A MAGAZINE FOR AIRLINE EXECUTIVES 2009 Issue No. 2

Planning departments follow industry best practices to compete

Global carriers take various steps to remain in the black

Air Malta makes big changes across entire organizations

11 20 46

A Conversation With … Dave Barger, President And Chief Executive Officer, JetBlue Airways, Page 14.

T a k i n g y o u r a i r l i n e t o n e w h e i g h t s

Happy Jetting

© 2009 Sabre Inc. All rights reserved. wearelistening@sabre.com

Stay Tuned To That Channel

ZUJI helps Asia/Pacific carriers extend their online booking capabilities well beyond direct flights, enabling them to add a hotel and/or package travel booking capability to their direct sites.

By Kim Stockham | Ascend Contributor

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By Kim Stockham | Ascend Contributor

While the Asia/Pacific region is still grap-pling with the global financial crunch, some travel companies are working

more closely with airlines than ever before to help innovate and stimulate sales with: Cost-effective online distribution and mar-

keting options that have a wider consumer reach than ever before,

New revenue streams for airlines where hotel booking channels come to airline Web sites.

Asia/Pacific is a volatile region for travel even in the best of times, with health and political uncertainties regularly changing the travel landscape. Short-lead flight bookings of only days or weeks are also “the norm” for this region.

Asian-based travelers have always kept a close eye on their purse strings when it comes to travel, but they’re cutting the total cost of a trip like never before in this current economic climate. They’re tak-ing fewer and shorter trips to predominantly short-haul destinations as well as trimming travel spending by choosing economy over business class. And, at times, they are fly-ing with a low-cost carrier alternative to a traditional network airline.

While airline capacity is currently fair-ly stable in the region, load factors are an issue and yields are often poor. The hyped regional growth of air travel in Asia has cur-rently stalled, and the once-full Asian travel “rice bowl” is now a much smaller meal.

It’s not just airlines hurting. Hotels are hurting, too, because as well as looking for cheaper ways to fly, people are also cutting back their spending when they get where they’re going. Gone are the days of a midnight snack from the hotel mini bar and large food and beverage spending at the hotel. This is dramatically reducing revenue per available room, or revPAR, for hotels.

Many airlines have, and remain, focused on revenue-raising and cost-cut-ting initiatives to get through these tough times for travel, and some are strategically thinking outside the box to adapt to the new reality of travel. Some of these actions are extreme and reflect the chaos of the industry today. Others are less headline-grabbing, but in themselves are innovative solutions in challenging times designed to drive flight sales and supplement core revenue streams.

A climbing trend for airlines in the region is the addition of new products that lead to additional revenue streams. Airlines are extending their product portfo-lios beyond direct-flight sales by introduc-ing third-party relationships, technology and certain products on their sites. In a way, it’s an all-care-no-responsibility approach where the third party retains and serves the customer

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and the airline takes a cut of the sales generated from its site.

Innovative online marketing placements and techniques are also tapping into the cre-ativity of the industry and reaching audiences actively buying travel via the Internet.

ZUJI, a TravelocitySM-owned online travel company and brand that has online travel sites spanning the Asia/Pacific region, has evolved

to become a driving force for innovation and positive change.

This evolution of the online channel can ensure a cost-effective distribution option for flights, when considering that online travel agents, or OTA, distribution decreases the airline’s internal servicing costs at the same time as extending consumer reach. Beyond this role, ZUJI extends the bounds of a traditional

airline/agent relationship to become something even more mutually rewarding. ZUJI’s online prowess in Asia/Pacific, and Travelocity lineage, ensures that various online services for airlines are now offered, with even the online distribu-tion channel now being able to serve airlines in more creative ways.

