Airlines adjust as distribution “tsunami” approaches

The nature of airline distribution will fundamentally change in the coming years, as factors including API connectivity and Google have a major impact the sector, delegates at the CAPA Airline Leader Summit have heard.

In a panel discussion at the Dublin event, CNN anchor Richard Quest warned that a “tsunami is coming”, but that no-one knows from which direction.

Ian Heywood, Travelport’s global head of product & marketing for air commerce, stressed the importance of API distribution, which he said would bring “huge benefits to airlines”. But at present, traditional airlines, which need to transition away from their old distribution methods, are way behind the curve compared to low-cost carriers, who have used APIs since the start.

“An API enables you to earn more revenue, to personalise offers, differentiate between people and agents, and dynamically return fares,” said Heywood, adding that using APIs would allow carriers to make “significant progress in increasing sales”.

Travelport currently has API connections with 25 airlines, but Heywood warned that the industry’s transition process “will take a long time” and that some airlines are reluctant to start. “[It] involves changing whole distribution and sales structure,” he said.

But while Heywood said that airline distribution was in a process of “evolution”, CarTrawler’s chief technology officer, Bobby Healy, warned of a potentially seismic shift in the sector.

Google Flight Search, he asserted, has the potential to harm airlines and even “wipe out” rival online travel sites. As it increases its share of the market to “critical mass”, Google Flight Search will have a shattering impact travel planning sites, meta-search companies, online travel agencies and even airlines’ own websites, he predicted. Once it has achieved this, he added, the fees for displaying air fares on Google Flight Search will rise.

And while he admitted that Google Flight Search was a “good product”, he told the assembled airlines that they are contributing to their own downfall by providing their data to Google.

“Google has more access to customer insight and data than airlines will ever have, and their ability to engineer new products is faster than ever seen.” Healy said. “[But] airlines are willingly giving Google real-time data.

“Right now airlines get a free ride from Google. They don’t see the tide [coming]. But the cost will come,” he added.

All parties agreed however, that airlines can brace themselves for these waves by collaborating as an industry. Heywood said the shift to API distribution “needs to be a collaborative effort between all players in the industry, particularly travel agents”.

“We need to talk about it and plan, but this isn’t happening at the moment,” he added.

Healy warned that stopping Google Flight Search would not be easy, but that steps could be taken. “Don’t let Google have your data unless it’s on your terms. Be vocal, lobby and add your voice to lobby groups,” he advised.