Académique Documents
Professionnel Documents
Culture Documents
Positioning Paper
Contents
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Room to grow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 An integrated approach to customer service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Making distribution more effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 How can airlines improve distribution? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Making it easier and better to book online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Extend the geographic reach of online direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Tap into agency and corporate online direct bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Grow the proportion of direct revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Maximize customer online self-service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Case study VLM Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Streamline airline reservations agents operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 The benets of smart distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Horizon SITAs leading edge distribution portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 About SITA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Annex Horizon portfolio detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Notes and references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
SITA 2009
AIRLINE DISTRIBUTION 3
Executive summary
For marketing, sales and information technology executives responsible for developing or driving airline distribution strategies, this document will provide an overview of the main distribution issues facing airlines today, and details a range of solutions for making distribution both more effective and less costly. More specically, youll learn how SITAs Horizon portfolio can help you address distribution challenges while driving further cost reductions, better returns on investment, and innovative strategies for tapping new revenue streams.
Todays airlines need agile, cost-effective distribution solutions to sharpen their competitive edge and help them respond quickly to fast-changing market conditions and passenger expectations. The biggest single challenge faced by airlines today is staying protable. Having lost money in every year from 2001 to 2006, the industry as a whole turned a prot in 2007, but margins are still wafer thin (just 1% last year), and airlines are still far from the prot of US$40 billion a year which IATA says would be necessary to make the industry sustainable1. In todays highly competitive, cost-conscious environment, airlines must look for protable growth and develop the responsiveness needed to manage both future opportunities and market disruptions. One answer is smart, cost-effective distribution solutions, which offer opportunities for rapid gains through the adoption of new technologies and business models. The dramatic growth of online channels has already irrevocably changed the face of distribution. Airlines are using e-commerce to radically transform their business models, capitalizing on the strength of their direct distribution capabilities to slash overhead costs. The need to trim costs is also driving a hybrid approach whereby airlines leverage a variety of different distribution strategies ranging from direct-only to multi-channel, shifting their business to the most efcient, lowest-cost channel for each different market environment. But while many airlines have already signicantly reduced their distribution costs, there is still much that can be achieved, and different distribution solutions still remain a major point of differentiation between airlines. In a world where the vast majority of airlines sell via the web2, SITA has the technological know-how and expertise to optimize the effectiveness of all distribution channels helping carriers broaden their market reach, increase revenues and maximize the benets of online passenger self-service while streamlining call centre and remote sales locations. SITA has over 25 years experience supporting the distribution management needs of over 150 airlines globally. And SITA know-how allows for the seamless integration of the third party systems that are increasingly vital to airlines business continuity and growth.
4 POSITIONING PAPER
SITA 2009
Room to grow
SITAs 2008 Airline IT Trends Survey3 revealed that over 90% of airlines are now using their own website to sell tickets. While the average percentage of tickets sold through airline sites industry-wide is still below 25%, some carriers are handling upwards of half their ticket sales through their own sites. But despite the industrys success in dramatically reducing the overall cost of distribution, theres still much room for improvement in the way airlines leverage their most cost-efcient distribution tools. The aggressive direct sales strategies of low cost carriers have enabled them to build impressive market share by passing on cost savings in distribution to their customers, in the form of lower fares. But many full-service airlines have less room for manoeuvre because of agreements to provide full content for distribution through GDSs. That means they cant differentiate their online channel on price alone, and must seek other ways to actively engage with their customers, to build loyalty and repeat purchasing behaviour. Online travel agencies are another relatively new channel favoured by many airlines. For passengers, much of their appeal is based on the convenience of being able to purchase multiple travel components in one place, with some shoppers saying they value this time-saving one-stop shop approach as much as they value low prices4. Its worth noting, however, these sites target the same prole traveller that would be likely to book directly via the airlines own site but at a higher cost to the airline.
In developing effective distribution strategies for evolving markets, airlines need to be mindful of what really builds customer loyalty and ensure that the features of their direct sales outlets support the desired balance across chosen channels. A solid understanding of customer needs relating to value, choice, convenience, service and a pleasant purchasing experience is an essential starting point. Airlines must adopt a thoroughly customer-centric perspective, and learn to think more like retailers.
SITA 2009
AIRLINE DISTRIBUTION 5
Getting customers to buy direct means providing attractive content and convenient booking capabilities tailored to each type of purchaser in all target markets. In a highly competitive environment, airlines must be able to adapt the features of direct distribution strategies to changing market conditions, customer expectations and evolving business strategies. From a technology point of view, providing direct sales and customer service whether online or via a contact centre typically involves multiple systems and information sources spanning:
I I I I
Reservations Pricing Frequent yer account information Non-air travel components such as hotel, car, and travel insurance, and multi-currency payment processing systems.
While some of these systems may be based on next-generation open platforms, others may not have been built for the Internet age. Thats why SITAs Horizon portfolio orchestrates these systems to operate seamlessly in a streamlined customer service environment. This approach also adds exibility by allowing airlines to add, remove, swap or upgrade components without the need for a complete system overhaul.
