Role of XML technology in enabling airlines to garner true additional ancillary revenue
Published: 25 Feb 2008
EFT Ancillary Revenue in Travel 2008 Special
Technology is now allowing airlines to completely outsource the car rental ancillary product, and shift more of the benefits of the channel towards the airline rather than others.
It is acknowledged that low cost airlines that have overcome the technology barrier by investing in this area and leading the ancillary market trend.
"With the absence of the loyalty programme, they (LCCs) compensate by investing in new revenue streams which were quicker to implement than create a traveller database," according to Arthur de Perthuis, Head of Online Travel Sales EMEA - Hertz Europe Limited, who was one of the speakers during the recently held EyeforTravel's Ancillary Revenue in Travel 2008 conference in Dublin.
On whether technology is a major barrier when it comes to car rental companies and airlines joining hands together for ancillary revenues, he said, " Until an airline embraces XML technology, they will not benefit from the true additional ancillary revenue opportunity. Being able to dynamically offer real-time availability is key to maximising car rental penetration," he said.
He added, "However with our flag carrier partners such as Air France for example we have really pushed the technology boundaries by developing innovative services for passengers, as well as offering customer benefits worldwide, including savings, offers and rewards."
de Perthuis in an interview with EyeforTravel's Ritesh Gupta spoke about trends in ancillary revenues. Excerpts:
Ritesh Gupta: How do you assess the relationship between car rental companies and airlines when it comes to ancillary revenues?
Arthur de Perthuis: The relationship between car rental companies and airlines has entered a new era.
As a major partner for airlines, we work in collaboration, strategically to optimise the revenue opportunity. In order to respond to our partner needs, we have developed a dedicated Centre Of Expertise (COE) covering Strategy, Account Management, Marketing and Pricing.
This substantial additional revenue stream is also key for the airlines to be able to offer the most competitive fares in the market and to add value to their passengers' experience.
Ritesh Gupta: What new trends have you seen especially in Europe?
Arthur de Perthuis: In the 80's the trend was for Frequent Traveller Programs with flag carriers. In the 90's Hertz was one of the first to offer car rental as an ancillary product. Airlines are now following this trend and optimizing cross-selling opportunities through their communication channels.
The next stage is emerging with a fully integrated packaging experience similar to the traditional Tour Operator/Travel Agency offer but dynamic.
Ritesh Gupta: Global cross and package sales on airline websites are expected to be worth around 82 €bn from 2008 to 2012. What do you think are going to be the key drivers for the same from a car rental company perspective?
Arthur de Perthuis: Key success factors will depend on whether the airlines are ready to fully integrate the travel experience as part of their flight booking process as well as communication channels.
The dynamic packaging offered by Hertz enables us to sell a bespoke product to suit the traveller profile. This will be the key influencer to increasing car rental penetration as well as the average basket value.
CRM optimisation will be the next phase to offer a customised product within the passenger travel life cycle.
Ritesh Gupta: An industry executive last year told me - Usually an airline that hasn't yet accomplished real conversion in car hire are ones that have technology barriers, or that haven't seen the value of a multi supplier car hire offering as a source of ancillary revenue. Do you think technology is a major barrier when it comes to car rental companies and airlines joining hands together for ancillary revenues?
Arthur de Perthuis: Until an airline embraces XML technology, they will not benefit from the true additional ancillary revenue opportunity.
Being able to dynamically offer real-time availability is key to maximising car rental penetration.
However with our flag carrier partners such as Air France for example we have really pushed the technology boundaries by developing innovative services for passengers, as well as offering customer benefits worldwide, including savings, offers and rewards.
Ritesh Gupta: Technology is now allowing airlines to completely outsource the car rental ancillary product, and shift more of the benefits of the channel towards the airline rather than others. What kind of progress do you think airlines have made in this direction?
Arthur de Perthuis: Low cost airlines that have overcome the technology barrier by investing in this area and leading the ancillary market trend.
With the absence of the loyalty programme, they compensate by investing in new revenue streams which were quicker to implement than create a traveller database.
Ritesh Gupta: From traditional carriers perspective, it is being said that airline executives have other non-operational concerns about launching ancillary revenue strategies. One is that selling more frills to economy passengers would dangerously blur the distinction between first-class and economy service. From Hertz perspective, what have been the major concerns of traditional carriers?
Arthur de Perthuis: Flagship carrier strategy is not focussed on ancillary revenue as their key objective is to retain their high yield leisure and Business travellers.
Traditional carriers have concerns about losing the customer through out the booking process along with their customer database.
Our partnership with flag carriers such as SAS is focused on adding value to their travellers by offering a customised experience and unique benefits such as upgrades or bonus miles.
Ritesh Gupta: Airlines generate traffic to their websites that should be used to capture a larger share of the total spent planned by the traveller. But add on products and upselling requires a change culture of those facing the customer and the tools they use. From car rental company perspective, how easy is it for you to fit in talking of culture change?
Arthur de Perthuis: Culture change is driver by revenue opportunities!
When you can prove the business model of our partnership, culture change comes quickly!
Ritesh Gupta: To what extent do you think dynamic cross selling of car hire through airline websites is replacing existing channels for car hire such as meta search, brokers and the suppliers own sites?
Arthur de Perthuis: Airlines have a key competitive advantage of being the first step in the travel booking process.
Their strong brand and powerful CRM database are key factors in gaining traveller's confidence and adding value to the travel experience.
There is no need to leave an airline website as long as you have a good dynamic product and availability.
Comments
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Viaje said on 25 Feb 08:
As Arthur de Perthuis points out above, "Until an airline embraces XML technology, they will not benefit from the true additional ancillary revenue opportunity."
It is puzzling to me as to why there is still a discussion regarding the benefits of XML for an airline. Why would an airline be reluctant to embrace XML? Why the foot-dragging?
A travel industry specific version of XML has been on the discussion agenda for more than a decade. The OpenTravel Alliance (http://www.opentravel.org), was founded in 1998 to aggressively promote XML. The alliance is quite active and has members representing major airlines, hotels, car rental
companies, distributors and technology companies.
So, my question is: Why would anybody in the travel business not be interested in XML?