5 trends that will shape airline retail in 2023
The new year will bring new opportunities for faster access to analytics and insights, additional additional revenue opportunities and increased satisfaction for business travelers. However, it will not be easy. Airline executives and business travel managers should continue to embrace new technologies to unlock these opportunities and deliver a better experience for travelers.
Airlines Reporting Corporation (ARC)
As 2022 draws to a close, the future looks brighter for the aviation industry. Despite the clear challenges standing in the way of a full recovery — including fuel prices, labor shortages and global economic uncertainty — 3.8 billion passengers are expected to keep the skies busy in the new year and generate $498 billion in revenue, according to estimates from the International Air Transport Association.
What about what happens behind the scenes? As airlines work to overhaul backend operations and upgrade technologies to deliver an optimal travel experience, Skift reached out to experts at the Airlines Reporting Corporation (ARC) to see how airline executives and travel managers should think about the key changes that will shape the year ahead. Here are five takeaways that industry leaders should keep in mind for 2023.
1. Data will continue to be king
While airlines have relied on historical data to drive their decision-making models, Steve Solomon, chief commercial officer at ARC, pointed out that changing travel behavior and unpredictable booking windows highlight the importance of looking at new data sets.
“The pandemic has helped everyone question the rules of the game,” Solomon said. “While travel used to follow a year-in-year-out seasonal pattern, the pandemic has taught us that that’s not necessarily the case all the time. The data helps the entire ecosystem understand the changes that are taking place.”
Sarah Boyd, senior manager of airline retail strategies at ARC, highlighted that the mountain of data is doing more than making a difference to airlines – it can also change the way their biggest customers work.
“There is room for growth and creativity to better leverage data in enterprise contracts,” Boyd said. “Right now, you don’t have very fast data. It’s 30 or 45 days late, and it’s not very useful for changing behavior. If you can get that data into the hands of your tour operator faster, they’ll have a better understanding of all the bookings theirs – including orders made outside the channel and leakage – and they can enter into negotiations with suppliers for better terms.”
2. Accessories will continue to add capabilities
As business travel picks up and leisure travel continues to help lead the recovery, Shelly Younger, director of airline retail strategies at ARC, said the importance of ancillary services will increase. However, it’s not just about the existing products available, such as adding bags, selecting seats and upgrading to the next class of service. Airlines want to add new products and new suppliers to the ecosystem. For example, if an airline’s data shows that a loyalty member always checks a bag, pays for in-flight Wi-Fi and regularly orders a Lyft or an Uber at the airport, there is an opportunity to deliver a seamless booking experience in one transaction.
“It’s not just about dynamic ticket pricing,” Younger said. “We are moving towards a world where accessories will be dynamically tied together based on personalized analytics.”
3. More possibilities will create more complexities
Dynamic packages will continue to grow, and the products and services included in these packages will include those provided by third parties. While dynamic packages have enormous potential to positively impact the bottom line and build customer loyalty, selling them is one thing – servicing them is another story. As the supplier ecosystem expands, Solomon pointed out that airlines will likely bear the burden of ensuring that the passenger has a good experience.
“There will be more third parties involved in the fulfillment for what someone buys, but the customer won’t look to the utility companies if they have service issues,” Solomon said. “They want to look at who they bought the package from and look to them to make it a seamless experience.”
“On the back end, there’s all kinds of logistics and administration to make sure you can deliver operationally,” Solomon added. “It’s new for a lot of travel providers and it’s something they have to master very quickly.”
4. The break-up with older technology will accelerate
Throughout the pandemic, the industry has seen major developments with distribution strategies, including ARC’s Direct Connect product, a flexible and cost-effective settlement platform that provides airlines and travel management companies with a convenient route to adapt their business arrangements and create a better post-ticketing. service experience. Recently, Air France, KLM and Qatar joined four existing airlines (United, Singapore Airlines, British Airways and Avianca) in ARC’s Direct Connect range, and the number of airlines integrating ARC’s Direct Connect will continue to grow.
While a shift to NDC is the current focus, Younger said NDC will lay the foundation for moving from a world of disparate documents to a more efficient Amazon-style retail platform using IATA’s ONE Order Standard.
“The ONE Order is about bringing together all the information stored on separate documents in one place,” Younger said. “You don’t have an e-ticket database, an EMD database, and an internal proprietary document database. Instead, you put everything into an order that feels very Amazon-like.” She continued, “You can order 40 different products on Amazon that are fulfilled by different partners, but you go to one central place for all your needs. From a retail perspective, it lets you know a lot more about customer behavior. It is much easier to pull and act on the data together.”
5. Forward-thinking companies will use travel policies as an employee benefit
Changes in airline retail tend to focus on technical requirements and system integrations. But amidst the swirl of acronyms – API, XML, NDC, EMD and more – we shouldn’t lose sight of the most important part of the travel industry: the customers. Right now, these customers deal with a variety of frustrations when managing flights.
It is a particularly big challenge for business travellers. As some employers work to motivate people to return to the office for a few hours, it’s even harder to convince them to travel again a few nights each week – especially if they face the typical company policy restrictions that make it feel like booking a business trip . clumsy, thrifty and frustrating.
“The war for talent continues to be very hot in many labor market sectors,” Boyd said. “Job candidates ask about a company’s travel policy to understand if they can use their favorite websites and apps to book, and if they’re allowed to book a first-class cabin or upgrade product on an airline of their choice.”
As employees work to attract the right people, a more flexible travel policy can be just as attractive as a bigger paycheck.
“Organizations have an opportunity to differentiate their employees’ experience based on their travel program,” Solomon said. “Travel is going to cost money. It’s up to travel managers to figure out how to optimize the order line in their budgets as a way to build a more robust recruitment and retention tool. In 2023, use it as a chance to invest in your employees who are willing to be road warriors. The right approach to travel management can help reinforce why they are excited to work for your organization.”
This article was created in collaboration with the Airlines Reporting Corporation (ARC) and Skift’s branded content studio, SkiftX.