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Together, Let's Build Airline Industry Retailing! 23 – 25 October 2018, Rome, Italy

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Page 1: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Together, Let's Build Airline Industry Retailing!

23 – 25 October 2018, Rome, Italy

Page 2: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

AIR Symposium I 23 – 25 October 2018 I Rome Italy

Digital Marketing WorkshopPassenger Acquisition Strategies

and How Marketing Investments Affect Distribution Costs

Page 3: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

AIR Symposium I 23 – 25 October 2018 I Rome Italy

Digital Marketing Workshop

Marc HeinickeAssistant Director Marketing

IATA

Page 4: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

AIR Symposium I 23 – 25 October 2018 I Rome Italy

NDC Update

Claude MullerHead New Distribution Capability

IATA

Page 5: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Together, Let’s Build Airline RetailingNDC Program UpdateOctober 2018

Page 6: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

NDC Basics

Page 7: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

What’s the market problem?

Airlines

• Don’t have the freedom to distribute their products across channels without being commoditized

Travel Agents Customer Experience

• Can’t easily access many airline products that are available on the airline direct websites

• Is not consistent depending on where they search for travel and not rich when shopping through travel agents

Page 8: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

What do airlines want?

Revenue opportunities:• Differentiation (product description)• Merchandizing (ancillaries, fare

families)• Personalization (based on loyalty,

preferences)• Dynamic Offers (based on

personalization and other features)

Cost savings: • Innovation & Competition

Page 9: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

• To modernize the way air products are being retailed to travel agents, corporations and travelers

• A travel industry supported program for the development and adoption of a new data transmission standard

• Full-service and low-cost airlines

• Content aggregators and travel agents

• Corporate Buyers and travelers

Together, Let’s Build Airline Retailing

Why NDC? What is NDC? Who will benefit from NDC?

Page 10: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Global Distribution

Systems

Faresvia 3rd party

TravelAgents

(TMC | OTA | Independent)

Airline

Schedulevia 3rd party

AvailabilityAirline

e-commerce engine

Travelers

(Business | Leisure)

How Flight Distribution Worked

Page 11: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Airline

Content Aggregators

(GDS | New Entrants)

TravelAgents

(TMC | OTA | Independent)

Airline

AirlineOffer & Order

ManagementSystem

Travelers

(Business | Leisure)

Content Aggregation

NDC

NDC

Airline Retailing Works

Page 12: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Compare airlines mainly on price and schedule

Source: Expedia 27th November 2017

Today’s shop interface

Page 13: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Enabled by NDC

Full airline products seen by consumer via travel agents Tomorrow’s Shop Interface

Tomorrow’s shop interface

Information here is purely for illustration purposes.

Page 14: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Enabled by NDC

Comparison shopping capability

Information here is purely for illustration purposes.

Tomorrow’s shop interface

Page 15: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

NDC Program Update

Page 16: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

A new structural baseline

Industry feedback:

• A robust standard as a new baseline

• Provides functionalities to go for critical mass

• A solid base to invest in

17.2The new industry

baseline

Page 17: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

NDC LiveImplementations-

65NDC Certified Deployments

Level 3 Airlines as of 17/10/2018

Aegean AirlinesAer LingusPJSC AeroflotAir AustralAir CanadaAir ChinaAir FranceAmerican AirlinesAPG AirlinesAustrian AirlinesAvianca AirlinesBritish AirwaysBrussels AirlinesCathay Pacific AirwaysChina AirlinesChina EasternChina SouthernColorful GuizhouCondorCORSAIRDelta Air LinesEmiratesEtihadEthiopian Airlines

Shandong AirlinesShenzhen AirlinesSichuan AirlinesS7 Siberia AirlinesSilkAirSingapore AirlinesSunExpressGermanySunExpressTurkeySWISST’way AirTaca International AirlinesTAP Air PortugalThomas Cook Airlines ManchesterTurkish AirlinesUnited AirlinesVirgin AtlanticVueling AirlinesWestJetXiamen Airlines

