customer sales and service: the key to an airline’s profitable future

business models all over the globe are closer than they’ve ever been before to realizing untapped income. For decades, airlines have pursued the ideal of offering the right seat to In the world of air transportation, the right person at the right price at where certain key cost items the right time. Although it sounds seem to remain perplexingly easy enough, it has proven to be out of control, airlines today are an elusive goal. But now, with a obliged to focus ever more keenly new industry practice that focuses on those areas of their operations on leveraging customer insight that they can control, or at least to increase revenue, airlines of all incrementally enhance. The customer sales and service concept represents the next step in the evolution of airline business, moving beyond old passenger service solutions to give airlines new ability to future proof themselves. The introduction of revenue management processes and loyalty programs in the 1980s helped lay the groundwork for CSS. While those elements worked separately, What precisely should airlines concentrate CSS builds on those synergies and others on as they gaze into a future that, while to deliver much more exciting results. challenging, still offers select but potentially substantial opportunity to those willing to examine and incorporate future-facing The Power Of CSS innovation? In the few seconds between an availability For today’s airline, reservations and request and the resulting display, imagine departure control provide numerous if an airline could consider and evaluate revenue-enhancement possibilities — from hundreds more variables than it does merchandising to up-sell — if the airline is today. What if it could look at the booking able to both recognize and present them activity for the flight while also checking the to the right customers. current fare classes available? Or consider Those possibilities are woven into a new attributes of the customer making the industry concept known as customer availability request — the tendency to book sales and service, or CSS, which focuses a particular branded fare, for example? on generating more revenue by better What if it could also look at the fares understanding customers and their competitors were currently offering? And preferences. CSS is also based on flexible then based on that knowledge, offer the technology that incorporates practices most appropriate fare to that customer? Or such as services-oriented architecture, select one potential customer over another giving airlines the ability to adapt to new because one offers more potential benefit? technology or new business processes while That’s the power of the customer sales and conveniently incorporating existing solutions. service concept.

2 Generating Revenue CSS creates the possibility of real-time revenue management to provide the right price to the right customer. But it also creates other revenue possibilities by using customer preferences to make offers the customer is likely to value. Offer an aisle seat For years, the goal of airlines has been to to a business traveler pressed for time. Offer structure the price of its product to what lounge access to a customer with a layover the individual is willing to pay. But that goal in a hub airport. Give the leisure traveler is impossible to reach given the restricted the ability to purchase a meal or a pillow. capabilities of the PSS system. With CSS, ancillary sales are key. While But take heart. Through the customer airlines are able to offer ancillary services sales and service concept, that goal can be today, CSS brings the ability to better target achieved, helping airlines collect money those sales to the customers most likely previously left on the table. With the limited to pay for them. The customer appreciates knowledge at hand today, airlines often receiving relevant offers — and isn’t offer fares lower than the customer would annoyed by the irrelevant ones. By giving have paid. Or they offer a fare that’s so high, customers the option to pay for what they the customer declines to purchase. In both want — and not pay for what they don’t cases, potential revenue is lost. — an airline builds loyalty and customer satisfaction and revenue. CSS harnesses the power of customer data, revenue management, fares management and real-time capabilities to dynamically Building Loyalty price an itinerary for each customer. Gone Customer data can be used to build a are the days of PNR-based pricing. CSS relationship with the most valuable people ushers in a revenue-centric and customer- who fly your airline. And while most airlines focused service environment. have information on their passengers, And while that’s exciting, it’s just the CSS takes the concept one step further by beginning. There are many paths to the enabling airlines to use that information as desired result; flexibility to structure a CSS well as decide just what data matters the environment tailor-made for your unique most. With a configurable customer value business needs. score calculator, airlines can determine

