By Andy Kidd
Airlines are already retailers. They want to be better, nimbler, more agile retailers. But they’ve got a problem in the form of the passenger service system (PSS), whose decades-old passenger-record and business-process models, while pioneering in their day, no longer keep pace in a digital world. Yet PSS continues to underpin airline reservation management. That’s a problem.
The International Air Transport Association (IATA) has been working on this problem for two decades now and has launched initiatives to address it over the years. Two current ones are noteworthy, with major airlines running pilots and issuing RFPs to build systems incorporating IATA standards and approaches to moving beyond PSS.
The two key initiatives are New Distribution Capability (NDC) and ONE Order. NDC focuses on offer management. It’s about picking the right product at the right price to improve customer experience and boosting the likelihood of purchase, whether through Expedia and its ilk, credit card companies, or local tour, travel, and lodging providers. ONE Order then takes offers and turns them into orders, then orchestrates the service delivery and the settling of funds.
Enter Offers and Orders
Recently, IATA has combined NDC and ONE Order under the banner of what it calls “Offers and Orders.” That makes a lot of sense. Airlines have been able to expand their offerings using NDC for offer management and then use their old PSS systems for handling the reservation management. But PSS systems, designed in a much simpler, more stovepiped travel-and-retail era, struggle to reflect today’s airline-business complexity, much less provide a platform flexible enough to cultivate future business-model innovation.
The nature of the market is part of that. You have hundreds of airlines that compete as well as form global alliances and a dizzying array of itinerary options, potential add-ons, ancillary services, product offerings, and so forth. What amounts to a global mesh of potential providers benefits consumers, but the underlying complexity is staggering.
It’s understandable that PSS systems have been stretched to their limits. The question is no longer whether the transition from PSS to enable a modern offers-and-orders model is the right thing to do. Now it’s about how to actually do it.
The ONE Order/order management side of the equation is the bigger challenge. It’s easier to sell something than to manage the delivery, accounting, and settlement that happens after a sale in a global mesh of providers – even more so when a storm rolls in and flights start getting cancelled.My thoughts as far as conceptual approach can be simply put – and they can also fill a 24-page white paper(“Mapping Your Journey to ONE Order: A Practical Guide for Airline Leaders”). Let’s stick with “simply put.”
A long transition ahead
Simply put, there’s no one answer as to how airlines should implement ONE Order. The “right” approach will depend on an airline’s systems, its business aims, and its appetite for risk. Unequivocal is that the transition from PSS to approaches that can achieve the Offers and Orders vision must also be able to exchange data and otherwise cooperate with legacy PSS systems for what will be a years-long transition period.
That realization drove a major European airline to work with SAP and IATA on a proof-of-concept project that simulated a partner airline running an Offers and Orders system that then interfaced with the airline’s PSS. We showed that the two could inter operate and sell each other’s flights while maintaining full business-process integrity.
Others are also doing more than just talking about the transition from PSS. A dozen major carriers have signed on to IATA’s Airline Retail Consortium. These players have committed to spearheading IATA’s Modern Airline Retailing program, which is aimed at speeding the move to Offers and Orders. They are backing a variety of pilot projects, and we are starting to see RFPs for systems that move them toward Offers and Orders.
It will take time, and, as Neil Geurin, an American Airlines managing director, told the IATA with considerable understatement, “Completing the transition to 100% Offers and Orders will not be an easy task.” But airlines recognize that, if they want to provide dynamically tailored offerings to customers efficiently and confidently, order management can no longer be straitjacketed by PSS systems designed for an era long gone.
(The writer is Industry Principal for Travel and ONE Order Evangelist at SAP.)
