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December 26, 2012 4:11 pm
The aviation industry is heading for a battle next year over how air travel is sold, as airlines push for a new approach to distribution that would allow them to personalise their offers to ticket-buyers and better distinguish their products from rivals.
Iata, the airlines’ main trade body, will in January unveil the terms of reference for pilot programmes to test its proposed new interface between carriers and ticket distributors and travel agents.
Under the new standard, called “dynamic airline shopping”, travellers would submit information about themselves and the journeys they were hoping to make, and airlines would respond with customised offers.
That differs from the current system, whereby airlines file all their fares with Global Distribution Systems (GDSs), which agents and websites access when searching for tickets.
Eric Leopold, head of Iata’s passenger department, said the changes would allow airlines to give customers a better idea of what they were buying – showing, for example, the angles of seats or whether checked luggage was included in the fare. “If you’ve been investing in product innovation, you want to customers to be able to see the product,” he said.
Airlines have been working in recent years to push up thin margins both by selling more elements of air travel a la carte, such as extra leg room or wifi access, and by trying to change the perception that seats on an aircraft are interchangeable, “commoditised” products.
But critics caution the new system could make price-focused comparison shopping more difficult. Christoph Klenner of the European Technology and Travel Services Association argued “some airlines will want to reserve certain fares for certain customers, in which case, you will have a series of gateways and gatekeepers . . . and no way of ensuring you’re getting the best offer”.
Gordon Wilson, chief executive of Travelport, which owns two GDS platforms, said that under the new system, “you just won’t know if you’re getting the market price or not”. He added that while he understood the airlines’ impulse to encourage customers to focus on the “value” of a specific offering – as opposed to the ticket price – “if you’re down at the back of the aeroplane, you really aren’t going to see much of a difference between one airline and another”.
“Airlines are trying to be more profitable and I don’t blame them for that – it’s not a very profitable industry – but not at the expense of transparency.”
Under Iata’s schedule, next year will be devoted to testing the new interface and getting industry feedback, while implementation would begin in mid-2014.
Mr Leopold, meanwhile, envisaged a “hybrid solution” between new and old systems, at least in the short- to medium-term. He added that customers using dynamic airline shopping would have the option of searching for tickets anonymously, a necessary feature to stay within the bounds of European privacy law.
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