3 Integrating New Technology The ability to maximize potential revenue and increase customer satisfaction is closely tied to advancing technology. Airlines will need to apply a customer sales and service approach that not only encompasses all what their top customers look like. Maybe aspects of revenue (“revenue centricity”) the top customer is the frequent business and a look at the total customer (“customer traveler. Or maybe it’s the high-end, first- centricity”) but also includes a forward- class leisure traveler. Or perhaps a new thinking approach to technology solutions customer who shows great potential for (“solution centricity”). the future. The point is that through CSS, the airline determines the criteria that helps Technological solutions must be built establish customer rankings. Then with a around the capability of an airline to shape rules engine, you have the ability to set its business model, according to its own in place various practices appropriate for well-developed strategy, rather than forcing various customers. the airline to alter its strategy to fit within the confines of a particular technology solution. Perhaps your most valued customers enjoy more personal attention — an agent who Important technology elements should helps with travel arrangements, the waiving include open architecture as well as robust of certain fees, a limo ride to the airport. technological and adaptive capabilities. That same personal attention would not Basically, any solution should offer a be wasted on more infrequent travelers “future-proof” design that will accept or those who don’t value such high-touch relatively easy customization and upgrading services. Of course, not every airline needs with the newest, latest developments. to go to such lengths to retain its customers, This also means services-oriented but it’s possible to set high-value customers architecture — isolating the individual apart for special treatment to ensure they capabilities of an application so they can be continue to select your product. used in multiple ways and combined with

4 Zone 1

Zone 2

Zone 3

that customer information throughout all touch points. Customer centricity is about seeing the “whole” customer plus determining which parts of the “what you know” equation are most important to your other services to create new functionality — airline. Does the customer have special deployed across a service bus that facilitates service requests? Does she prefer the aisle easier integration and communication. seat? A vegetarian meal? Did she have a mishap on her last trip? All that information Reservations and departure control, can be collected — and used — with CSS. constituting what is often referred to as an airline’s “central nervous system,” consists This holistic approach to customers is key to of several key elements — in each of which CSS. But it also goes beyond just knowing reside numerous opportunities to enhance the customer. CSS also enables an airline airline revenues. to deal with its various customer types differently based on the information it has Vital areas — including core reservations; accumulated about each individual customer. check-in; booking engine; shopping; ticketing; and inventory — can provide opportunities If an airline considers a particular customer to find untapped sources of revenue. to be significantly valuable — and it knows the customer prefers seat 11C on a typical Boeing 737 or Airbus A320 aircraft — the Reservations airline can build a relationship by assigning Core reservations includes several of that customer seat 11C when it’s available. the somewhat misleadingly labeled (and to as close an equivalent of Seat 11C “commodity” aspects of an airline’s as possible when it’s not). reservations and departure control This can only happen if the airline’s operation such as codeshare, booking underlying information technology and passenger name records. capabilities are fully integrated. If they are, It’s misleading to pigeonhole reservations customer information is consistent at every as consisting strictly of commodity features. touch point (globally, if applicable). In reality, it actually can proactively separate And this consistent information means an airline from its competition through its consistent customer treatment — regardless superior approach in providing true value to of how the customer enters the airline’s the airline’s customers. system (phoned the airline’s reservations Precisely defining customer centricity center, or through the airline’s Web site, or can be difficult. But in general, it revolves booked with an empowered travel agency), around knowing how that customer relates or how the customer and airline interface to the airline and then effectively applying (airport check-in at a kiosk or dealing with

