Airline system look-to-book ratios soar, expected to go 10x higher

Back in the good old days, say around 20 years ago, airline systems had a 10:1 ratio of searches to actual bookings.

Fast forward to 2015 and a metric of such apparent efficiency is extremely hard to come by now.

In fact, it’s nigh on impossible.

Amadeus says over the course of the last two decades the look-to-book ratios for many airline systems have climbed to somewhere in the region of 1,000:1.

This leap has been as a result of a number of important factors.

The switch to digital and online services by consumers has obviously seen the entry of online travel agencies and metasearch engines in the equation, but in turn these now send millions of call queries to airlines systems to obtain information on fares and availability on flights.

But, according to Christophe Defayet, director of research and development for airline IT at Amadeus, consumer habits in general have also had a major impact on the volume of information required from an airline’s system.

Previously, a traveller would potentially have just one destination and a specific time in mind when they search for a ticket.

But in the last five years in particular, travellers are considering more products, are flexible on their schedules, and seeking ideas and fares for multiple destinations.

Add the complexity around the fares themselves, such as the inclusion of ancillary products, then the volume increases even further.

The result for the airlines can often be a creaking system under the weight of traffic, but arguably a more important factor is the fact that results being returned to the consumer are not entirely accurate.

Defayet says 100% accuracy can never be guaranteed, but a system it has built, known as Amadeus Cloud Availability, will go some way to helping carriers cope with the volume of traffic coming their way.

Furthermore, the 1,000:1 figure that many airlines are facing on a daily basis is not the end of the story when it comes to an increase in look-to-book ratios.

Defayet predicts the metric could see another ten-fold increase over the next few years to around 10,000:1, as the factors outlined earlier continue to evolve both in terms of changes to consumer behaviour and more third party services requiring information from an airline.

“We have not reached a plateau,” he argues,”with more products, different criteria, more flexible [traveller] behaviour and more destinations needed in a search”.

Amadeus has been piloting the Cloud Availability system with Lufthansa during 2015, using the Google Cloud Platform to host the service.

In particular, Lufthansa argues that being able to cope with massive demand is a way of handling the “new era in real time merchandising”.

NB: Airline search image via Shutterstock.

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Kevin May

About the Writer :: Kevin May

Kevin May was a co-founder and member of the editorial team from September 2009 to June 2017.

 

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  1. Riyaz Lakhani

    You are right Kevin, we specialise in hotel bookings and our experience has also been very similar. The look to book ratio is 1:1000. This varies for various niches. If the niche is good and the discount is good this ratio improves upto 1:500

     
  2. Waqas Sheikh

    The customer habits have changed because there’s been a substantial amount of innovation on the CX side of the online travel space. Customers now have capabilities to explore and discover flights in ways that they could not have imagined, even a few years ago. The OTAs and metasearch players deserve credit for providing more transparency to an opaque marketplace, and pushing the envelope. These capabilities have unsurprisingly come at the cost of so-called “efficiency”. Unfortunately the supplier systems have struggled to keep pace with the explosion in upstream volume from their users, despite the dramatic decreases in cost of computing power. Suppliers have decided to sacrifice customer-facing accuracy by trading off the freshness/quality of the availability/fares data to manage their volume-based costs. I feel that this compromise is pragmatic one, although somewhat sad.

    Jonathan’s points about the inefficiencies introduced by metasearch, scraping and the multiple-hop supply chain are all extremely valid.

     
  3. Jonathan Boffey

    Interesting article.
    The hotel distribution sector is a great parallel and we (Triometric) have many clients in this sector. The change has been quite astounding – although every organisation/channel gearing is different, Look-to-Book ratios in this sector have gone from maybe 1,000:1 three or four years ago to 10,000:1. Whilst the best managed organisations have dug in at 5,000:1 sadly ratios over 20,000:1 are now not that unusual. The big question is why?
    Meta-search, designed to address (at least on price) the consumer’s right of choice, continues to drive ever growing volumes of search traffic down the supply chain. It has helped push traffic search volumes up leaving booking volumes lagging behind.
    Another other major factor is the number of hops in the supply chain fuelled by the fruit salad of XML standards. This has grown the supply tree, with aggregators now connecting to aggregators and each aggregator passes one front door search out to several if not many suppliers or aggregators via their back door.
    Scraping is another – price trawling to shove competitive product info into revenue managers’ databases. Let’s face it, if you or I want to stay somewhere, do we really make 10,000 or more searches before booking? Somebody or something does! I probably do four or five searches and at stretch ten – I have a lot of better things to do with my life.
    So what’s our view on the likely deal for airlines?
    NDC will open up the market so there will be a lot more searching going on. Significantly more than any increase in seat capacity. Tariffs may no longer be centrally registered and the market (price) will be more dynamic so there will be more scraping. The good news is that the number of airlines is significantly smaller than the number of hoteliers and NDC will be a single common XML standard – both of these mean that the number of hops in the supply chain does not need to grow.
    I can envisage that the airline distribution systems will still get a fair amount of pressure on both look-to-book, and even “show-to-ticket” ratios which we also like to measure. A current level of 100:1 may grow by a factor of 10-20 in the next few years but hopefully avoid the truly bigger numbers.

     
    • Kevin May

      Kevin May

      @jonathan – cheers for the additional commentary and data-points, appreciate it ……

       
 
 

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