided great visualization for the information being discussed.

    This is my first time visiting your blog. You have a great deal of good information on here and I look forward to following it.

    • Scott Gillespie says:

      Thanks very much, Tom. I really enjoyed preparing the speech, and even more, the broad-ranging discussions that followed it. Looking forward to seeing which of these innovations actually pan out!

  4. Pingback: Most Popular Reads of 2009 « Gillespie's Guide to Travel Procurement

  5. Mike says:

    Thanks Scott – great job at simplifying complex issues

  6. Praveen says:

    Really liked your thought process.
    I would be delighted to have all the slides and any explanatory notes you may have.
    I am researching the convergence of internet, mobile, iptv, cloud computing, etc and the GNEs that may ride on such tech-shifts in the world.
    Will look for you on LinkedIn…
    Praveen

  7. Pingback: Four Barriers to Travel Innovation | Gillespie's Guide to Travel+Procurement

  8. David Studden says:

    Hi Gillespie

    Like the presentation and the connection with real life examples. My view is that GDS will be overrun by internet based applications like Tripit. Also as pointed out tried and tested ways of managing data thru PNRs needs to change – to become more customer focused rather than passenger focused. Something like a twitter pnr – where I can scroll down a list of all travel activity for the passenger in question

    The world will keep evolving, airlines keep “trying” to evolve and hopefully airline technology will keep pace.

  9. Bob Johnson says:

    Amazingly, even 3 years later this is super spot-on. Would you mind sending me the full presentation?

    Thanks!

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