on 29 September 2009 
(No Ratings Yet)
Airlines, it turns out and contrary to recent statistics, are pretty serious about beefing-up their own websites.
I say that somewhat facetiously because, of course, airline direct-to-consumer distribution has been a priority for years.
But, a new Air France-KLM Group agreement with iSeatz, the New Orleans-based technology company and inventory aggregator, symbolizes a renewed carrier push to, as iSeatz puts it, knock online travel agencies “further out of the food chain.”
Why would a traveler need to visit Opodo, Ebookers or lastminute.com if they can surf over to KLM.com, which is now using the iSeatz OneView platform, to offer consumers the Kempinski Hotels Dukes Palace in Bruges, and a rental car to go along with a Da Vinci Code Walking Tour in Paris?
At least that’s the feeling of many airline execs, who hope they will earn incremental revenue from non-air sales while keeping consumers loyal to their websites.
In using the iSeatz OneView platform, which is also used by Delta, Northwest, Air Canada, Southwest and several financial institutions, klm.com visitors can book or change reservations for this disparate-inventory mix in a single transaction, iSeatz states.
Incidentally, iSeatz is a technology company and aggregator, getting some of its hotel inventory directly and and some from businesses like booking.com, for instance, says founder and CEO Kenneth Purcell.
And, much more of this stuff OTA-like product is on the way for airline websites. Purcell tells me that iSeatz is in the process of implementing similar capabilities on Air France websites, and, also unannounced, is under contract to deliver its dynamic-packaging engine to a major US carrier.
In addition, the new Air France-KLM pact with iSeatz, its first foray into Europe, contains a provision that would enable it potentially to strike agreements with the group’s other airlines, including Martinair, Transavia, Brit Air, Transavia France, Regional Compagnie Aerienne Europeenne, CityJet, Alitalia, VLM Airlines and Kenya Airways, Purcell says.
As travelers know every time they check a bag these days, airlines are very bullish about finding ways to attract new revenue rivers. But, Purcell says, iSeatz faces an obstacle in convincing airlines to come on board.
“They are desperate for sources of ancillary revenue, but at the same time they don’t want to introduce anything in the shopping engine that would disrupt passengers from buying airline seats,” Purcell says. “That’s the biggest challenge we face with the airline industry.”
Of course, as you might expect, Purcell says he has the numbers to show that introducing iSeatz hotels, car rentals, airport transfers and destination activities on an airline website “has zero impact on core product sales.”
Meanwhile, airlines increasingly are giving a sympathetic ear to the noise about selling nonair products on their websites.
Much of the destination tour product and some of the other inventory iSeatz aggregates is unavailable in the global distribution systems, which feed travel agencies like Travelocity and Orbitz with inventory. So, airlines hope that their ability to offer these products on their own websites will give consumers another reason to visit the carriers’ websites without bothering with OTAs.
Thus, as airlines continue their uphill drive to knock OTAs off the roadway, I don’t think it was any accident that when Delta Airlines began using iSeatz technology in 2007, iSeatz replaced Expedia in that role.
Related posts:
Great article Dennis. The one issue i have with dis intermediation of OTAs by airlines is the assumption aggregators like iseatz will have the millions of inventory or travel SKU’s. The fact is the supply side of travel is so fragmented and the demand so particular that one cannot really disown anyone. All need to partner with everyone. The Global delivery network that is connected to each other is the key. It really is about co-optition than competition.
Well said, Ram! Yes, it’s not a question of what technology can produce, it’s a question of what the client wants. After all, in theory all travel agents (of any ilk) should have gone out of business just after Graham Alexander Bell said “these two tin cans a piece of string, can I improve on it, or what?” These techology types are really charging off down an alleyway without looking around to see if any customers are following.
Of course,an airline website will only give you what that airline wants to give you (which may well prove self-defeating, long term, from a customer psychology point of view) – the OTA’s go a lot further in giving you options (one thing airline websites do not want you to have – or possibly aggregators who are only able to aggregate that which people want aggregated) – so the answer is still, to integrate the supply side of travel with all the available sales channels. OTA’s mind you, cannot work wrinkles. Only human travel agents can do that. And trust me, there are an awful lot of wrinkles to be worked!
