Airline distribution technology has remained largely unchanged for the past 60 years. We have only seen marginal improvements like the mainframe Passenger Service System (PSS) software being ported to x86 architecture, but still retaining the same high-level architecture and concepts. Despite some evolution, tickets, fares, availability, and all other associated processes, are essentially the same as they were in the 1960s. While six decades ago airlines used to be at the cutting edge of innovation adoption, they are now lagging far behind although technology has transformed tremendously over the past years.
The lack of investment in innovative solutions comes at a big price for airlines and their customers. Booking-centric rather than customer-centric data models and business processes make it difficult for airlines to understand and serve their customers consistently and smoothly throughout their entire journey. This is limiting airlines’ revenue opportunities due to difficulties in key areas:
- Adopting more flexible and continuous pricing
- Expanding products catalogs with more ancillaries, especially non-air
- Delivering more tailored offers
- Applying certain retailing techniques (wide-range shopping & pricing, door-to-door trip building,)
There are extremely complex processes for changing or cancelling existing bookings (voluntarily or involuntarily) and customers have to juggle different references for the same booking. Other limitations such as passenger name restrictions, limited information stored in payment fields, etc. make it frustrating when compared to other industries.
What is the solution? The transition to customer-centric retailing, now known as Offer & Order Management (OOM),is underway. Some of the largest airlines and tech providers are starting to look at how this transition can be handled. The short answer is obvious; the new OOM platforms will have to be deployed alongside the legacy platforms and run side-by-side for a lengthy transitional period, with a near real-time bidirectional synchronization between them.
The transition will be gradual.The PNRs & tickets will remain masters for certain channels, while the new ONE Order/compatible orders will become the masters for the others (gradually, more channels will be shifted from legacy PSS to the OOM platform). For example, we expect direct channels and NDC to lead in the switch to ONE Order, while legacy distribution channels like GDS and traditional interline & codeshare (based on host-to-host links) would remain mastered in the PSS until they are decommissioned altogether.
The main challenge for airlines will be to define and agree on those business processes for which the NDC messages and processes are not yet established, -, such as the future handling of interline. While virtual interlining is providing some lightweight solutions (with significant compromises), the future processes for fully seamless interlining and code-sharing are far from being finalized. This should be treated as a top priority in the coming years because, while GDS can now be expected to be decommissioned within 8-10 years, interlining and code-sharing are at the very core of the full-service carriers' business. In addition, it may soon become the primary obstacle preventing the full transition to ONE Order and decommissioning of the legacy distribution systems.