On Airlines, Agencies, GDSs and Customer Insight

"We Know Why You Fly" has been American Airlines' motto for the last several years. Those of us in the distribution area are focused on improving our use of customer insight to better deliver on this promise. Unfortunately, airlines are limited in their ability to receive and consider customer insight through the current messaging process of the travel agency/GDS channel. We believe that the industry should adopt a communication structure which fully supports insight from all members of the supply chain.
Airlines have been successful in personalizing the customer experience through their web sites and other direct channels. Now is the time to extend these benefits out through travel agencies that represent more than half of airline tickets sold in the U.S. today. Doing this effectively requires the use of a "Pull Model" where traveler identification information is sent to the airline for use in compiling and presenting an offer, as opposed to the traditional "Push Model."

The Push Model involves the airlines pushing out the base components of an offer to the GDS including fares, inventory availability, etc. The GDSs take the components and assemble an offer on behalf of the supplier to present to the customer via a travel agent. This model was very beneficial for the industry when it was created. Computing power was expensive. Airlines sold a standard product where choice was primarily limited to First Class, Business Class or Economy Class. So the use of central systems to process the shopping inputs was necessary to connect suppliers and consumers. However, as we move into an era where hardware and bandwidth is less expensive, the airline product is becoming more varied, and customers are able to customize their desired experience, the current Push Model is insufficient to provide true insight for the exchange of information.

The Pull Model differs from the Push Model in a number of key areas which allow for better use of customer insight. The request from an agency on behalf of a customer flows all the way through to the airline. The airline uses this information in the assembling of the offer which is then pulled from the supplier and aggregated together with other suppliers' offers for presentation to the agency and the customer. By allowing this full flow of information, the airline can use the information presented along with other customer information that resides in the airline's customer relationship management to put together an offer that is most relevant to that customer. This may include suggesting of one or two optional services that may be most valued by the customer as determined by their travel characteristics or past travel habits. This flow of insight is good for the customer because it gives them a more personalized answer, the agency is able to better service their client with more relevant offers, and it allows the airline to differentiate itself and increase its uptake rates through the provision of more customized offers.

Being able to assemble an effective offer to a customer requires insight into their needs and preferences. An excellent example of gaining customer insight through the variance of pull offers was presented in a case study by Bob Dufour, president of Mondial Interactive Company at the Computerized Airline Sales and Marketing Association's (CASMA) fall conference held last month. Mondial worked with an airline to increase the uptake of travel insurance offers through the airline's website. In order to learn what components were valued most by customers they presented different offers which varied in terms of price, benefits highlighted, graphics used to describe the service, etc. In reviewing the results of the various offers presented they were able to determine which offers and their various components were best received by customers. By presenting a pull offer with the knowledge of who was asking, they were able to segment by customer types to further distinguish among preferences.

This case study highlights the benefits and potential that the airline industry holds to assemble and present relevant offers to customers based upon their values and preferences. In order to do this, there will be a need to gather information through the experimentation of providing different offers to see which ones are valued most by customers. As the library of potential optional services grows, the use of experimentation to gain customer insight will be invaluable in determining which services are most beneficial and how best to package them for the customer.

Insight in the Pull Model should include all participants in the supply chain. Agencies have pertinent information about the customer that can be provided in the request so that that airline can factor it in when determining the offer. For example, the agency may know that the customer is flying to a destination for a meeting that starts shortly after the scheduled arrival. With this information the agency can request that the airline provide an offer that includes a seat in the front of the cabin and priority baggage handling so that the customer can quickly move from the flight to their meeting. It will be important in the pull model for GDSs and other technology providers to develop easy and efficient ways for agencies to use customer insights such as this in requesting offers.

These are exciting times in the airline industry as we embark on new and inventive ways to better market our product to our customers and to do so in a more personalized and relevant manner. We can learn a lot from true marketers in other industries such as Amazon, Dell and eBay on how to better connect with and interact with our customers. As we embark on this journey it is important that we as an industry make sure that we architect a process that takes advantage of customer insight held by all parties in the supply chain. When it comes to the indirect channel we believe that the Pull Model will allow us to truly demonstrate that "We Know Why You Fly."

This post was republished with permission from American Airlines' Distribution blog.