Plus ca change, ca change…
..and I say, once again, why can’t the airlines send a triggered “after sale” email message to travelers, giving hotel/car/activity “deal” offers during the dates of their travel? This would counter arguments about putting obstacles in the airline purchase booking path. Partnering with iSeatz, makes it easy to white label this service from airlines (powered by iSeatz), and through clever marketing and merchandising (via email, notifications, even on the confirmation email/page), these incremental sales could add up. Right now, it seems that airlines are only focused on selling airline ancillary goods and services such as preferred seat assignments, on board food and entertainment, WiFi connectivity and added baggage fees. IdeaWorks reported that airline ancillary revenue for calendar year 2008 rose nearly totaled $10.25 billion — a 346 percent increase — above the worldwide results over 2007 levels. One can only imagine the staggering numbers this year over last! So, if the airlines are focused on where they can yield the greatest returns on ancillary revenue, non-air add-ons are not as attractive as air services. Nevertheless, airlines are leaving money on the table by not using their data to drive non-air sales in the “after sale.” Also, some of the current ancillary charges, such as baggage fees and charging for aisle seats are inciting passenger backlash. Wouldn’t it be more “customer-friendly” to offer passengers a discount on targeted non-air product and services, and package them up as nicely as the OTAs, in order to make travelers more loyal to an airline brand? Convenience and value – what a concept!
Good idea, let’s sell the add on’s. Oh! Dear!, we need extra staff to handle the add on’s. I know, we can farm it out and pay the people who do this (yes, on or offline) a “bounty” (can’t use “commission” can we!). We can give them a name and, let me see, Yes! We could call the Aravle Tgents.
Hmmmm…. These Aravle Tgents seem to be getting too much “bounty”. Let’s tell them – no bounty, they can charge a fee……
Oh! And I seem to be about n squillion dollars short in my technology budget as well……
@Ram @Murray – anything that one single airline does will always fall short of what any On- and Off- TA can do in terms of choice, rates and technology, however… the airline doesn’t care! As far as they have enough product supply to match their routes and can earn commissions at 0 cost, it’s a good deal. Remember every airline has been setting up vacation branches for decades to fill their seats selling packages, now they are simply doing the same with the independent traveller.
Susan’s point is interesting – if this is so good why are they not pushing it? The only airline I know which has gone “full monty” and has integrated ancillaries IN the booking path is British Airways using Openjaw. On the other hand we have heard AA last week saying that anything they can win on upselling air seats vastly overcomes ancillary sales, so they know where to put their (limited) resources.
My take is that each airline is different in terms of strategy, focus, culture, pride and balance sheet, and this can drive many different decisions.
Daniele
[I am not affiliated with any of the companies mentioned above].
Ah! Now, there you have it! The thing is that airlines are precisely that – airlines. What they do, is to get a fair few tons of metal into the air with a complement of crew and move people from point A to point B. They (used) to do this quite well.
Yet, I remember, when BA dropped commission, them saying stuff like “We do not owe travel agents a living”. What has happened, suggests otherwise. Agents duly said “Okay” and got on with changing their perspective and approach. Airlines promptly sat back and thought that they had cracked it and waited for the dollars to role in. They forgot a few basics (not to mention the effects the Mr O’Leary’s of this world had in mind. A few other things went wrong as well. They were legacy airlines, burdened with archaic working practices, routes that just didn’t work and other hopeless costs. The agency network changed – they didn’t.
The main thing airlines do not realise is that they are not retailers. Retailing is a different skill set – you don’t see TESCO airlines and even if TESCO were to start flying people about the place, they would get someone else to do it and use their brand only. For some reason best known to themselves, airlines then decided, to help them in their (retailing) quest, to ask the techy types – indeed to ask anyone to help them APART from the very people who they actually needed to help them, the on and offline agents. Techy people are good at solving a techy problem – the trouble is, what was the right problem that neede solving, in the first place. Not being retailers, airlines could not answer that question properly. Nonetheless, they forged onwards and so we have the blind leading the blind.
Now, even the likes of the low-cost types are not retailers – you can see that in the way they sell. It is not retailing at all. It’s getting ancillary revenue by tricks that border on the sharp practice – making it hard to get rid of extras whilst booking, using a low or zero fare and then adding stuff on – this is not retailing.
What is? For example, when I go to TESCO to get some butter I usually come out with a few other bits as well. The thing is, I do not feel bitter and twisted about it. I do not feel resentful, I feel that I have made a buying decision that I wanted to make – I hadn’t, of course, I had been lured into additional purchases by very clever and leading edge retailing techniques – and THAT is the difference between TESCO and an airline. Between retailing and sharp practice, between having a customer feeling good and coming back for more and the customer bitterly regretting every second of a journey they have to make with XYZ airlines from the moment they go on the website.
Sure, low cost airlines can make profit – but for how long. Sooner or later some of the techniques used by airlines will be seen for the rather tenuous grasp on legitamacy that they hold. People will have had enough of a pound here a pound there – despite a notorious Germans supposition that “The people will fall for a big lie rather than a small one”
So, we are back to embracing all sales channels. To make travel work, it is airlines that need to relaise that the longer they refuse to acknowledge their profound weaknesses, the harder it will be to return to sustainable profitability. Ironically, the retail experience is out there and more than willing to work together. (The amazing travel industry – the only business where the various facets are at each other throats!) The thing is, are their enough corporate brain cells left in various boardrooms to realise this.