“In the early days of online travel in Asia/Pacific, no one really knew the potential or how the growth of online bookings would pan out,” said Roshan Mendis, president of ZUJI and regional vice president of Travelocity for Asia/Pacific. “ZUJI played an important role in introducing some Asia/Pacific-based airlines with the opportunity of online distribution in the region as well as globally. Over time, we’ve grown and changed, alongside airlines, which have introduced more and more complex direct-booking functionality to their Web sites. Online distribution and marketing offers airlines great flexibility and fast reaction time to tweak the message or the offer, based on consumer book-ing response.”

As more low-cost carriers launched in Asia, with their predominantly online, direct booking models, the tide really turned toward online travel, and it gained the groundswell of support that continues today, just six years after ZUJI’s launch in Asia/Pacific.

Most Asia/Pacific airlines now embrace the multi-distribution model, including direct bookings as well as offline and or OTAs. A fairly recent trend has been the move of LCCs to the OTA mix as they look to extend their reach, maximize their marketing dollars and gain a foothold in new markets.

National carriers now sit alongside Jetstar Airways, Jetstar Asia, IndiGo and SpiceJet in the mix of online travel agent offerings on ZUJI, as the benefits of regional and global marketing and distribution are recognized by all airlines.

The next step in the evolution is for airlines to work closely with OTAs, such as ZUJI, to extend their product base. Known as “private” or “white label” hotel booking sites or engines, they’re the next trend of airline online development. ZUJI can connect its hotel port-folio to airline sites as a business-to-business relationship.

ZUJI can provide advice, technology, logistics and global hotel product to airlines, enabling them to add a hotel and/or package travel booking capability to airline-direct sites. Airlines do not have to significantly invest in technology development or build direct hotel relationships in house because ZUJI provides this as an outsourced service as part of the rela-tionship, and ZUJI also manages the customer service elements of a hotel booking.

Depending on the level of complexity the airline seeks, adding hotel bookings as a service to direct airline customers can be as simple as adding a plug-and-play link to an airline-branded white label site, where the airline then gains revenue from every hotel booking made on

ThemajorityofAsia/Pacificonlinetravelersshoparoundusingnumerousonlinesites,aswellassocialnetworkingsites,priortobookingatrip.Asaresultofthistrend,ZUJIlaunchedRateFinder,designedtohelpcarriersgaintravelerinterests.

PartneringwithZUJIenablesairlinestoincludeahoteland/orpackagetravelbookingcapabilitytotheirdirectWebsiteswithoutasubstantialtechnologyinvestmentortheneedtoestablishdirecthotelrelationships.

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Photo supplied by Jupiter Images

Photo supplied by Jupiter Images

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that site. More complex solutions offer custom-ized packaging between the airline’s flights and hotels for each destination.

“Adding hotel bookings to an airline port-folio opens a new ancillary revenue stream for airlines,” Mendis said. “The booking technology can be as customized or as out of the box as suits an airline needs and can offer everything from stand-alone hotel bookings to integrated, dynamic package bookings. These allow travel-ers to choose from the airline’s flight options and add a hotel to create a package holiday online. In this case, only the airline partner flights are shown.

“All hotel-only or package bookings can be made online as a link from the airline’s direct Web site, and the hotel or packaging site can be customized to have the airline’s preferred look and feel as well as site copy. ZUJI manages the technology and back-end and client service, all of which is opaque to the consumer. Generally, ZUJI pays the airline commission on sales or visitor targets, therefore creating a new revenue stream for the airline. It’s an approach that turns the traditional supplier-distributor relationship sideways for the benefit of all: travelers, air-lines, ZUJI and the thousands of global hotels,” Mendis said.

ZUJI’s partner network team works with Virgin Blue (for the delivery of www.BlueHoldays.com packages travel: matching Virgin Blue and its sister airlines with hotels), and Jet Airways (for the delivery of an online hotels solution). There is opportunity for all airlines with an online presence to follow suit.

Beyond working with airlines to extend their product range, ZUJI is also working to drive more airline bookings from its core platforms. The recent introduction of ZUJI’s “TripSaver” technology now offers an opaque way for airlines to market and promote their product to travelers as part of a package. Consumers do not see component pricing for the fare component, but instead design a short break comprising flights and hotel accommodations online and see a total package price. This dynamic-packaging feature was introduced as part of ZUJI’s ongo-ing investment in serving suppliers and travelers great online travel experiences.