An airlines direct market touchpoints can encompass leisure travel consumers, business travellers, the airlines own reservations agents, and retail travel agents each of which need different types and levels of functionality from the direct booking channel. Any future-proof solution must be able to translate the booking capabilities of the platform through multiple interfaces that provide exactly the right experience for each user. Incorporating the right tools and functionality will help airlines stake out a strong position as the channel of choice for each type of customer.
6 POSITIONING PAPER
SITA 2009
As margins grow thinner, airlines are under continuous pressure to strengthen their direct channel. But for real, long-term benets, its important that the supporting technology not only fully enables each airlines current strategy, but offers the exibility and scalability to support future growth.
Make it easier and better for customers to book online. Extend the geographic reach of online direct. Tap into agency and corporate online direct bookings. Grow the proportion of direct revenue. Maximize customer online self service. Streamline airline reservations agents operations.
SITA 2009
AIRLINE DISTRIBUTION 7
8 POSITIONING PAPER
SITA 2009
SITA 2009
AIRLINE DISTRIBUTION 9
Low cost carrier business models are prompting many airlines to unbundle their pricing, allowing customers to purchase a basic airfare and then pay for the extra services they require. During Ryanairs scal year 2007, some 42 million passengers contributed ancillary revenue in excess of 362 million an amazing 8.50 per passenger carried7.
SITAs E-Commerce portfolio is designed to help airlines maximize up-sell and cross-sell opportunities through the provision of sophisticated fares shopping, the ability to drive incremental revenues through booking-related service fees, and the integration of relevant third-party revenue-generating ancillary content. In addition, SITAs Airfare Shop helps airlines maximize every up-sell opportunity by providing calendar displays that make it easy for customers to see all available fare options that match their needs, rather than just the cheapest.
10 POSITIONING PAPER
SITA 2009
SITA 2009
AIRLINE DISTRIBUTION 11
12 POSITIONING PAPER
SITA 2009
An opportunity to establish direct relationships with customers and better understand their needs. The chance to slash distribution costs compared with traditional travel agency/GDS channels. The ability to leverage negotiations with third-party distribution channels. An extension of the corporate brand and customer experience.
Support for market segmentation geographic, demographic and lifestyle. Faster response to changing market conditions. Ubiquity a storefront thats open to everyone, everywhere, at all hours.
SITA 2009
AIRLINE DISTRIBUTION 13
14 POSITIONING PAPER
SITA 2009
Business transformation
When it comes to redening distribution, airlines need more than just technology. Effectively managing change requires an in-depth understanding of the travel industry and expertise in a full range of ATI business processes. SITAs Business Transformation consulting service is dedicated to ensuring our customers realize the maximum possible business benets from our Horizon portfolio. Our Business Transformation team is entirely focused on helping our customers leverage the right solutions to cut costs, improve performance, adapt to changing direct and third-party distribution trends and boost their bottom line.
About SITA
We are the world's leading specialists in air transport communications and IT solutions. We deliver and manage business solutions for air solutions for airline, airport, GDS, government and other customers over the worlds most extensive network, which forms the communications backbone of the global air transport industry. Created and owned by the air transport community, SITA is the communitys dedicated partner for information and communications technology. As a team of industry experts, our know-how is based on working with customers across the global air transport community. Almost every airline and airport in the world does business with SITA. SITA innovates collaboratively with the air transport industry, and the industry itself drives the companys portfolio and strategic direction. Our portfolio includes managed global communications, infrastructure and outsourcing services, as well as services for airline commercial management, passenger operations, flight operations, aircraft operations, air-to-ground communications, airport management and operations, baggage operations, transportation security and border management, cargo operations and more. With a customer service team of over 1,600 staff around the world, we invest significantly in achieving best-in-class customer service, providing integrated local and global support for both our communications and IT application services. We have two main subsidiaries: OnAir, which is the leading provider of in-flight connectivity, and CHAMP Cargosystems, the world's only IT company dedicated solely to air cargo. We also operate two joint ventures providing services to the air transport community: Aviareto for aircraft asset management and CertiPath for secure electronic identity management. In addition, we sponsor .aero, the Internet top level domain reserved exclusively for aviation. We are one of world's most international companies. Our global reach is based on local presence, with services for over 550 air transport industry members and 3,200 customers in over 200 countries and territories. In 2009, SITA celebrates 60 years in business. Set up in 1949 with 11 member airlines, today we employ people of more than 140 nationalities, speaking over 70 different languages. SITA had consolidated revenues of over US$1.42 billion (1.06 billion) in 2007. For further information go to www.sita.aero.