EVA AirFinnairFlybeflydubaiFlyEgyptGOLJiangxi AirHainan AirlinesHong Kong AirlinesIberiaIberia ExpressInselAirKLM Royal Dutch AirlinesKorean AirLufthansaNorwegian Air ShuttleOlympic AirOnur AirQatar AirwaysQantas AirwaysRotana JetSaudi Arabian Airlines

Page 18: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

System Providers certified & capable to date-

62• 46 IT Providers - Capable• 16 Aggregators - Certified• Includes 5 Start ups

Aaron Group

Airlines Technology

AirGateway

AirSkyInformation

Amadeus

APG

ATPCO

AtriisTechnologies

Beijing Asia Technology Co

BirdresTechnologies

Conztanz

Caravelo

Datalex

DXC Technology

Farelogix

HitchHiker

Hitit

IBS

Indra

Infiniti Software Solutions

Sabre

SAP Customer Experience

Shanghai Aqueduct Information Technology

Shree Partners

"Sirena-Travel" JSC

SITA

Skyscanner

TOPAS

TPConnects

Travelfusion

TravelNDCTechnology

Travel Planet

Travelaer

Travelport

Travelsky

VerteilTechnologies

WTMC

WinteliaTechnology Co

TravelgateX

Information Systems Associates

InteRES

ISO Software Systeme

ITA Software by Google

Iween Software Solutions

JR Technologies

KAYAK Software Co

Maureva

Marco Polo Technology

Navitaire

Nemo Travel

On Travel Solutions

Openjaw

Polarium Co

Pribas

PROS

QuadlabsTechnologies

Reserve

Page 19: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

• Certified Level 3 in July 2018

• Certified Level 3 in September 2018

• Certified Level 3 in December 2017

GDSs have become Level 3 NDC aggregators 2018

Page 20: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Sellers certified to date-

AL Maghseel International LLCChina Air Service Ltd.Chongqing Yunshang International Travel Service Co.,LimitedClick TravelClub TravelCorporate Travel ManagementCtrip.com International Ltd.DnataFlyazmeel.com (Azmeel International Agency Tours & Travel)Hogg Robinson GroupJebsenTravel LimitedLogitravel GroupSerko LimitedSuperior Tracks Travel & Tourism –Zeeyarah.comTravelCCTravel PlanetTripadvisor, LLCViaflight.com (Talent Travel & Tourism)WTMC

19NDC Certified

ImplementationsIncludes 6 TMCs

Page 21: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Latest industry announcements

Page 22: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Business Travel engagement

Page 23: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Corporate Buyers also see opportunities with NDC

• Customer experience - Segment traveller types and personalise their trip

• Content - Improved, rich content, to match brand.com

• Cost - Greater visibility of fare types & ancillary costs

• Control – Could encourage the traveller back into the chosen channels

Page 24: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

• Total management: TMCs taking a more strategic role

• Real-time: TMCs leveraging the combination of deeper supply chain relationships, more dynamic technology & better data to support the corporation & buyer along the journey, in real-time

• The power of personalization: Personalization applied at corporate & individual levels to improve engagement & service satisfaction

Corporate buyers envision the future of the TMC

Page 25: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

• Customer service: To help them be more customer focused

• Efficiency: To make selling airline ancillary products more efficient

• Competitiveness: To better compete with airline websites

Travel Agents see NDC as an enabler

Page 26: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Travel Agencies have their reference architecture

Objectives1. For TMCs to think about their future

IT (from small to large TMCs) 2. For IT providers to identify technology

needs and build solutions 3. For airlines to better understand the

TMC mid and back office implications

Page 27: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

The road to 2020

Page 28: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

NDC Roadmap set with IATA Board

Page 29: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

The NDC Leaderboard is growing

Page 30: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

NDC Tools & Comms Channels

NDC Certification Registry• Up-to-date list of all companies that are considered NDC

