Offers & Orders: What does retailing transformation mean for mid-tier airlines?

CitizenPlane and TTI (a CitizenPlane company) have been on the road, sharing our vision since the launch of the CitizenPlane Operating System (OS). From London to Bangkok and everywhere in between, the conversation on the agenda has been dominated by retailing transformation. Given that we champion the needs of the mid-tier market we serve, we are often asked for our perspective. The way we look at it, retailing transformation is like a train, if not a high-speed TGV! Here’s what we mean.

The retailing transformation journey began 12 years ago with the introduction of NDC and the disruption of the traditional distribution model that was dominated by the GDS. NDC enabled airlines to create offers (flights, ancillaries and bundles) and directly distribute them to travel sellers like retail travel agents and online travel agents (OTAs). Twelve years is a long time in technology, but this is not just about technology adoption. It's about rethinking how the airline business works - and that train has left the station.

A quick look at an IATA database shows that 76 airlines have adopted NDC and are on the path to retailing. The road leads to data-driven and personalized offer creation and retiring purchase-related documents (PNRs, eTickets, EMDs) in favor of a single order, like you get when you order products on Amazon.

When we were at T2RLEngage (London), the World Aviation Festival (Amsterdam), and the IATA World Passenger Symposium (Bangkok), we heard a LOT about this topic. It is clearly high on the industry agenda and the tech community is investing in this future. For example, at the World Aviation Festival, FLYR and Riyadh Air announced that the airline will be the first full-service carrier to operate on a fully native offer and order basis. For mid-tier carriers, however, the journey is not about if they need to embrace offers and orders, but when is the best time to catch the train and at which stop.

The IATA database shows that Tier 1 airlines lead the pack when it comes to NDC adoption (64%), while less than half (40%) of Tier 2 airlines have commenced their journey. When it comes to Tier 3 and Tier 4, the picture changes significantly, with only 16% of Tier 3 and less than 1% of Tier 4 airlines taking the first steps. Why? Because transformation requires an investment in budget, resources, and time to manage not only the technology but also managing your retailing strategy.

When we speak to our customers, they are concerned about flying customers from A to B, filling their planes, and staying profitable with small teams and tight budgets. Innovation is important, but it needs to be practical and well worth the investment. The onus is on technology providers to innovate on behalf of their customers and support them in their journey toward the future. And that future is coming.

The interconnected nature of the airline business means that few airlines can operate without cooperation. They need to partner to enable customers to get to the places they need to go, visit family, build business relationships, and grow economies. We feel that the tipping point for the mid-tier airlines will be when they look to partner with larger airlines that have adopted offers and orders. This will be the station where they will need to jump on board.

Given the limited resources at the disposal of our customer base, at CitizenPlane, we are ready to rise to meet the challenge on behalf of our customers and ensure they are on the right track.

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¹ https://retailing.iata.org/armi/registry/