Rajeev at ATM Dubai: The Future Of Air Distribution

At the recent Arabian Travel Market (ATM) Dubai, Rajeev Kumar, CEO of Mystifly, shared his thoughts on the future of Air Distribution.  We’ve compiled his thoughts and presented them here, to help travel business prepare and cope with the fast-approaching future.

Change is inevitable. It is all-encompassing and constant. And, in an industry such as Travel, which is dynamic and ever-evolving by nature, change is vital. The Travel Industry has seen several cycles of transformation. With cutting-edge technology being developed to suit the traveler’s changing needs, the industry continues to redefine, restructure and reinvent itself time-to-time.

The Travel Industry has come a long way since 1960. The structure, function and distribution of content have evolved in leaps and bounds over the last 50 years. What began with inventory being tracked and distributed manually has now progressed to a phase where artificial intelligence and other advanced technologies manage the distribution of content. The Travel Industry has indeed progressed quite rapidly.

How much has the industry changed and where are we headed? Rajeev clarifies, “An Airline in the future will be a strong technology, data, and retailing company that owns airplanes. They will have more in common with Uber, Facebook, Google and Amazon.”

What does that mean for the Airlines of the future?  “Commercial strategies of airlines will be based on leveraging relevant data so that they can sell their products in a compelling manner across platforms and channels.”

Unlike days bygone, where Airline Distribution was more passive by nature, distribution of airline content in the future will employ a more passenger-centric, active approach. What does this entail?  The approach involves targeted distribution of content based on market trends such as:

  • Changing and Diverse Population: Led by China, Airlines will serve a diverse passenger base from emerging markets. This includes India, Malaysia, Indonesia, Iran, Vietnam, Saudi, and Columbia.
  • More First Time Passengers from Emerging Markets: As infrastructure develops and income levels climb, there will be an increase in first time travellers from EMDE countries.
  • An Increase in Older Passengers: According to the World Bank, there will be an increase of 4.8% in the number of passengers aged between 25 and 54. By 2021, UK, Cuba, South Korea, Singapore, and Slovakia will join 30 countries that will have a greater number of people aged 65 and older, than individuals aged 15 and younger.

Adapting to and addressing the needs of a changing traveller base is a step in the right direction. Airlines are also joining forces in the form of anti-trust joint ventures and cross-carrier investments as a path to becoming more profitable and successful. A report by IATA summarizes these changing trends:

  • Airline Joint Ventures will replace Airline Alliances
  • Network/flag airlines will rely on independent low-cost carriers for a meaningful amount of traffic feed
  • There will be significantly reduced reliance on interlining
  • There will be significantly reduced emphasis on code-sharing
  • Low-cost carriers will continue to grow and become feeder partners to network airlines 

According to Rajeev, “The Industry is shifting from a world of ‘all seats are the same’ to a world that tailor makes offerings based on a diverse customer base. While IATA’s XML based New Distribution Capability (NDC) and One Order will drive the shift towards a customer-centric approach, they alone cannot be the driving factors for change or differentiation.”

What does the future of distribution look like? Rajeev references IATA’s report to provide insights on the five driving factors for future distribution:

  • Catering to the ‘Connected’ consumer: ‘Connected’ does not simply refer to the mobile. It is the connection between Airlines Distribution Systems, actors and non-traditional mediums of communication, such as, social media, games and conversational commerce.
  • Ability to personalize and create relevancy: When combined with standards such as NDC, and other applications/ technologies, airlines will be able to provide travellers with options based on relevance.
  • Active Distribution: Allows for a more flexible passenger-based shopping experience. Five years from now, Active Distribution will require Airlines to make use of customer data and other data that will enable carriers and third party retailers to anticipate customer requests.
  • Global Active Cache: Active Distribution will require airlines to become the sole source of fare and availability content.
  • Attribute Based Selling: The ability to support ancillary based selling for the dual purpose of increasing personalization and revenue.

While the approach and steps that the Travel Industry has followed may seem impressive on the outside, they are not the be-all and end-all to enhance the future of distribution. “None of this will have an impact if payment and settlements don’t evolve simultaneously. Payments will continue to assume greater importance in the days to come,” says Rajeev signing off.

 

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