Certified/Capable

Dedicated NDC Microsites• For Airlines, Business Travel and Developers

Change Readiness Guide for Airlines• A support tool for airlines planning their NDC enablement

from defining the vision and strategy to initiating the program

Info tab on iata.org• To access white papers, dedicated microsites, case

studies and guidelines around the NDC standard

Page 31: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

For more information subscribe to the NDC Hubwww.iata.org/publications

Page 32: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

AIR Symposium I 23 – 25 October 2018 I Rome Italy

The Lines Between Marketing and Distribution Are Blurred

Pablo CaspersChief Air Supply Officer

Odigeo

Page 33: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

1

eDreams Odigeo

Rome, 25th October 2018

Page 34: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

2

We are a leading player in Europe, with more than anybody else

European flight revenueEstimated Long-tail of other OTAs (not-exhaustive)

339

c. 190

c. 100

c. 1501

SOURCE: Industry Research; Amadeus MIDT data1 Including acquisition of eTravel SA

Scaleadvantage

Page 35: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

3

2

2

1

1 1

1

2

1

European OTA flight market share

eDreams ODIGEO: the leading flights retailer in Europe

#1# Market

position

CoreExpansion

SOURCE: Internal analysis; Amadeus bookings data; Phocuswright European Travel Overview Thirteen Edition

eDreams ODIGEO is the leader in the European online leisure travel market

Scaleadvantage

30%27%

2016 2017

Page 36: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

4

Overall our technology has significant scale and allows us to offer

customers the best experience

Our

platform is

built forscale

1 billion

monthly searches

120,000

peak searches per second

8 billion

pricing calculations per hour

80 million supplier

searches per day

Scaleadvantage

35

SEM bids per second

SOURCE: Company Information

245

Websites both desktop and mobile

43

countries with eDO presence …growing

> 600 airlines

> 155.000 flight routes

> 1.700.000 hotels in 40.000 destinations worldwide

88% faster results

Through machine based learning proceses

8 billion daily automated predictions

through machine based learning

Page 37: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

5

Benefits for airlines working with OTA’s

Key points

Marketing: Requires enormous technical scale, reach, skills and

experience.OTA’s core competency.

Cost efficiency: OTA is a pure online booking specialist - it is cheaper for airlines to leverage OTA’s specialization rather than

every airline re-inventing the wheel

Opportunity: International presence, new and faster

developments, benchmarks and big data identifies important

opportunities for collaborating carrier

Revenue: OTA traffic, increases revenues as airlines can partially

not access to this audience.

M a

r k

e t i

n g

R e v e n u e

C o s t O p p o r t u n i t y

Page 38: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

6

Benefits for airlines working with OTA’s

Key points

Marketing: Requires enormous technical scale, reach, skills and

experience.OTA’s core competence.

Cost efficiency: OTA is a pure online booking specialist - it is cheaper for airlines to leverage OTA’s specialization rather than

every airline re-inventing the wheel

Opportunity: International presence, new and faster

developments, benchmarks and big data identifies important

opportunities for collaborating carrier

Revenue: OTA traffic, increases revenues as airlines can partially

not access to this audience.M

a r

k e

t i n

gR

e v e n u e

C o s t O p p o r t u n i t y

Page 39: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

7

Marketing approach & scale

Page 40: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

8

We have a market-leading performance approach to marketing

Customer Acquisition managed on profit

Marketing and pricing actions based on micro level insights

Automate and leverage technology and capabilities always at highest actual level

▪ Marketing spend is based on profit not cost▪ Every system, decision and algorithm is based purely on optimizing

profit, rather than spend. All partners benefit from this approach

▪ Bidding systems built around propensities to understand at a micro level the marginal and full costs, and marginal and full revenues of each search and product. Steering can be done with great precision

