Aviation Business News

Big Interview: How Sabre is plotting its assault on the airline e-commerce summit

Uneven but clear growth is seeing airlines focus on how to return to profitability post Covid, according to leading US retail and distribution systems developer Sabre.

Aviation Business News caught up with Jean-Vincent Teuler, Sabre vice president and general manager EMEA travel solutions, in London last month at the T2RLEngage conference to chat about a seismic change that is happening today.

He said while there remains some regions and segments to still recover fully from the pandemic, the hunt is on for new revenue streams that airlines can tap into to increase revenues and recover income lost due to four years of Covid disruption.

And this is where Sabre is investing heavily in the technology to help, along with its strategic partner Google which is bringing its technical might to bear to modernise the way airlines retail, merchandise and distribute.

“What we did at Sabre was we started to invest actually during Covid,” said Teuler, “we did not wait for it to be over. We started to invest in this technology and saw it as something the industry needs to recover from the pandemic.

“You need to find a new source of revenues. That’s why we invested in our retail travel marketplace where we want the airlines to be smart travel retailers. That means more complex offers that lead to more profitability on their side.

“Investment in the same old legacy technology, does not make sense. Investment to provide more value across all the entire value chain – that makes sense. This is not a simple investment, it’s a huge investment and we have to provide value every single step of the transition.”

The Sabre stand at T2RLEngage that took place in London last month

Sabre likens the industry’s transition from the sort of legacy technology that Sabre, and other GDSs are often accused of moving too slowly to consign to history, to a more modern Amazon-style ecommerce world as like climbing a mountain.

Much of the success comes down to preparation even before establishing a base camp from which to make the bid for the summit.

Teuler said: “You need staff ready to operate at very high altitude, you need a base camp, you need to prepare and define the right strategy. You need the right partners, the right technology to support you and only then can you start to climb.”

Different airlines are expected to make this ascent at different speeds, and there are pioneering carriers already setting timelines on their arrival at the summit. Others, meanwhile, will be a lot slower and some may never try to make the climb.

Marathon not a sprint

A first phase will see existing technology adapted for an ‘order offer’ world to enable airlines to optimise smarter offers by bundling and unbundling, before moving to a hybrid where legacy tech co-exists but can be gradually phased out.

At the summit an airline can go to 100% full ‘order offer’ regardless of what technology and systems the rest of the aviation ecosystem is using or how its transition is progressing.

“It’s a marathon, rather than a Usain Bolt sprint type of race,” said Teuler. “It’s a transition and it’s going to be different for different people and at different points in time.”

Pressed on likely timescales Teuler believes, however, that this process will not take the decades that other significant changes, like the move to e-ticketing, took.

He believes that by 2025 airlines with the simplest business models, like pure-play low cost carriers, will have planted their flags on the summit. Then, by 2028, other early adopters will be able to join them while the larger network carriers will make it by 2035.

The more recent and on-going adoption of IATA’s New Distribution Capability (NDC) data standard, while slow and painful, has, according to Teuler, at least prompted a more collaborative approach in the industry.

“IATA has listened. At Sabre we welcome that because we think that will help everything work, not just on the airlines’ side, but for the whole ecosystem to have a full view. There is a more collegiate approach, looking at it from all angles.”

The emerging technology foundations that the likes of Sabre is developing with partners like Google are being built to be more flexible, modular, and adaptable. They seek to take more advantage of open-source IT to open up the sector to new entrants and competition.

Changing customer expectations

The systems are also exploiting the opportunities of cloud computing capacity and Artificial Intelligence to provide more intelligent and real-time analytics so aviation can derive more useful insights from the masses of data the sector collects.

Teuler said this promises a future where any retailer can generate personalised, tailored offers dynamically to each potential customer at any point in their journey.

“Covid has changed customer behaviours and expectations. You need to have more understanding, more simplicity and comparability. All of those things that actually lead to personalised capabilities.

“With that you will be able to adapt to the context of the customers’ travel. Knowing what’s happening in the market will make it a more complete offer to this customer at this moment because it’s happening now, because it’s in-path.

“Airlines have been doing normal revenue management for decades. This is about listening to things that are happening and dynamically and contextually giving the customer a personalised offer.”

This lays the foundation for greater complexity by expanding beyond air and the ability and cross- and up-sell their own and others’ services and products.

Teuler concluded: “The whole promise of what the transition to ‘offer order’ will deliver is how do you sell a more complex offer but make sure at every single touch point you understand what the customer is facing and be able to serve them in the right way.

“The ecosystem is an ecosystem of partners. We are trying to bring people together to work through that transition because the new world is different from the old one. Modern retailing with personalised offers exists; it’s a reality.

“The transition will be long, it’s not a shift that will take place over night. This is a transition we want to share with everyone in the industry. At Sabre we are moving out of base camp and starting to climb.”

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