Travel Analytics Blog
Time for airlines to use XML intelligence to drive profit
Posted by Sonja Woodman on Wednesday, April 8, 2015
Understanding the passenger shopping journey from searching to buying is a major pre-occupation for airlines in today’s competitive distribution landscape. XML intelligence prompted by IATA's NDC initiative holds many answers to help structure what is sold where and to whom.
There is a certain urgency in this when you consider all the new ways of raising revenue that airlines are introducing or contemplating. Ancillaries, first forced upon the air traveler by the Low cost carriers are now pervading the industry. In particular airlines are looking at being more in control of their merchandising plans and pricing, something that cuts across the indirect distribution channel, too. Something that is designed to help the achieve this is IATA’s New Distribution Capability (NDC) initiative. For instance, offering value-added services via the agency channel using XML open standards is a work in progress. In this context, coming to grips with the implementation of NDC is a huge opportunity as well as a challenge for airlines.
Recently airlines have heard a lot about embracing XML for distributing ancillaries in the agency channel. It is common knowledge that XML is a standard for sharing or storing data, not a technology. Its adoption essentially means that a varied set of systems that speak in diverse languages would speak the same language.
There is no limitation in terms of connection options such as TCP/ IP, or Internet, as opposed to the legacy point-to-point communication lines.
The developer-friendliness and ease of access to XML interfaces is going to result in interesting options shaping up for airlines. This means one can expect a lot from the arena of analytics, which is already proving to be a promising one, and of course already in proven use in other online travel sectors.
Including analytics in implementation
It is clear that NDC is here to stay. Numerous pilot projects are in progress with airlines collaborating with technology companies and even all the GDSs are now publically embracing it.
Airlines are keen on knowing how NDC can open up new sources of revenue generation from the sale of value-added services in the agency channel. Also, to what extent cost reduction can actually be done through the delivery of content across multiple indirect channel outlets (i.e. new XML based GDS connections and other third party aggregators) via a single, standardised XML API featuring a common implementation structure.
Strengthening the ancillary merchandising plan is one of the major attractions of NDC. But as airlines assess the repercussion of their respective NDC projects, it would be apt if they focus on gaining meaningful passenger insights from their XML data. When airlines are exposed to user insights, they would end up being in better control of their product/service offerings via all the various channels and not just their own websites
As airlines work their way through such initiatives, right from establishing their airline NDC XML API connectors to finalising the actual technical connectivity roadmap, it is imperative to focus on web services monitoring and analytics insights. It essentially means that XML analytics need to be tied up with the NDC API. The requisite infrastructure needs to be in place so that chosen distribution and merchandising technology is accentuated by BI dashboards and reports.
And all of this is already possible today. The technology already exists for airlines to be able to minutely evaluate their XML data.
The Value of Data
Airlines need to dig deeper in terms of understanding how NDC is going to sell the same array of ancillary products across third party channels that they already sell via brand.com. The goal should be to look into search and booking traffic. Bookings data tells an airline how successful it is at securing the booking (e. g. what customers have bought (destination, ancillaries), but search data can tell airlines what is being searched for and how well demand is being met.
XML analytics is key going forward. It gives airlines information about who is searching for their products and how and whether the search is being fulfilled. Search data gives important insight into what people are looking for before the booking is made and can help segment customers according to travel types – which can help improve the offers.
The airline knows a lot about bookings that are made, but currently not much about the searches made before the booking is secured. Knowing more about search traffic helps airlines understand their customers and customize the offers better. Knowing what was bought and what was not bought – gives detailed insight that can help them to fine tune their offers or packages. Searches would either be anonymous or possibly with identified individuals if name or loyalty number is known.
Even though there is no dearth of ancillary revenue opportunities, nothing should be taken for granted. Flyers shouldn’t be bombarded with a number of inconsequential offers. Rather they should be presented with tailored, contextual offers pertaining to services that are valuable to them.
Some key areas that can be analysed:
- Booking mix – the number of transactions coming from airline-owned channels and affiliates
- How many bookings through wholesalers / intermediaries (booking contribution performance)
- Booking conversion rate
- Average booking value
- Look to book ratio
- Type of ancillaries searched for (most/least popular) / by flight time or destination
- Whether ancillaries searched for were actually booked (or abandoned when purchasing
- Bookings by destination / popular ancillaries by destination
Analytics can pave the way for apt segmentation – offering ancillaries depending upon the propensity to spend and search pattern/ booking behavior. In loyalty schemes, analytics can help highlight the appropriate level of incentive, such as bonus frequent flyer miles or third party partner deals – to help drive specific customer behavior—ultimately designed to help also reduce costs.
Airlines can reap from the primary benefits of XML, as well as XML-based SOAP and Web Services. They are open standards. The technology is platform and programming language independent, and has enormous support from the IT industry at large, both in terms of commitment to standards.