▪ This allows us to optimize marginal and full profit per transaction

▪ Use our scale to automate and leverage technology as a competitive advantage

▪ Matched with highly analytical skills and capabilities that we can afford to employ to help steer the business on a daily basis

▪ Cost-free technology benefit for all partners who can never reach this level of capabilities or only at very high cost

Page 41: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

9

In SEM, our unrivalled scale and technology capabilities allows us to tailor strategies for each local market

+325mnKeywords monitored

+63%Mobile click share on Google FL campaigns

5.8bImpressions per year

+200mnClicks per year

Managing incredible scale…

…underpinned by world-class technology and data usage…

+1mnBid changes every day

Proprietary toolsTo automate campaign management and reporting (SEMBox)

35 Bids per second

1.5 TBDatabase to support bidding

…to deliver tailored strategies for our local markets, customers and their preferences

36 markets Multi-product Including flights, hotels, cars

5 brands

2 business

modelsOTA and Meta

Multi-engineGoogle, Bing,

Yahoo, Yandex

Multi-deviceIncluding mobile

optimisation

…able to identify and attract all demand in the market

…granularity allows us to bid more efficiently than others

…we give our partner access to customers across technologies, markets and devices

Page 42: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

10

Leading SEM capabilitiesOur distinctive capabilities

▪ Automated bidding based on real-time feed of micro costs and revenues▪ 1 Mio. Bid changes every day, 35 bids per second

▪ Dedicated SEM technology team▪ Able to customise every part of the journey incl. landing pages, mobile, ad copy

▪ Significant scale allows faster A/B tests, delivering better results▪ Multiproduct campaigns: Flights, DP, Hotels, Cars, HP, Brand▪ Multi engine: Google, Bing, Yahoo, Sapo, Yandex▪ 36 markets, 6 brands, 2 biz models (OTA & Meta)

▪ Built proprietary tools including SEMBox for better visibility and forecasting▪ Keyword A/B ability on hour by hour bases▪ Enables ROI or volume steering

▪ One of Google largest flights clients worldwide▪ Exclusive access to Google Data▪ Of the few companies worldwide participating in Google pilots

Page 43: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

11

We are running and further building market-leading SEO capabilities

▪ Landing page technology that allows to test and optimize at large scale in short development cycles

▪ Large scale, with millions of landing pages tailored to different customer needs▪ Top organic positioning in the travel industry for most European markets

Market-leading capabilities

▪ Internal linking algorithm to match site architecture to user behavior. Creates higher conversion, thus volumes to our airline partners.

▪ Content marketing increasing external links using proprietary user-generated data (e.g., best airports, best airlines). Also increases steering capabilities.

▪ Strength in mobile based on overall leadership in mobile bookings. Creates important channel knowledge to our partners.

Airline landingpages and customerreviews increase our SEO strength

Airline landingpages and (airline) route pages allowscollaboration with arilines to benefit from our scale and SEO capabilities

Page 44: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

12

Mobile is gaining share progressively in the market and we are best positioned than anybody else in that marketMobile bookings continue to grow

Mobile bookings for flights%

SOURCE: Company information, Phocuswright's European Online Travel Overview Thirteenth Edition, AppAnnie

▪ 87% of total industry growth from 2017-2020 will come from mobile

▪ Continue to accelerate, making mobile our largest source of traffic in FY19

▪ 34% of flight bookings via mobile in Q4 FY18 (vs. 24% for rest of industry)

+10pp+9pp

+5pp+7pp

Industry Average

24%21%17%13%10%

High APP ratingsUpdate:

37%

Page 45: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

13

Manage audiences, not just channels Anticipate customer needs

We focus on audience management and machine learning scale to drive ongoing improvements

ConversionRepeat business

AUDIENCES MOMENTS

CONTENT

▪ Differentiation for key strategic audiences throughout their journey, across all touch points

▪ Create coherent experiences▪ Optimise variable costs▪ Incremental and new audiences

for airlines

▪ Timing, frequency of interaction tailored to customer journey & preferences

▪ Medium used adapted to customer’s preference

▪ 360º presence at choice

▪ Machine learning output used to make product offering systemically relevant

▪ Commercial pressure, product visibility, product offering driven by propensity to book models

▪ Allows specific product offering and steering to our partners

Moving customers across channels and across products: increase lifetime value

Page 46: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

14

Benefits for airlines working with OTA’s

Key points

Marketing: Requires enormous technical scale, reach, skills and

experience.OTA’s core competence.

