Airline Ancillaries:What’s Working Today?

WebinarFebruary 27, 2013

Kevin MayTnoozEditor & Moderator

Gene QuinnTnoozCEO & Producer

Shelly TerrySabre Travel NetworkVice President

Panelists

Aldo PonticelliAlitaliaVP, Distribution

Liz MandarinoWorld Travel, Inc.President

Poll no. 1

Poll no. 2

Enabling Airline Merchandising

Shelly TerryVice President, Supplier Merchandising

Confidential - Not for redistribution without Sabre's prior consent.

mer·chan·dis·ing: n. or v.

 the planning and promotion of sales by presenting the right product to the right market at the right time….using attractive displays

[mur-chuhn-dahy-zing]

PRODUCT PLACE PRICE RIGHT CUSTOMER

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Evolution of Airline Merchandising

8

Published Fares

QualifiedDiscounts

PrivateFares

TargetedOffers

PromoFares

Unbundled – Air Extras Bundled – Branded Fares

Buyers:Efficiently Shop, Book & Manage

Suppliers:Grow Revenue &

Differentiate Brand

Attractive Displays

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Classic View – Alitalia Lounge Passes

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Classic View – Alitalia Lounge Passes

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Graphical View – Shopping with Air Extras

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Graphical View – Shopping with Air Extras

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Graphical View – Shopping with Air Extras

Graphical Seat Map – US ChoiceSeats

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15

Branded Fares – Qantas Fare Matrix

Customer Requirements

Desired Content, Comparison

Shopping, Total Price

Corp Travel Policy &

Negotiated Rates

Service Model

Operational Requirements

Front, Mid and Back

Office

Agent Training

Scripts, Automation

Business Model

Airline Contracts

Client Service Fees

Technology Implications

Agent POS

Customer POS (OTA,

CBT)

Automation, Back Office, Reporting

Buyers Evolving Technology & Processes Agencies & technology developers are making necessary adjustments

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Airline Tariff Publishing Company

(ATPCO) Optional Services (OC) data standard enables

significant flexibility and customization.

Standards developed through collaboration with airlines, travel agencies, and technology providers.

International Air Transport Association

(IATA) Electronic Miscellaneous

Document (EMD) delivers efficient,

accurate fulfillment.

Dynamic in nature to meet the evolving needs of the marketplace.

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Leveraging Industry Technology StandardsEnabling broad and rapid deployment of new products & services

Open Travel Alliance (OTA) XML Message Standards provide

structure and interoperability in

electronic messaging between all industry

constituents.

ACCOUNTING

DELIVERY

SELL

CONTENTAIR EXTRAS

BRANDED FARES

AVAILABILITY | SHOP | PRICE

BOOK

FULFILL

ITINERARY | INVOICE

BACK OFFICE

BUSINESS INTELLIGENCE

AGENT

POINT-OF- SALE (POS)

CORPORATE

ONLINE

ONLINE

AGENCY

MOBILE

THIRDPARTIES

ENABLED BYWEB SERVICES

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Fully Integrated Into ANY Workflow

Tnooz WebinarAirline Ancillaries: What’s Working in Today’s Marketplace

Presented by:Aldo PonticelliVice President Distribution, Alitalia

February 27, 2013

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Ancillary distribution through trade decision Check List

BUSINESS

MODELFull Service Hybrid LCC

TECHNICAL COMPETENCE

AND READYNESS

High LowAverage

COMMERCIALSTRATEGY

Unbundling Hybrid Bundling

DIRECT CHANNEL

PENETRATION

20% 50% > 80%

-+

DISTRIBUTION MODEL

Full ContentNO

Commitment

2121

Regulatory and technological scenario

SCENARIO and

PLAYERS

• IATA: − V-MPD target phase out by end of 2013 (IATA StB The road to 100% EMD in BSP);− service booking process definition open to different interpretations (SSR+ASVC or

ASVC) while stricter EMD standard is available (RESO 725G+AIRIMP).

• ATPCO: − detailed standard optional services list available (IATA RP1790); − service codes proliferation.

• PSS / CARRIERS: − Main PSS perform standard protocol ancillary sales on direct and indirect channels:

• different approach for services booking process (Teletype); • standard EMD product (Edifact).

− Some PSS developed API/web services to selectively distribute ancillary contents;

• GDS SSR:− some GDS support SSR ASVC stand alone only; − some other support IATA STANDARD SSR or BILATERAL SSR + ASVC only;− some developed API content feed.

• GDS EMD: some support associated EMD only, others both associated and stand-alone.

• BSP/ARC: support EMD standards (not all Markets have been implemented). • Unique standard service booking process;• Not all DCS ready to fully support EMD;• Interline EMD very complex.

