At IATA’s World Passenger Symposium in October I had the pleasure of joining colleagues from Amadeus to formally introduce Amadeus Nevio. Amadeus Nevio is a new generation of better, smarter and more open airline technology and solutions, offering advanced retailing capabilities, allowing airlines to focus on the traveler experience.
Even more exciting for me and our team is the fact that not only have we signed Finnair as our first Nevio customer, but Saudia has also recently agreed to transition to Amadeus Nevio. After a lot of hard preparatory work we are working all hands on deck with these airlines as they transform every aspect of their businesses.
As airlines accelerate their transition to modern retailing we are already building new capabilities that will help them become truly traveler-centric. These capabilities address everything from selling, to servicing, to delivering an exceptional experience across the entire journey. Airlines are already seeing significant early value on the commercial aspects of the retailing transformation, which is the focus of this blog.
Airlines today are moving from static fare classes with limited pricing options that are presented to travelers in a relatively one-dimensional way, with only limited control over the presentation of their fares and bundles. Despite progress in areas like merchandising, airline commercial teams crave the ability to personalize, price and present their product in the most attractive way possible for each individual traveler.
This is where dynamic offers can make a significant difference.
How are dynamic offers driving more sales?
At the core of modern retailing is the move to dynamic offers, which can be conceived as bundles of an airline’s own flight and ancillary products, combined with third-party services like hotel, car and insurance. Amadeus Nevio allows an airline to create a highly personalized offer for each traveler based on a deep understanding of their context.
But what does that really mean? It means that the airline is aware of travelers’ preferences in full accordance with their privacy choices. if a traveler has been browsing luxury beachfront hotels or frequently books a lounge access, the airline is aware and can offer the appropriate product at the right moment.
This knowledge is combined to sift through the myriad potential combinations of an airline’s own product inventory, and that of its partners, to create an irresistible offer. More relevant. More dynamic. More attractive. Intelligently created offers drive additional sales and more revenue.
How are dynamic offers driving greater profitability?
Until recently, airlines priced fares based on static fare classes. The same price was presented to everyone, irrespective of context and competitive dynamics. Now, when an airline prices an offer with Amadeus Nevio, Artificial Intelligence computes contextual factors like the duration of a trip, time to departure, travel day and competitive insights drawn from the airline’s revenue management system.
Finnair by applying dynamic offer pricing, has seen revenue increase of 3% on average, well ahead of expectations. Work is on-going to extend dynamic pricing to ancillary services.According to a recent study by Amadeus in collaboration with MIT
, this could help an airline to increase ancillary revenues by up to 13.8% by better combining its content and optimally pricing offers.
How are airlines better controlling the presentation of their offers?
Creating intelligent offers and optimally pricing them is the foundation of modern retailing. Yet airlines can go further. They can make offers available through travel agency partners using IATA’s New Distribution Capability (NDC) standard and gain new levels of insight and control to boost commercial performance.
Historically, airlines made their fares available; and agents booked them if they met the traveler’s need. Now, airlines can present personalized offers via travel agents. New insights mean airlines can deeply understand the commercial performance of agency partners. They can see the volume of seats and ancillaries sold by each partner. They can understand how agents navigate around their airline’s content in the Amadeus Travel Platform to learn what drives conversion. These deep insights deliver new levels of control and the ability to further optimize commercial performance.
Amadeus has already supported 23 airlines to go live with NDC across more than 45,000 travel agencies. We’re now seeing five times more NDC sales than we did last year.
How can a new approach to partnerships help airlines grow their retail ecosystem?
Airlines have always partnered together to sell each other's inventory and carry each other's passengers. But these partnerships require significant upfront work, can be slow to establish and don’t fully reflect each airline’s offer.
Amadeus Nevio
is being built to revolutionize how airlines partner to grow their networks. By moving to the 'retailer / supplier' model airlines can combine their content with that of their partners using common and flexible standards. This means they can retail and/or supply their best offers including both flights and ancillaries through interline partners, increasing revenues and offering a consistent service to customers.
Establishing partnership models like this will be possible not only with alliance partners but with any airline, irrespective of their business model or underlying technology. Indeed, innovation in this area means airlines will also be able to partner with providers, like rail or ground transport operators. It’s an exciting prospect to consider how the travel network will grow and the new options this will present for travelers for a much smoother and enjoyable experience.
How can airline route and schedule planning support optimal commercial performance?
Network and schedule planning defines an airline's offer in terms of the core flights, routes and schedule. Planning is therefore crucial to any airline’s overall revenue potential. The move to modern retailing presents exciting new opportunities to factor in more data and intelligence that can help airlines plan in a way that maximizes revenue and profitability.
With the ability to integrate new market data, networks can be built with an understanding of demand and competitive dynamics. This means schedules can better balance profitability with the robustness required for on-time performance, including forecasts of delays and disruption.
Through integration with revenue management systems, schedules can be created based on an understanding of bookings an airline is already receiving, and the specific customers making them. This means airlines can assign more flights or different aircraft to best meet this emerging demand.
The move to modern retailing impacts every aspect of an airline’s commercial approach. From how it plans its network, to how it packages its products, to the pricing of those offers and of course, how it controls and makes those offers available to the world. During my long career in the industry, I've never seen such an opportunity to improve commercial outcomes. So yes, airlines should generate more revenue, but in a way that also delivers better experiences for travelers.
If you want to learn more, you can have a look at this interview with my colleague, Cayetano.
It’s here. It’s now. It’s traveler-centric retailing. Unleashed.
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