Cost efficiency: OTA is a pure online booking specialist - it is cheaper for airlines to leverage OTA’s specialization rather than

every airline re-inventing the wheel

Opportunity: International presence, new and faster

developments, benchmarks and big data identifies important

opportunities for collaborating carrier

Revenue: OTA traffic, increases revenues as airlines can partially

not access to this audience.M

a r

k e

t i n

gR

e v e n u e

C o s t O p p o r t u n i t y

Page 47: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

15

Value creation for airlines

Page 48: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

16

Transaction feesCustomer Service

Cost of fraud

Traffic acquisition

25-36€

SOURCE: Airline and OTA annual reports, industry benchmarks

Additional investment also required for technologyand infrastructure to support these transactions

OTAs present a 50% cheaper means of indirect customer

acquisition for airlines

Estimated acquisition cost per booking (indirect traffic), EUR

1 Spend includes sales commissions to agencies, computerized distribution expenditure, and associated advertising and sales promotions. Based on airline annual reports and industry benchmarks.

2 Traffic acquisition based on Expedia, lastminute.com and Priceline results. Customer service and transaction fees based on Expedia results, cost of fraud based on internal estimates.

0*-20€

vs

Internal acquisition2External acquisition(via OTA)1

Airlines

DeveloperIT Infrastructure

* DCC scenario

Page 49: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

17

Schematic SEM cost structure to generate incremental volumen on SEM

Average SEM cost

per booking

Bookings

▪ Marketing costs are not linear with volume

▪ Attracting incremental bookings (eg., to compensatevolume loss in agency distribution) requiressignificant sacrifices in spend efficiency

▪ This will drive up marketing cost per booking

…and marketing cost are highly exponential for generating incremental bookings

Page 50: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

18

Scaleadvantage

This scale means we are best placed for online sales development and to serve the mobile travel customer

Mobile developer capability comparison, European OTAsFTE Dedicated mobile

IT

~70

400+

~50

~40~20 ~20

~40

OTA EOTA C

~30

OTA BOTA A OTA D OTA F

~60

OTA G

Scale and dedication enables speed, innovation and excellence for our product building, which positions us with

a huge advantage vs. competitors and airlines

Page 51: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

19

Product buildingOur scale is balanced by a high level of agility to execute on ideas rapidly and cost efficient

Scaleadvantage

of top development talent

50+agile teams

Features released in last year1

6,177

Best case deliverytime from development to code live

15minutes

+330% A/B tests y.o.y. and therefore better insights

A/Btests

Users participating in testing monthly inCutting edge User Lab

300-500

SOURCE: Company Information(1) FY 2018

16

Page 52: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

20

Benefits for airlines working with OTA’s

Key points

Marketing: Requires enormous technical scale, reach, skills and

experience.OTA’s core competence.

Cost efficiency: OTA is a pure online booking specialist - it is cheaper for airlines to leverage OTA’s specialization rather than

every airline re-inventing the wheel

Opportunity: International presence, new and faster

developments, benchmarks and big data identifies important

opportunities for collaborating carrier

Revenue: OTA traffic, increases revenues as airlines can partially

not access to this audience.M

a r

k e

t i n

gR

e v e n u e

C o s t O p p o r t u n i t y

Page 53: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

21SOURCE: Amadeus IT Group, 2016 analysis

The demand an OTA brings to an airline allows them to improve

their yield management

Amadeus analysis on LCC booking data.