Further, ZUJI’s brand new calendar shop-ping feature for flights also gives airlines a new way to highlight their weekday, alternate day and off-peak travel flight options (where fares may be cheaper and more appealing to travelers with flexible travel plans) across a seven-day view on most ZUJI sites.

Savvy marketing is also playing a role in helping capture the limited consumer travel spending.

The distribution side of ZUJI’s business is also changing to meet a new environment for travel and changing travelers. ZUJI offers inte-grated online campaigns on ZUJI sites, which offer a much more compelling proposition for consumers than static ads. This enables airlines

to raise awareness of their brand, destinations and fares as well as stimulate new demand.

ZUJI is also embracing new marketing channels and actively promotes deals and pro-motional placements beyond its members to social media sites, including deal “tweets” and Facebook fare updates to a growing band of followers. The result is a multi-faceted approach to promotions that airlines on ZUJI can utilize to their best advantage.

“Most Asia/Pacific online travelers now visit many online sites before booking a trip,” Mendis said. “They visit social networking sites to find opinions about travel, OTA sites, such as ZUJI, as well as supplier sites. In recognizing this shopping-around consumer behavior occurs, we’ve just introduced another new and innova-tive way for airlines to capture traveler interests to specific third-party travel sites when they leave our site. We call it ‘RateFinder.’”

ZUJI actually encourages visitors to look at other OTAs and even an airline’s direct site while researching a trip. That offers another new and opportunistic way for airlines to capture highly qualified consumer traffic coming from one of ZUJI’s sites. While initially it sounds a little counter-intuitive, it’s actually a clever way to capitalize on a behavior that already exists, to the benefit of savvy advertisers, offering a win-win for ZUJI (realizing people shop around anyway) and airlines (that have the opportunity to capture the traffic coming from a ZUJI site).

Another facet to the ZUJI Partner Network is the additional distribution for airlines that comes with extending the business-to-business distribution of flights to hoteliers.

One recent example of this is Taj Holidays, which is working with ZUJI-owned Travelocity India on a new booking site called Fly-N-Stay. Further, non-core travel sites, such as BigPond.

com, Australia’s largest telecommunications company and network, and Yahoo!, also work with ZUJI to deliver travel channels that extend the audience reach and booking potential for all ZUJI suppliers.

While airlines originally worked with OTAs such as ZUJI to establish relationships that mimicked the historic relationships they’d had with offline travel agents for distribution, today, the interconnectivity is multi-tiered and mutually beneficial. Behind the scenes, ZUJI manages highly complex technology to ensure innovative and lucrative travel connections for the industry as a whole.

“ZUJI can offer suppliers much more than a one-way conversation,” said Mendis. “The opportunities for innovation are many and varied. From new hotel booking channels on an airline Web site to extended airline distribution on our partner sites and even creative market-ing opportunities, the opportunity exists for real and tangible value to the bottom line and better customer relationships ahead.”

Beyond ZUJI opening the door for hotel bookings from airline sites, advanced Web tech-nology from Sabre Airline Solutions® is helping more and more airlines have their own direct reservations functionality (enabling them to reap some of the benefits of in-house bookings alongside agency distribution). Online-direct and OTA distribution now work hand in hand for air-lines. a

Kim Stockham is director of corporate affairs for ZUJI Asia/Pacific. She can be

contacted at kim.stockham@zuji.com.

Travelocity-ownedZUJIpartnerswithAsia/Pacific-basedairlines,broadeningonlinebookingcapabilitieswellbeyonddirectflights.Theonlinetravelcompanygivestheregion’scarrierstheabilitytoaddhoteland/orpackagetravelbookingcapabilitytotheirWebsites.

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Photo supplied by ZUJI