STILL MISSING

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Alitalia ancillary services - strategy and roadmap -

TRADE CHANNEL

• August 2012: First Market/GDS (ExBag/Lounge)• October 2012: Second GDS (ExBag/Lounge/Fast track/Insurance)• March 2013: Third GDS• 1H 2013: Deployment new services (Seats, Meals)

INTERLINE EMD

• Deployment after migration to Industry PSS

• Full service carriers are modifying their business model to compete with LCC and with High Speed train

− unbundling services included in basic fares to better compete on pricing;− offering new services “on demand”;− selling them as “optional”.

COMPETITIVE SCENARIO

ALITALIA STRATEGY

• Pursuing a multi-channel distribution strategy to maximize revenue and availability of ancillary services in all channels.

• Distribution of Ancillary services through Indirect Channel (Trade/GDS), addressed a multitude of users, in low demand market, with current direct sales penetration is considered as more convenient than an alternative policy of content differentiation through channels.

DIRECT CHANNELS

• November 2010: EMD-S and EMD-A for Direct sales• December 2011: Fare quote for ancillary services on direct sales.• February 2012: EMD for WEB extra baggage and comfort seat

350K EMD

2011/12

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Ancillary Services (EMD) Trade - Services deployment 2012 /13 -

Third or additional extra piece

Second extra piece

Excess weight

Excess size

First extra piece

Standard sport equipment

Trip insurance

Fast track (FCO/NAP)

Lounge access (FCO/LIN/TRN/VCE/PMO/CTA/NAP/JFK)

Pre-reserved seat assignment

Meal (celebration & premium)

Phase 2

.

Implemented

Jul Aug Sep Oct Nov Dec Jan Feb MarPhases AprProducts

Implemented

Implemented

Implemented

Implemented

Implemented

Implemented

Implemented

Implemented

Status

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Phase 3

May Jun

Phase 1

Implementation for first GDS

Alitalia, first adopter of new process developed with

Insurance Partner

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Markets

Ancillary Services (EMD) Trade - Markets deployment 2012/13 -Status

Spain

Greece

UK

Belgium

Italy

Israel

Poland

Romania

Argentina

Brazil

Venezuela

Canada

Egypt

USA

Turkey

May Jun Jul Aug Sep Oct Nov Dec Jan Feb MarApr

GDS 2GDS 124

May Jun

Alitalia 2nd adopter worldwide with

GDS 1

Alitalia 3rd adopter

worldwide with GDS 3

Alitalia 2nd adopter worldwide (*) with GDS 2

TBD

TBD

TBD

(*) Between NOT GDS System users

GDS 3

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Ancillary services “Plus”: a win-win-win solution

• Buy in advance. avoid time loss at the airport; . have a larger choice (“first-in: best served”)

• Service follows ticket evolution (changes, refunds,…)• Pay with all forms of payment (cash / credit card / Invoice).

CLIENT

• Agency becomes “one shop stop”.• Channel parity.• Use one system (only GDS iso GDS + BSP Link + side platforms).• Paperless.• Integrated in current settlement system (BSP/ARC).• Integrated back office accounting.

AGENT

• Access to a wider customer market.• Fast growing Service Portfolio enlargement enabled.• Shift effort from Airport to sales process (i.e. excess baggage,…).• Open to all Form of Payment (in the average cheaper than credit card).• Money collection secured in current settlement system (BSP/ARC).• Timely and reliable Revenue Accounting. • Reduced fraud risk.

CARRIER

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“Soft” Critical Success Factors

COMPETENCES Functional and IT Teams must rely on deep process and system knowledge.

PARTNERSHIP “It takes two to tango”:GDS/Airline teams must reach high level of trust/harmonization.

PACE & FOCUS Small teams must work at constant and never-stopping pace.

PROJECT MANAGEMENT Constant and focused project management activity must be assured.

MANAGEMENT Management focus to escalate on possible open issues.

INNOVATION Continuous workarounds needed for a successful deployment.

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And now we focus on Customer & Sales…

Poll no. 3

Tnooz PANEL WEBINARPresented by:

Liz MandarinoPresident, World Travel, Inc.Presented on: February 27, 2013

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How our company has supported this effort: Advocates for public consumers and corporate

clients Attended two DOT meetings along with several

clients Only TMC representing travel community WTI customers only consumers present Panel member with Open Allies at the Press Club

along with our valued customer Darla Montalto, the Travel Manager from MLB

WORLD TRAVEL ACCOMPLISHMENTS

World Travel awareness initiatives for transparency:

Corporate bulletins Newsletters Customer reviews Client symposiums

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AWARENESS & EDUCATION

Transparency is key for corporate travel managers

Identifying total cost of travel All opportunities displayed regardless of

distribution channelContinue to stress importance with airlines and government agencies

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CONTINUED SUPPORT

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Q & A

Thank you!

Send questions to Kevin May, kevin@tnooz.com

Webinar replay and slide presentation available at www.tnooz.com