Each incremental 1% of

demand is worth an extra

0.8% revenue

to the airline and

increases load

factor by 0.4pp

Airlinew/OTAdemand

Airline

Airline has to sell more seats at cheaper prices with lower demand

Extra demand allows an airline to close cheaper fare seat categories earlier,

and therefore charge higher rates for the same seats

Airlines

Page 54: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

22

OTA Customer Value proposition & partner advantages

choice & comparison vs. specialist

- Sales steering- Data & benchmark

- Constant growth- Large volumes

- Growth focus- Reduced seat-only competition

- Global scope, 43 countries- Reach, 12 bio searches p.a.

- Airline mix, virtual interlining- New schedule creation

- Excl. user group, high yield- Frequent traveler

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23|

Thank you.

Page 56: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

Thank you.

Page 57: Together, Let's Build Airline Industry Retailing · 17.2 The new industry baseline. NDC Live ... Cathay Pacific Airways China Airlines China Eastern ... 1.5 TB Database to support

AIR Symposium I 23 – 25 October 2018 I Rome Italy

The Alliance Perspective: On the Runway to Airline Retailing

Mauro OrettiVice President Sales & Marketing

SkyTeam

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DateFooter can be personalized as follow: Insert / Header and footer1

IATA Airline Industry Retailing Symposium - Rome, 25 October 2018

MAURO ORETTI, VICE PRESIDENT OF SALES, MARKETING & CUSTOMER

EXPERIENCE – SKYTEAM

The alliance perspective: on the runway to airline retailing

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2

SkyTeam20 member airlines

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DateFooter can be personalized as follow: Insert / Header and footer

3

Facts & FiguresSkyTeam by numbers

Destinations 1074

Countries 177

Daily Departures 16,609

Number of Lounges 600+

Annual Passengers 730 million

FFP members 200 million

Interline passengersTransfer passengers

28 million8.5 million

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4

Will we all be Amazon of the air?

• SkyTeam’s member airlines are evolving along with the new reality in the value chain, taking into account the shifting Distribution landscape (NDC, Offer/Order, i-EMD…) and the new opportunities this entails

• As an alliance, SkyTeam is developing technology to enable its members to cooperate in this new environment

• And, help its customers solve common pain points

How SkyTeam is refocusing on customer and technology

Customer Technology

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5

Identifying customer pain points

Research commissioned by SkyTeam* identified a lack of digital seamlessness in retailing one of the top travel gripes

• 60% of travelers have experienced and been inconvenienced by a lack of a complete ancillary offering across multiple carriers

• Two-thirds of business travelers identified choosing a seat on all flights as being ‘very important’

• 7.5 million, the amount of customers that are expected to benefit annually, from the improved online experience offered by SkyTeam’s new Seamless Seats & Ancillaries program

*Source: Atmosphere Research Group - 2017

Research – what our customers expect and need

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6

Addressing basic customer expectations

When it comes to buying ancillaries in a ticket involving more than one airline, two major seams exist:

We are solving the .com seam for interlining ancillaries

The interline seampassengers are unable to buy

ancillaries on a leg of the flight if a second carrier is involved

The distribution seamProduct offerings differ depending on the channel (.com vs GDSs)

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Seamless Seat Maps and AncillariesSolving basic service customer pain points and generating additional revenue

Pain Points

With interline tickets, often customers:

• can’t view the seat map

• can’t make their seat selection

• can’t select preferred seats

• can’t change seats

• can’t purchase baggage ancillaries

All of which leads to inconvenience and stress

The result?

