Air Sourcing Moves Out of the Slow Lane

Horse-buggy vs CarsThe big bottleneck in airline sourcing projects is the time and cost of entering detailed airline contract terms.  That will soon change for the better.

Fayrnet, a product of Volaro, automates the loading of airline contracts into GDSs.

In speaking today with Patrick Healy, Volaro’s Director of Sales and Distribution, I discovered that this tool could  – and should – be easily adapted to handling corporate contracts and proposals from airlines.

Healy says it handles Category 25 and 35 fares (discounts off published fares, and fixed, aka flat, lane or zone fares, respectively).  The demo I saw quickly converted a typical Excel-based airline contract for dozens of fixed fares across a dozen points of sale in a matter of  a few minutes.

Let’s assume the tool works well.  The implications are clear:

  • Air sourcing project fees should come down.  This assumes Fayrnet can do the same job at a significantly lower price than a skilled analyst.  One of the most experienced analysts I know estimated that it could take ~ 30 hours to load a complicated Star alliance proposal for a multinational client.  Fayrnet claims to process simple contracts in minutes; complicated contracts will take a few hours, and may require special formatting.
  • Air contract analysis will be more accurate.  Automation reduces errors, right?  This should be good news for buyers, who have trouble spotting errors made by their analyst, and should give airlines more confidence that their complex bids have been entered correctly.
  • Air sourcing projects will take much, much less time from start to finish.  Most air consulting shops run a client’s proposals through the same analyst, so he or she is the bottleneck.  Using Fayrnet, the analyst can upload many contracts quickly, presumably even simultaneously.  Faster contract/bid loading means much shorter cycle times between negotiation rounds.

And for those star-gazers out there, here’s a not-so-wild-anymore prediction:

Automated contract loading will mean the end of airline sourcing as we know it.

Think dynamically-adjusted discounts based on weekly or monthly market share results, as decided by the airline.  Why spend time negotiating discounts and waiting months or quarters to see if the market shares materialize?

I think airlines will eventually get to dynamically pricing, or dynamically revenue-managing, individual corporate accounts.  Airlines see the market share data daily.  With automated contract loading, they can quickly adjust their discounts as needed to get more share, or better margins…why bother asking the buyer for a shaky “commitment”?

OK, that will strike many of you as far-fetched, but it has to get you thinking about the longer-term implications of the commercial relationship between airlines and travel buyers.

For now, let’s just be excited about the prospect of significantly improving a painful part of the travel procurement landscape. The combustion engine for airline sourcing is here.

NB1: I’ve asked Volaro for Fayrnet references, and will check them. I’ll report if they come in less than strong.

Update: I received two very favorable references for Fayrnet, and a third very favorable and unsolicited testimonial from a third customer.

NB2: I have no commercial interest in this product; just a fan of the potential for industry improvement.

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