Digitalization and tech advancements have disrupted multiple industries across the globe. From automating tedious processes to optimizing the customer experience, these breakthroughs continuously shake up old and obsolete business models and transform them into more cost-effective and efficient methods with little human intervention.
Despite the grounds that these tech advancements continuously break, the airline industry seems to be a little behind in the game.
In this episode of the Fetcherr podcast, host
Dabkowski shares his valuable insights on how technology has revolutionized the airline industry and how airlines can leverage technology to enhance operations and improve customer experience. As a former Vice President of Airline Commercial at Amadeus, CEO at Navitaire, and Senior Vice President at the airline solutions division at Sabre, Dabkowski has a wealth of knowledge to share.
Omri: John, thank you so much for being on the show. Can you elaborate on your extensive track record and background to our audience?
John: I’ve been an IT guy for a long time, pretty much always around in the airline industry. I’ve worked on a range of IT solutions that originally started out with the solutions that helped airplanes fly to much more time spent on commercial systems that help airlines sell seats at the right prices for both the airlines and the passengers. Most of my career has been with the major providers of those IT solutions, including Saber, Avatar, and Amadeus.
Omri: The IT industry especially in aviation has been seeing a dramatic change in the last several decades. What are some of the things that you see on your side that have truly impacted how the IT industry is currently working?
John: I think in general, the airline industry has changed dramatically over the years, as well as the IT solutions that have been offered to those airlines. I think one of the biggest changes for the airline was the launch and growth of the low-cost carriers. And in my view, the success of the low-cost carriers has driven huge changes in the way that passengers book, and generally the IT solutions that they use. And as a result, it’s made airfares much more transparent for passengers, which is a big positive.
If you think back in time, traditional companies like Saber and Amadeus were really big in providing solutions to travel agents through their GDs services. And they developed IT solutions for airlines only as a second step after their focus, and they really started working on full-service airlines. Then came this revolution with the low-cost carriers booking mostly directly, over the internet, and often bypassing the travel agents and the GDs. So there are a lot of advancements, particularly after the pandemic where the need for self-service and automation solutions rose.
https://youtu.be/kzCD3iWaSWk?embedable=true
Omri: What are the traditional revenue management and high-frequency pricing and how did they progress in recent months?
John: It’s an area of huge change for a couple of reasons, like the LCCs and the full-service carriers demanding much more up-to-date revenue management, but actually, I think the pandemic is accelerating the move, and the change that we’re seeing in revenue management directly. The pandemic has played a huge change in booking activities, and as we see the growth after the pandemic, it’s completely different.
For example, business travel. A lot of airlines rely heavily on business travel and their booking patterns and traditional revenue management were very much targeted at that sector of the marketplace, but I strongly believe that business travel is never going to return to what it was before the pandemic. It’ll be a quarter to a third less of what it was before. And business travel typically has grown in line with the growth of economies and GDPs, and so if you take that into account, I think business travel is never going to recover to more than about half of what it should’ve been. So what it has done is it has done extremely different booking patterns: leisure travel remains strong while business travel will remain half of what it should’ve been.
Omri: What type of technology solutions do you see emerging, specifically in dynamic pricing?
John: The big development here is reacting to existing conditions and becoming more dynamic. For the longest time, the airlines seem to be more e-commerce driven and Amazon-like: being real retailers, controlling inventory and pricing, and this has become a massive imperative after the pandemic, because the booking patterns have completely changed, and the nature of how we hold inventory on the airlines has completely changed, and so the technology now has to be much more dynamic – it’s less business, it’s more leisure.
Omri: Some airlines have been very quick to shift to dynamic pricing models backed by AI and machine learning, while some airlines have been struggling to adapt. Can you elaborate on what you think are some of the barriers that these airlines are currently facing?
John: Like many other industries, airlines have a whole range of cultures – some are more open to new ideas, processes, and technologies. I think LCCs will continue to lead and as Leisure travel grows strongly, the LCCs will benefit, and they’ll have fewer barriers to success. Full-service carriers, on the other hand, can be a bit slower to adopt change. Sometimes, they really require compelling events to change, and they have the traditional barriers of any IT team, like the risk of scalability. These are really big airlines with very high volumes of transactions, and as you look at optimizing pricing dynamically, and as you look at recognizing customer shopping trends dynamically, then that’s a big load. There’s some traditional functionality that they’re always going to want to hold on to, so we need to either work to supply those in a way that they want to use their current processes or have some very new, innovative ways of supplying that functionality.