Travelers are frustrated…

p7

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The solution? Introducing…

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Advantages

• Bridges providers and message formats (both NDC and non-NDC)

• Provides airlines with numerous options if they want to add new functionalities

• Enables leaner and quicker development of new IT-services

• Delivers a more consistent customer experience

• Quick time to market

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Seamless Seat Maps and AncillariesSolving basic service customer pain points and generating additional revenue

Solution

• Exchange seat maps and cross-sell ancillaries through the SkyLink Digital Spine

✓Bridging differences betweensystem messages

✓Marketing carrier’s look and feel

✓Operating carrier’s product characteristics and prices

• Delta and AeroMexico were the first members to go live with the SkyLink Digital Spine on August 2nd, 2018

• More members will follow over the next two years

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MMB

A small step, but a significant oneThese are the first bricks of a Value Creation Hub (VCH)

• Today, SkyTeam’s focus is only on this relatively small segment, MMB (Manage My Booking)

• This technology can really open up a new world of possibilities

Overall Ancillary landscape

1) Connect up to 360 airline pairs

2) Expand to the Initiate Booking phase

3) Expand to the Check-in window

Sold indirectly

Sold directlyAirlines.com, call centers, etc.

Initiate Booking

TMCs,OTAs,etc

Check-in window

Reservation window

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• Seamless check-in

• Track and trace for baggage

• Using miles as currency (enhancing loyalty)

• Purchase additional baggage

• Upsell from economy to business (includes using miles)

• Lounge access, Wi-Fi, meals, …

The future opportunities are endless…We have been just scratching the surface

This innovation may significantly enhance the customer experience and enable a wealth of additional opportunities by offering, among others: - …

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AIR Symposium I 23 – 25 October 2018 I Rome Italy

Understanding the Path to Purchase

Surain AdyanthayaSenior Vice President

PROS

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Understanding the Path to Purchase

Surain AdyanthayaPrincipal, Travel Product InnovationPROS

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.2

the airline industry RM and pricing leader

2018

1985

1000+

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3 OUT OF 5AIRLINES

2/3 OF ALL THE WORLD’S FLIERS

6CONTINENTS

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.4

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©2016 PROS, Inc. All rights reserved. Confidential and Proprietary.

Airlines are Embracing a New Era of Modern Commerce and Digital Business

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.6

The Buyer Experience has Changed Forever

Digital, social, and mobile are the new front doors

Buyers flow seamlessly across multiple channels

Time is the new currency

Self service and price transparency are the new normal

Buyers expect frictionless interactions, every time

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.7

Airlines want full control of every offer/sale

Segmentation, WTP,

Dynamic Pricing & Packaging

Kayak, Orbitz …

Airline.com

GDS

A single dynamic offer optimization

product!

Customers

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.8

Real-Time Dynamic Pricing

O&D RMDynamic Pricing Science and AI

Group Sales Optimizer

Shopping and Merchandizing

Offer Optimization

LegRM

IndividualizationFull Realization of Modern Commerce

Vision Path to Airline Modern Commerce

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Dynamic Pricing Science and AI

Individualization

LegRM

O&D RM

Real-Time Dynamic Pricing

Full Realization of Modern Commerce

Group Sales Optimizer

Shopping and Merchandizing

Offer Optimization

PROS’ Vision Path to Airline Modern Commerce

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.10

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AI has an Important Role in Modern Commerce

AUGMENTPricing & RM User Expertise

GENERATEIntelligent

Offers

CREATEPersonalization

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Shopper DNA: Personalization à Individualization

“Time to booka vacation”

§ VACATION§ CONVENTION§ STUDY

CONTEXT

§ EUROPE§ JAPAN§ U.S.A.

CULTURE

§ RENTAL CAR§ HOTEL

TRAVEL ADD-ONS

§ NATURE§ SHOPPING§ CITY CHIC

ENVIRONMENT

§ CHINA EASTERN§ AIR CHINA§ CHINA SOUTHERN

BRAND§ PREMIUM§ BUDGET

PRICING

§ FIRST§ BUSINESS§ PREMIUM ECONOMY§ ECONOMY

CLASS

§ BEACH TRIP§ SKI TRIP§ GRADUATION

OCCASION

§ BAGGAGE§ LOUNGE§ DUTY FREE

ANCILLARY

Jasmine

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.13

Airport City State

Country Region

Destination Type

TravelerLIK

ESIN

QUI

RED

ABO

UTINQUIRED

ABOUT

TRAVELED TO INQ

UIRE

D AB

OUTLIV

ES IN

IS IN

IS IN

IS IN

IS NE

AR

IS IN

IS IN

TRAV

ELED

TO

HAS

TYPE

Destination

Shopper Insights

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.14

Utilizing Data from Varied Sources

How can I help you?