SITA 2009
AIRLINE DISTRIBUTION 15
As highlighted earlier in the document, SITA addresses airlines needs for improved direct distribution through its Horizon portfolio a suite of inter-related technologies that supports advanced airline distribution and customer management strategies. SITA offers a comprehensive distribution and customer management solution based on its SITA Reservations host. A number of components are also available separately, and can be tailored to support a range of host and data systems. SITA Reservations is the worlds largest international, neutral, multi-host system, handling 110 million passengers per year and supporting the full spectrum of airline multi-channel distribution. SITA Reservations provides the ability to distribute via all nine GDSs as well as via partner airlines and alliances. It also supports tier processes including priority waitlisting, seating and re-accommodation. Partner Access is an optional function that provides airline agents and code share partners with full access to last seat availability, allowing them to able to sell, conrm and view seat map availability. SITA Reservations also offers sophisticated nesting and point-of-sale parameters that enable airlines to manage inventory control precisely. SITA Reservations Web Services (SRWS) lets an airline design its own applications using SITAs XML application programming interface, for secure, direct connectivity to the SITA Reservations host. This new interface provides the openness, exibility, platform independence, security and performance needed to support new and emerging customer service and distribution strategies. SITA Reservations Desktop is an intelligent, intuitive graphical user interface that gives reservations agents access to all relevant data in a single application, including SITA Reservations, SITA E-Ticketing and SITA Airfare, without having to learn cryptic legacy terms and technology. SITA Reservations Desktop helps reduce training costs, improves customer service, reduces agent errors and increases revenues from both experienced and novice airline reservations agents in central or remote locations. SITA E-Commerce provides a comprehensive range of solutions that enable airlines to manage multi-channel direct distribution and to maximize up-sell and cross-sell opportunities. E-Commerce incorporates fares shopping (through Airfare Shop) and allows customers to rapidly access available fares and ight options, make reservations, pay online, store their personal information and preferences for easy recall, complete the advance passenger information required by border security agencies, and view and re-use past itineraries. The solution supports brand and multi-channel faring objectives, multilingual/multi-currency requirements, and frequent yer point redemption, as well as integrating customer or market-specic ancillary non-air content. It also supports the change/cancel/rebook processes and supports book and hold reservations. SITA E-Commerce can be integrated with a range of payment process providers to support the most prevalent forms of payment for each marketplace. SITA E-Commerce can also be used to provide a portal for unmanaged corporate travel offering the same advanced booking capabilities. When combined with SITAs private fares distribution capability, SITA E-Commerce enables airlines to distribute fares to individual customers or customer groups. In addition, the SITA E-Commerce airline-to-agent portal provides an interface for GSAs and travel agents to support professional-level booking capabilities and management functions. SITA E-Commerce allows an airline to monitor responses to marketing activity and customer booking behaviour, for accurate tracking of online strategies. In addition, airlines can leverage customer prole information to support new marketing activities. SITA Airfare Shop breaks new ground with e-commerce shopper tools that provide complete airline support for direct sales, whether via the web or agent-supported channels, including availability-led shopping. With support for multiple host reservations systems, Airfare Shop supports calendar displays of airfare prices for which there are available seats. These displays can be customized using an XML data feed to display many ight and fare combinations over multiple days, to help customers nd seats at the best price. If the customer seeks a promotional fare, the best available price calendar locates the cheapest fares on a given day or across multiple days.
16 POSITIONING PAPER
SITA 2009
Airfare Shop supports airline load objectives by improving the visibility of promotional fares and helps make the airline site the channel of choice for customers. Airfare Shop can be integrated into any Internet booking engine and is fully integrated with SITA E-Commerce. SITA Integration Platform uses technology to simplify distribution and improve customer service requires the close integration of multiple airline applications, including back-end systems such as central reservations systems (CRSs), GDSs, mainframe applications, loyalty systems and fares databases. To provide simple integrated access to these assets, airlines need to deploy smart middleware and tools to allow them to communicate with new applications and interfaces, including web applications and wireless servers, desktop and other front-end applications, and customer relationship management (CRM) and content management systems (CMS). By de-coupling back end, front end and supporting systems, IT managers can interchange individual system components to take advantage of new technology when it becomes available or necessary, without the need for a complete system overhaul. SITA Integration Platform links multiple legacy systems, together with the business process views required by the airlines different types of customer. Supporting multiple host reservations systems, SITAs integration approach provides exceptional levels of exibility, enabling an airline to evolve its technology infrastructure and components in tandem with its distribution strategy.
SITA 2009
AIRLINE DISTRIBUTION 17
1 Speech by IATA Director General and CEO Giovanni Bisignani at the World Air Transport Forum, 18 October 2007, available at http://iata.org/pressroom/speeches/18-10-2007-01. 2 2008 Airline IT Trends Survey published by Airline Business magazine (www.airlinebusiness.com) and SITA (www.sita.aero). Over 90% of airlines surveyed sell via the web. 3 Ibid. 4 PhoCusWright: Consumer Travel Trends Survey Seventh Edition. 5 Forrester: Travel Sellers Should Adopt Alternative Payment Options, February 2007. 6 Forresters NACTAS Q4 2006 Healthcare, Travel and Customer Experience Online Survey. 7 Ideaworks 2008 Ancillary Revenue Guide available at www.airlineinformation.org/guide. 8 See IATA StB Support Portal at www.iata.org/stbsupportportal 9 Source: 2008 Airline IT Trends Survey.
18 POSITIONING PAPER
SITA 2009
SITA 2009
SITA 09-THW-019-3. All trademarks acknowledged. Specications subject to change without prior notice. This literature provides outline information only and (unless specically agreed to the contrary by SITA in writing) is not part of any order or contract.