5 The airline can also store in the records whether the customer accepted the club pass (or if he even showed up) to decide if it should later extend the customer an invitation to become an airline club member at a discounted membership fee. The point is that it’s virtually impossible to make any revenue approach work without an accompanying robust and an agent at the airline’s ticket counter). Each active customer focus. And neither is interaction lets you build a more complete completely effective without the required picture, and it’s the whole picture that lets underlying technology. you make better business decisions. A shotgun approach to revenue will only It is then very important to retain and create bigger headaches. But teamed with logically archive the information on each customer focus — when an airline truly individual customer so the information knows its customers — it can become a can be reassessed and used in future much more effective “targeted” approach, transactions. A good argument can be offering the right customers the right fares, made, for instance, that the information upgrades, seat assignments and other regarding the customer’s seat preference is value-added items. nowhere near as essential as, say, the fact that the airline lost the customer’s luggage the last time the customer took one of the Check-In airline’s flights. Opportunities for value enhancement at Such information could trigger an automatic check-in revolve largely around much greater refund of any baggage fees for the affected efficiencies in carrying out required tasks. trip, but it could perhaps also prompt the Check-in involves the factors present on the airline to waive any baggage fees for the day of travel. This system generates boarding customer’s next trip. Or, if the customer’s passes and luggage identification tags, booking and routing create a layover, and keeps precise track of the numbers of the airline might offer the customer a passengers on particular aircraft. So, check- free lounge pass to the airline club at a in integrates closely with flight-planning connecting airport. and flight-operating system components.

6 Booking Engine An airline’s Web site is a revenue engine, and innovation and creativity are keys to maximizing the value. Airlines can choose to outsource the creation and operation of At the airport, the No. 1 check-in priority that Web site; however, they must choose is to expedite and facilitate the departure an online merchandiser with excellent process. And that involves two primary judgment and sales savvy to truly enhance imperatives: making sure passengers check revenue. Or the airline can create and in as quickly and efficiently as possible operate its own Web site. (while keeping up with all mandatory With the myriad of new Web capabilities government regulations and airport security available today, airlines can more rapidly requirements) and making sure the aircraft adapt to and take full advantage of online departs safely — with proper weight-and- direct distribution to better price their balance and center-of-gravity calculations. offerings, improve shopping and create Airlines can help make the check-in process dynamic choices for customers — making more efficient by leveraging technology the airline Web site a full-service travel site. to encourage as much passenger check-in For example, airlines can offer not only away from crowded airports as possible site access to airline tickets but hotel and — enabling remote check-in, either online rental car reservations as well. There are or on a passenger’s mobile phone or other also numerous travel extras that can be personal communications device. merchandised on the airline site — plus, Through carefully applied check-in technology, up-selling and cross-selling regarding airlines can save considerable time and airline tickets. money. For example, an airline can reduce At one time, it was common for airlines the number of staff stationed specifically to primarily offer deeply discounted fares to check passengers in at the airport. on the Web in hopes of attracting online A well-managed check-in process also shoppers. But it’s much more likely today, paves the way to additional loyalty building when visiting an airline’s Web site, to be with strong customer information, enabling able to peruse a variety of branded fares, an airline to determine which customer as well as purchase travel extras such as might be interested in receiving a mobile insurance, assigned seats and meals. phone call with selected offers, such as a An airline’s Web site has the ability to not discount code good at a particular airport only reduce costs but also offer revenue store or a free cup of coffee at a beverage- opportunities. An airline can readily analyze specialty airport location. the value of ticket sales on its own Web site These current technologies are helping but it can also apply assorted enticements airlines better communicate with their to persuade customers to purchase in the passengers on day of departure. Airlines first place — to effect what’s referred to that embrace these and other new as “channel change,” coaxing customers technology advances will more fully to switch their buying habits and shop for enhance their revenue. tickets through the airline’s online channel.