Structured data

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.15

©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.

Offer Optimization Using AI

Product DNA

Shopper DNA

Context

Product Images

Product Descriptions

User Reviews

Lifestyle Content

External Data

Gamification

Clickstream

Search

Explicit Profile

Purchase History

Social Opt-inANON

YMOU

SAUTHENTICATED

Channel

Location

Day + Time

Intent

Season / Holidays

Insights that Create Conversion

andLift Engagement

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.16

Behind the scenes:Recommender System for Personalized Offers

Feedback Loop

ATPCO Services Conditions

Aircraft information

?Query

Customer Context

• Location weather• Nature of trip

Context Information

Customer Information

• Customer type• Customer persona

Product Information

• Type of services • Flights they are offered on

personalized, relevant ancillary & package offers

Recommender System

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.17

New Revenue Opportunities with Dynamic Pricing

NEW REVENUE GAINED WITH VARIABLE PRICING

# OF PASSENGERS

$0

$300

$550

$200

FARE

$375

$300

$225

$205

$175

$125

$500

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Personalized Ordered Ancillaries

AnonymousSteve

Personalized

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Personalized Branded Fares

Personalized Ancillary Bundle

Unique, personalized offer prominently displayed

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The Customer-centric Digital Experience

Data-driven

End-to-end

Real-time

Personalized

Omni-channelOmni-device

Passenger, shopping & RM data

Fast, live during the traveler e-journey

From inspiration to post-trip

Tailored to passenger needs, journey context

Across all digital touchpoints©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.

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©2018 PROS, Inc. All rights reserved. Confidential and Proprietary.21

PROS HeadquartersHouston, Texas3100 Main Street, Suite 900Houston, TX 77002, USA+1-800-555-3548

PROS San Francisco101 Montgomery Street, Suite 400San Francisco, CA 94104, USA+1-415-283-3000

PROS Chicago5215 Old Orchard Road, Suite 505Skokie, IL 60077, USA+1-847-583-8450

PROS Austin3600 Parmer Lane, Suite 205Austin, TX 78727, USA+1-713-335-5829

PROS ToulouseLe Galilée185 rue Galilée31670 LabègeFrance+33 (0) 811 70 78 78

PROS MünchenLeopoldstrasse 2380802 MünchenGermany+49 (0) 89 24442 3097

PROS Paris10 Boulevard Haussmann6th Floor 75009 ParisFrance+33 811 70 78 78

PROS London4th Floor, East Wing Communication HouseSouth StreetStaines-Upon-Thames TW18 4PRUnited Kingdom+44 (0) 1784 777 010

PROS FrankfurtFrankfurt Herriot’s2nd Floor, Herriotstraße 160528 Frankfurt, Germany+49 (0) 69 677 330 15

PROS SydneyThe ArkLevel 32101 Miller StreetNorth SydneyNSW 2060Australia+61 2 8912 2199

PROS DublinOrmond Building31-36 Ormond Quay UpperDublin 7Ireland+1-800-555-3548

Thank You

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AIR Symposium I 23 – 25 October 2018 I Rome Italy

Airline Distribution as a Digital Pure Player

Kevin WangGeneral Manager of Flights APAC

Google

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AIR Symposium I 23 – 25 October 2018 I Rome Italy

Final Remarks

Marc HeinickeAssistant Director Marketing

IATA

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Together, Let's Build Airline Industry Retailing!

23 – 25 October 2018, Rome, Italy