Airline Experience Marketplaces

A new digital airline retailing experience can inspire shoppers & grow airline profits

According to Google, web browsers are looking at more sites than they used to. The average person surfs through 35 sites for travel experience planning, compared with eight sites ten years ago. In order to win a shopper’s business, web retailing platforms need to be more compelling than ever to inspire the shopper to stick around and buy.

Unfortunately for airlines their current Internet Booking Engines are mainly lackluster, based on legacy ‘from > to’ technology that does not represent the way people shop for travel in the real world. Last time (see article) I wrote about how if I were building an airline startup today this is the problem I would seek to solve. This article explains what I would do and how it would work.

True retailing requires an experience marketplace with attractive window displays as well as well-stocked shelves

An inspirational shop is full of exciting and interesting things to touch, experience and buy, with more on offer than the owner’s own products and more than just one shelf. Airlines who want to be real retailers need to become lifestyle businesses and avoid being seen as merely selling seats in a tube and let customers figure out what is included or important not to miss. The way they offer products should be based more on how people shop in the real world rather than ‘stackable’ sequences dictated by how we have structured airline distribution since the 1960s.

Building social proof into the retailing experience will be important too, as consumers gain confidence to buy when they see believable insights from third-party influencers they trust. Hotel chains like Accor now include Trip Advisor ratings in their booking engines and airlines should show similar things – passenger photos, tweets, videos, trip reports, the list is limited only by their imagination. We can stream it live, as well.

Flexibility is also needed. Not everyone visiting a butcher buys one 250g steak for each person in their family – maybe Mum likes a large ribeye, Dad a small fillet, number one son a rump and number one daughter a sirloin. The meat of the airline content needs to be shopper-selected in the same way – accommodation is a higher priority than food for some, for others a good swimming pool might beat any hotel room’s features. Golfers often stay at an inexpensive three-star motel because they insist on the expensive tee time at a high profile course. The same applies to air transport.

Airlines creating such an experience marketplace will need to figure out how to play around with the options, trading off flight price against other travel spend and any commission earned from partners (see article), a shopper’s previous brand loyalty and many other attributes.

Content & control

Shoppers want more content than airlines offer today and the shopping experience is not well aligned with how flights and the current ancillaries are sold.

Airlines start with a schedule, constructing an origin-destination pair, departure time and price from there. Travel or experience shoppers on the other hand start with why and where they want to be, and what they want to do. Some may have a specific experience in mind but others choose either a beach, a mountain or a city with the exact location a secondary decision. Other important things shoppers bear in mind are weather, distance, budget and maximising their time at the destination, which may be based more on arrival time rather than departure.

Shoppers also want more control over how content is delivered to them and to choose which third-party sources they trust. They need a digital assistant that automates the heavy lifting of search, profiling, and many recommendations into a simplified, customisable user interface.

Who will offer this experience platform? Airlines have a simple choice – either they do it themselves (costing time and money) or they pay someone else to do it (costing more money but less time). If they do not, they will lose money to a more nimble competitor.

Even if airlines decide to do some of the building work themselves, such a project is likely to be a collaborative effort. There are four possibilities for how it might pan out:

·      Big-tech company (e.g. a FAAAM*) plus an enterprise scale artificial intelligence (AI) platform plus a startup

·      Airline company (e.g. an existing IT vendor, an airline, an alliance) plus an AI platform plus a software service company plus a startup

·      Travel service company (e.g. online travel agent) plus an airline plus software integrators plus a startup

·      A remarkable startup bringing in the above stakeholders.

The big question is to what extent a startup can be a major player – for the right team and the right execution plan the rewards could be huge.

* Facebook, Alphabet, Amazon, Apple, Microsoft – the famous five of American tech companies

Content creation is co-king

Pushing airline approved content to shoppers is not the sole function of the marketplace. A good marketplace will make it worthwhile for shoppers and travellers to create their own content and stick around, and for retailers to join the marketplace without the airline telling them what to do.

This does not only give the social validation I mentioned before to other shoppers, it also increases the power of the marketplace at low cost by offering a more complete range of services without any high cost centralised organisation.

Such content has a third benefit too – it generates deep data that modern machine and deep learning algorithms can use to find trends and patterns that airlines would not see otherwise. To address privacy and GDPR concerns, content creation can be an opt-in process.

How will airline experience marketplaces work?

Experience marketplaces of the future will be like an Amazon of travel. On top of a well-designed selling platform, non-airline travel service providers will be able to make their own listings without any co-ordination with the airline. Virtual reality interfaces will be a given, too. AirAsia’s super-app is a good example, but is still at an early stage and is more centralised.

For full impact the platform will be need to work on modern aircraft. The A320neo, A330neo and A350 families are ready to go with each having high capacity technical backbones and communications capabilities able to handle the necessary data processing.

At the back-end the platforms will need five components powered by AI to work:

·      Input layers with airline-own, third-party and live-streaming content

·      Output layers of recommendations relevant to a single shopper

·      Customer segmentation rules and filter engines

·      Optimisation layers incorporating loyalty, pricing, revenue management and other commercial (sub)rules, all cost factors, linked into a measurable and meaningful end metric like share of wallet

·      Integration with order and offer management systems, plus revenue accounting.

If the experience marketplaces of the future are open-source, open-standard and peer-to-peer they are likely to deliver better long term results to airlines than high cost, highly centralised alternatives. Designing an analytics and DevOps layer where commercial strategies designed by humans can be executed by AI. When I developed the process with Databricks it worked out like this:

Three startup opportunities

Building websites, sourcing content through application programming interfaces (APIs) and selling plane tickets now have turn-key solutions. The potential for startups in these spaces is low.

But there are three high potential, high reward opportunity for truly transformational startups helping to build experience marketplaces:

·      Finding a way to calculate what a flight should cost based on a shopper’s journey through the retail experience

·      Building an enterprise scale system for making multiple recommendations for shoppers, including all price components in real time

·      Developing a comprehensive airline commercial system that does not just price itineraries, hold reservations, check tickets and accept passengers for travel but incorporates all shopper data, live-streamed traveller insights, third-party insights and experience content into recommendations for shoppers – these systems will create offers and manage orders independently of traditional airline fare classes and be powered by enterprise AI platforms with live-streamed data and content.

Are you interested in building an experience marketplace? Are you ready to plot your roadmap to success?

We can help you to:

·      Build your roadmap of what any of these opportunities look like for airlines ready to think “customer first”

·      Select appropriate commercial logic and build the architecture

·      Develop relevant commercialisation and marketing strategies.

What do you think? What should a collaborative effort of this scale look like, and who should initiates it? Let us know.

And join AI Events Airline Information’s conference on Replacing Revenue Management with Retailing Optimisation on 8-Mar, 15-Mar and 22-Mar.

ricardo DOT pilon AT millavia DOT com

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