7 Or a customer can purchase a meal for the trip and handle loyalty club information online at the airline’s Web site. For lower-value customers, an airline can save the costs of having employees process customer transactions. In fact, the resultant cost savings to the airline could be quite substantial. Key to many of these Web-based revenue Some incentives to bring customers to opportunities is an inviting shopping the airline’s site might include a service environment for customers. Another aspect charge for buying through a phone call to to the online experience is presenting the airline’s reservations center or simply the customer with up-sell and cross-sell offering better fares with more flexibility opportunities. and better travel packages overall on the airline’s Web site. And an even broader view of the customer shopping experience at the airline’s Web Increasing numbers of customers are site encompasses branded fares — fare adopting self-service options from booking classes that are branded with their own through boarding and beyond, while more names to indicate different levels of service airlines are looking at the combination — and ancillary service capabilities, with of no-touch to high-touch options. CSS the unbundling of services such as onboard services enable a business model that meals and beverages. can handle both effectively. Once at the site, customers can not only buy tickets, If these are offered on the airline’s Web site, but check in, handle refund and exchange a customer can incrementally upgrade the transactions and purchase additional level of seat characteristics and ancillary services. For instance, if a customer is services online. Once again, this saves required to pay a fee to check luggage, that the airline significant costs because the can be quickly accomplished online, so it’s customer has shopped for and purchased taken care of before the customer gets to these items through the least expensive the airport. channel, the Web.

8 A good example of preferencing is the ability for an airline to merchandise branded fares. Technology is currently available to help airlines create those types of campaigns. This will help airlines not only better market the appropriate fares and other products to targeted customers Shopping but will also provide customers better value in being able to purchase exactly It is imperative for an airline to apply what they want. technology in providing ready, real-time shopping and merchandising data to its various points of sale — including its Ticketing Web site, reservations center and other Advanced ticketing processes now go distribution channels. considerably beyond electronic ticketing to electronic refund-and-exchange and other With CSS, this “sell” informational transactions. capability is completely point-of-sale agnostic — meaning the information And by enabling as many electronic itself must be consistently distributed transactions as possible, airlines can save throughout the airline’s channels on a considerable cost, thereby enhancing real-time basis, as fostered by continually bottom-line revenue. advancing technology. Electronic ticketing has not only reduced An airline may still offer a customer the costs and improved convenience but it has lowest fare possible to get him to its Web also brought Web sales directly into the site, but at that point, it wants and intends mainstream of customer routine. It has also to be in control of the shopping experience. made airport kiosks highly common and The Web site is, after all, the storefront — accepted onsite devices. offering the airline’s merchandise. And like In addition to e-ticketing, the air all good sellers, the airline should determine transportation industry is now moving precisely what to offer a particular customer forward with electronic miscellaneous and how to offer it. documents — replacing paper The supporting technology must be fully miscellaneous documents. In the past, capable of providing the ability to display these documents were issued for other fares and other ancillary sales opportunities. items: excess baggage, for instance, or An airline should steer the shopping “deny-boarding” compensation. In addition process to preference its marketing to making fulfillment easier and more alliances and associations ahead of other convenient, making these documents potential sales opportunities. The goal, as electronic actually carries the extra benefit always, is to enhance the airline’s revenue. of greatly reducing the risk of fraud.

9 An airline’s inventory system works closely with revenue management so the airline can realize as much revenue out of its Also affected are exchanges and refunds. seats as possible. And all this is generally When electronically enabled, the customer achieved prior to day of departure — it’s — through an airline’s Web site — can make actually a selling tool for the airline to any number of changes to tickets without manage its seats on its flights. involving an airline agent or travel agent. In selling seats, integration with the inventory In the payments area, e-ticketing and system is critical in order to ensure that all that goes with it enable a number of on an airline’s Web site, for example, transactions — also reducing fraud risk and customers are getting true “last-seat- greatly reducing the cost to the airline of availability” information. That way, when each individual customer payment. the airline provides responses to availability requests, it is providing information on Inventory seats that are actually available. At its most basic, inventory is what airlines The inventory process is responsible for use to determine what price they are going “accepting” and “rejecting” passengers. to make available for their seats on each of The inventory system must know at all their flights. times how many seats — at each of the And the inventory process effectively opens different class levels –— are available on a and closes various inventory buckets on particular flight leg. “availability” displays, depending on how Obviously, revenue is enhanced when the airline wants to control distribution in a an airline accepts its “most valuable” particular market or origin/destination pairing. passengers. To determine which of its

