Last week in Beijing I made the case for de-commoditizing the airlines. Even though it was a friendly audience at the CASMA Fall Global Conference, there was some sharp discussion during Q&A. Fair enough, as I skewered American’s handling of its Direct Connect value prop to the business travel community. Here are the key points:
Does Distribution Really Matter? Can it Differentiate Airline Products?
Absolutely. Think about how the endpoint of the distribution chain looks today. You still see flight times, carrier logos and prices. Pretty commodity-like stuff, that. From green screen GDS terminals to mobile booking displays, all you see is a long list of racked-and-stacked flight options.
It’s the equivalent of shopping in the paper towel aisle at WalMart. Price dominates.
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.