Navigating the Future of Airline Retailing

Flight delays and cancellations, understaffed airports, and pent-up demand have contributed to frustrating travel experiences for consumers and major financial and operational strains for airlines.

“If airlines can get smarter about what they offer, they can ultimately produce better outcomes for the consumer,” said Mike Reyes, vice president of product management at Sabre Travel Solutions, which provides airline retailing software that helps airlines maximize revenue and operate with more agility.

The challenge is that existing business processes and technologies make it difficult for airlines to be flexible about how they sell their products. A more streamlined solution aligned with the new distribution capability (NDC) format and powered by artificial intelligence and machine learning can help airlines deliver a broader selection of more targeted products and services.

SkiftX spoke with Reyes about the key challenges and benefits for airlines as they transition to a more customer-focused future state of retail.

SkiftX: What are some of the common frustrations that travelers face at key stages of the travel journey, from researching, booking, and payment through to pre-travel, travel, and post-travel touchpoints?

Mike Reyes: Consumers have become more accustomed to very seamless digital experiences. With mobile-first websites and apps, everything is expected to work. The systems used for airlines are complex and fragmented. If I’m looking to book a trip, I may search for flights with the calendar option, select a flight, look at a seat map, and then go to additional pages that present insurance, meals, Wi-Fi, hotel add-ons, and other extras, all before I even book the flight. That shopping experience can be a challenge, both for the consumer’s expectations and for the supplier’s ability to deliver a seamless experience.

Travelers look at dozens of sites while shopping for flights, and when they come back to book it’s really time-consuming to go through all of those different pages — so that’s a key frustration around shopping and booking. During the trip, travelers have to deal with different suppliers at each stage of the journey. If my flight is late, what does that do to my connecting flight or my hotel? I’m dealing with multiple customer service contacts, and none of them talk to each other well. The communication can often be asynchronous. Being stuck at an airport with a coupon for future travel isn’t a very satisfying experience. It’s just a big hassle.

SkiftX: What are the primary benefits for airlines to move toward an offer-and-order retailing model? How does it give them more control over how they sell and fulfill products?

Reyes: For the last several decades, the travel ecosystem has revolved around selling flights, with the concept of a passenger name record (PNR) as the standard format for any travel seller to take air bookings. The PNR is a specified format that includes the passenger’s name, the destination, and the price they paid. Over the years, we’ve had to modify the PNR as suppliers started selling more diverse products and bundling ancillaries together.

Now, with an offer-and-order model, airlines can make an offer that displays these products on a virtual shelf — so it’s a much more flexible framework. When the customer gives their credit card and that booking is created, the framework is more like an order. Think of Amazon and how it fills up your shopping cart and creates orders. Even if they’re talking to a whole bunch of different suppliers, it’s a single order. An offer-and-order model brings that flexibility into the travel ecosystem.

Full-service carriers, whose business models have grown up around long haul, international travel, hub-and-spoke systems, and big corporate contracts, didn’t put ancillary content center-stage at the outset. In contrast, low-cost carriers built their business models around ancillaries first. As a result, the tech backbone full-service carriers rely on must change to accommodate more — and different — types of content, and that change can come from offers and orders.

We’re now seeing both full-service carriers and low-cost carriers trending toward the offer-and-order model.

SkiftX: What is Sabre’s offer-and-order strategy?

Reyes: The three big themes that inform our strategy are choice, intelligence, and ease.

Our technology platform provides a modular approach to order management that gives airlines the choice to customize a solution that’s right for them. This provides airlines with increased flexibility.

We also provide airlines with intelligence that allows them to be smarter with the offers they’re creating — not only in optimizing yield, but also in finding creative ways to retail combinations of ancillary products to different audiences. Offers for business travelers are bundled differently than offers for leisure travelers or those visiting friends and relatives, for example.

Lastly, we’re making these systems easier to implement, easier to use, and ultimately easier for consumers to purchase the products that work best for them.

SkiftX: How does NDC fit within Sabre’s offer-and-order strategy?

Reyes: NDC is an XML-based messaging standard. We’ve created a set of standardized application programming interfaces (API) that helps aggregators, online travel agencies, and suppliers connect to a richer array of product offerings from travel suppliers. We have our own NDC program to help agencies and suppliers communicate through Sabre based on the International Air Transport Association’s (IATA) protocols. We’re heavily invested in making sure that we participate in not just defining those standards, but in building out our technology to support them so we can connect buyers and sellers.

SkiftX: How is Sabre working with IATA to modernize travel industry standards and accelerate retailing transformation?

Reyes: IATA’s main role is helping define technology and safety criteria, billing protocols, and other standards that can be used across the industry. If every company decided they were going to do their own thing, it would be even more difficult for consumers, so IATA is helping to ensure that everyone is on the same playing field. They’re not a technology provider, but they’re helping airlines and tech providers think through problems and developing requirements so we can deliver technology solutions.

SkiftX: How does Sabre’s partnership with Google, which incorporates artificial intelligence and machine learning, point toward the future of airline retailing?

Reyes: The big cloud providers are all doing deals with companies large and small to help them modernize their infrastructure. When we started thinking about our enterprise operation strategy for the next 10 years, Google was a natural fit because it wasn’t just about finding a cheap alternative to running data centers. It’s about our shared view of where the travel industry is going, both with the offer-and-order model and next-generation retailing in general. Again, it all goes back to choice, intelligence, and ease.

SkiftX: Are you feeling optimistic about the future of travel?

Reyes: Absolutely. It’s in the human spirit to want to travel and see other places. The conversation we’ve had with some thought-leading airlines recently is that the perfect storm of things converged in the last couple years, but the silver lining is that the pandemic allowed a lot of our customers to rethink how they run their businesses. If we can survive this, we can survive anything.

For more information about Sabre’s journey toward travel retailing modernization, visit Sabre.com/open.

This content was created collaboratively by Sabre Travel Solutions and Skift’s branded content studio, SkiftX.