10 airline’s experience — the greater revenue generated for the airline. O&D revenue management takes into consideration the overall market demand passengers are most valuable, the airline — as well as market fare values — and must maintain an accurate and up-to-date comes up with an optimal solution based on profile of each of its customers — again, demand across an airline’s entire network. requiring integration of information systems This is as opposed to a leg/segment system, across the entire range of airline operations. which is only concerned with the traffic on a specific leg, without regard to its impact on As to customer value scores, airlines the rest of the network. are demanding to be able to access and use value score information for critical So, for example, an airline might heavily decision support in real time. In other book a flight with passengers who are words, real-time access to customer scoring strictly traveling from Seattle to Chicago. enables airlines to make better on-the- Taking a look at the airline’s broader spot availability decisions. And no airline network picture, however, might show wants to risk losing its best customers to a considerable demand for tickets from competing airline. Seattle to Chicago, then on to Boston. And the larger network picture may represent Another aspect of CSS includes airlines considerably more revenue to the airline. having real-time access to competitive information: competitive fares, competitive Incorporating such a scenario into the availability and competitive schedule airline’s real-time decision-making process, updates. Airlines can use that competitive the airline may then assign higher priority information in real time to help determine to passengers traveling from Seattle availability. through Chicago, then on to Boston — as opposed to passengers who are only Additionally, airlines want to control traveling from Seattle to Chicago. availability by point of sale, whether by geographic locale or channel. At a country This decision-making process, then, level, for example, an airline might file requires the airline to look closer at each different fares based on monetary exchange passenger’s point of origin and final rates — again, with a view to maximize destination O&D to produce greater overall revenue from each seat sold. revenue, rather than a point-to-point decision-making matrix that may result in At an agency level, perhaps there are travel lower revenue. agencies to which the airline wants to limit availability and others that it might want It’s a network-oriented decision-making to provide preferential availability. The process that illustrates some of the true higher volumes that are pushed through complexity involved in correctly managing certain agencies — according to the inventory for the best bottom-line results.

11 These approaches will require airlines to communicate value to customers. The ability to effectively merchandise their offerings — from the airline ticket to branded fares to ancillary products and Conclusion services — gives airlines the ability to The ability to increase and enhance present the right offer to the right person at revenues is the key to the long-term health the right time. of today’s airlines. An airline will also need Value scoring is also a critical component to move beyond the old model of passenger of CSS as it lets the airline determine services solutions to one that offers a which customers are the most valuable more comprehensive “whole customer” and how that value should translate into view. Finally, an airline will need a flexible, products and services. Finally, because CSS modular technology solution in an open requires integrated information technology environment — a system that enables it to capabilities, carriers are able to ensure implement the critical revenue and customer that the customer value is communicated options that best fit its business model. through all customer touch points. The customer sales and service concept CSS represents the next step in the represents the best opportunity for airlines evolution of airline business. With CSS, to develop customer-focused solutions and today’s carriers can build on already- revenue generation in every distribution established revenue and customer channel to help airlines realize their synergies to deliver much more exciting revenue goals. results for the future. For improved revenue opportunities, And the carriers that embrace the concepts airlines should look for innovative, open- of CSS are those that will continue to minded approaches and expand their operate and set air transportation industry systems beyond “business as usual.” standards for decades to come.

Visit our Web site at Please contact our nearest Europe, Middle East, Africa www.sabreairlinesolutions.com regional office for more Tel: +44 208 538 8539 information: E-mail: [email protected] Worldwide Headquarters Sabre Airline Solutions Asia / Pacific The Americas 3150 Sabre Drive Tel: +65 6215 9500 Tel: +1 682 605 6750 Southlake, Texas 76092 USA E-mail: [email protected] E-mail: [email protected] The Sabre Airline Solutions logo is a trademark of an affiliate Holdings Corp. © 2008 Sabre Inc. All rights reserved. Printed in the USA. AS-10-12238 0310.0