EConference DPeller ITA 0905 Public

Slide1: 

E Conference Redefining airline distribution David Peller, ITA Software, Inc. Senior Director of Worldwide Business Development dpeller@itasoftware.com Frankfurt – September 29th/30th 2005

Introduction to ITA Software: 

Introduction to ITA Software Founded in 1996, now 160+ employees Launched QPX Airfare Pricing & Shopping System with Orbitz in 2001 QPX now established as a leading international pricing and shopping system, with: Airlines incl. Alitalia, American, Continental Distributors incl. Orbitz, Disney, LibertyGoGo GDSs: Galileo’s online/offline agencies QRS introduced as a low-cost GDS-alternative system; ARS under development

From this…: 

From this…

And this …: 

And this …

To this …: 

To this …

The end of an era?: 

The end of an era? Content is becoming increasingly more fractured Most LCCs do not participate in the GDSs Many non-air products not available through GDSs Agents becoming used to finding and booking content through other sources / channels Airlines are under significant economic and competitive pressure Yields / fares are falling Costs not falling proportionately (esp. fuel) GDSs continue to increase charges Increased competition from LCCs and reinvigorated airlines (Chapter 11) Airlines are beginning to regain controls of their channels and lower their dependence on GDSs GDS deregulation in North America (Europe?) Ending of DCA3 agreements

Why the focus on distribution costs?: 

Why the focus on distribution costs? Source: US DOT, 08/2004

Airline distribution costs: 

Airline distribution costs

Focusing on distribution costs: 

Focusing on distribution costs Airlines have already Attacked staff costs, benefits and pensions Outsourced certain operations Reduced in-flight amenities – meals, pillows Introduced charges for ‘high touch’ bookings And they’re still losing money It was only a matter of time before airlines addressed their very high costs of distribution and a technology alternative emerged GDS alternatives – with fundamentally different economic models – have been created

Emergence of the GNEs: 

Emergence of the GNEs So called ‘GDS New Entrants’ (GNEs) have emerged with technological and economic advantage Modern technology enables enhanced functionality – for travel suppliers and distributors – at a fundamentally lower cost Unburdened by legacy processes and business practices, GNEs provide genuine and credible alternatives to the existing distribution model Airlines can use effective channel management – ensuring their most competitive fares/products are available through the lowest cost channels

GNEs’ capabilities: 

GNEs’ capabilities Pricing and shopping, booking and ticketing, without the involvement of a traditional GDS Creating and maintaining the control PNR Maintaining own e-ticket stock Using industry standard communication protocols to support transactions with airlines’ inventory systems Such as sell/cancel, ticket/void, refund/exchange, upgrade requests, frequent flier, seat selection/seat maps, SSRs/OSIs, FLIFO

ITA Software’s capabilities: 

ITA Software’s capabilities ITA Software has built, from the ground-up, a modern GDS alternative / bypass To price and shop, book and ticket airline inventory, without any traditional GDS involvement Incorporating ITA Software’s proprietary, industry leading, pricing and shopping system (QPX) Built using current technology standards and running on PCs; connected to airlines using EDIFACT and AIRIMP Supporting credit / debit card processing; ARC and BSP settlement; BIDT and TCN data; and MIR data for agency hand-off Supplied with multiple interfaces to support agency connectivity, integration and adoption

Changing channels: 

Changing channels 38%+ of total US airline bookings now online In the US, carrier.com now competes effectively with the OTAs (59% : 41%) Shoppers ‘look’ on OTA sites but book on airline sites, particularly as airlines improve their shopping engines European online travel market growing fast: European online travel market estimated at €19.5bn (2004), ~50% growth over 2003 Projected to grow to €27.3bn (2005), ~40% growth Source: PhoCusWright

Driving direct distribution: 

Driving direct distribution

Driving online adoption: 

Driving online adoption Source: Continental Presentation ATW Annual Conference Washington DC, February 2005

Driving online adoption: 

Driving online adoption Source: Continental Presentation ATW Annual Conference Washington DC, February 2005

US majors – internet sales: 

US majors – internet sales

The key to successful online sales: 

The key to successful online sales Airlines have grown direct online sales by: Enhancing the user experience Making their web sites more straightforward / easier to use Providing improved functionality / features and a variety of self-service tools Backing-up their sites with ‘best fare’ guarantees Encouraging direct sales with bonus miles and other ‘soft dollar’ benefits, while levying charges for call center bookings {some OTAs charge ‘booking fees’ making them less competitive against airlines’ own web sites}

The key to successful online sales (cont.): 

The key to successful online sales (cont.) Successful direct online sales are being driven by modern, flexible pricing systems, enabling customers to find products (fares / schedules) that meet their need ITA Software’s QPX is the leading such system: Prices and compares all relevant itineraries, across your entire network – online and interline, alliances and code shares partners Any number of segments / itineraries can be fully priced Handles all passenger types / classes of service (incl. mixed class of service) One-ways, round-trips, multi-stops Processes multiple faring strategies Full integration of any number / type of private fares Processes any applicable POS restrictions Supports all IATA checks with carrier exceptions

Calendar shopping: 

Calendar shopping

Calendar shopping: 

Calendar shopping

Simple upsell: 

Simple upsell

Frequent flyer shopping: 

Frequent flyer shopping

Cross-shopping / Flexible searches: 

Cross-shopping / Flexible searches

Success online – using QPX: 

Success online – using QPX Source: Alitalia Presentation IATA Information Management Conference Athens May 2004

What’s next?: 

What’s next? At the heart of airline distribution is the host inventory system and the features/functionality supported IT costs associated with legacy hosting / reservation architecture are high Current systems do not provide modern interfaces that customers demand and employees expect Inflexible systems – hard to maintain / improve Transaction oriented systems do not easily support product-based or customer-centric views Systems were not built to meet current user demands – web sites, screen scrapers and more Legacy systems do not exploit low-cost, scaleable technology or modern web-based economics

A modern ARS: 

A modern ARS ITA Software is designing and building a modern airline reservation system: Leveraging low-cost, high performance, scaleable technology (commodity PCs, XML, TCP/IP) Providing a modern, flexible inventory control system supporting current products, while enabling new / innovative products to be created, managed and sold Web-based departure control system to provide unparalleled customer service – focused on self-service and advanced capabilities for re-seating and re-booking Integrated with ITA Software’s distribution system and pricing & shopping system  providing a low-cost, modern, integrated technology platform for airlines

Slide28: 

Thank You!