Skip directly to search

Skip directly to content

 

How Offer and Order Management Systems Are Expanding The Aviation Business Model

 
 

Mobility | Joachim Zintl |
17 May 2023

This piece has been co-authored with Vojin Rakonjac, VP Travel at Endava.

Legacy technologies have served the aviation industry well. Airlines, large and small, still rely on a handful of Passenger Service Systems (PSSs) and Global Distribution Systems (GDSs). These hardy frameworks are based on the EDIFACT communication protocols that were finalised over 30 years ago.

Yet while these technologies have proved impressively robust, they’re imposing an increasingly eyewatering opportunity cost. As profits struggle to rebound from the Covid era, airlines need the tech firepower to implement root-and-branch innovation strategies. But their tech stacks are so old and complex that they turn what should be small feature integrations into open heart surgery.

Until now. A breed of new technologies coming on stream promise to rewrite the revenue streams of the whole industry. Let’s scroll on to take a look at the emerging systems expanding the aviation business model.

WHY IT’S TIME FOR A NEW DISTRIBUTION MODEL

The PSS and GDS that underpin the world’s airlines were designed for a time when travel agents reigned supreme. Holidaymakers would walk into their local travel agent’s office with their destination and travel dates in mind. The agent would then select their flights and book their hotels.

As anyone in the business knows, that’s not quite how things work anymore. 2023’s passengers are more likely to do this all themselves, using flight comparison and metasearch engines to construct their own travel plans tailored to their own needs.

Airlines’ legacy systems offer neither the flexibility nor the data to fully cater to these self-directed customer journeys. Their fare rules limit the ability to implement dynamic pricing and tailor offers to customer behaviour.

PSSs also impose greater complication. The passenger’s ticket is just one of a number of individual documents to be issued. Other electronic miscellaneous documents (EMDs) might  cover baggage check-in, meal entitlements and paid seat reservations.

On top of this, these systems’ obsolete components make expanding the feature set difficult and costly.

It’s much more pleasant not to think about how much potential revenue is being squandered here. But there is no doubt that a new way of doing things is sorely needed. The airline industry needs a distribution infrastructure that breaks away from legacy tech.

This infrastructure will serve connected customer experiences and allow airlines to integrate new technologies as they emerge.

SIGNPOSTS TO A BETTER DISTRIBUTION SYSTEM

The IATA has gone a long way in creating a blueprint here with its New Distribution Capability (NDC). This is a data exchange format based on Offers and Orders management processes. It allows airlines to sell their own goods and services directly to third-parties without intermediaries.

NDC goes hand in hand with another IATA scheme, ONE Order, which will phase out the current booking and ticketing record system. No more passenger name records and other miscellaneous documents - just a single, XML-based customer order.

THE PROMISE OF OFFER AND ORDERS

Taken together, the NDC and ONE Order frameworks have the potential to open many new value channels. ONE Order consolidates all customer data into one record, which airlines can update and monitor in real time.

This move towards Offer and Order management systems (OMSs) will also eliminate the need for reservation booking designators (RBDs). This opens up the possibility of offering individual fares and booking options. Prices will become more dynamic and ancillary packages more bespoke. Airlines will simply know their customers much better.

The NDC’s API integrations also make airlines’ prospects for personalisation and sophisticated retailing a whole lot brighter.

MAKING THE TRANSITION

The IATA is aiming to see 100% Offers and Orders across the aviation industry by 2030. The challenge lies in convincing each airline why they should jettison a PSS they know works well.

Airlines are currently underestimating the commercial potential of these systems - and the retailing they enable. The most recent estimate by McKinsey places this at $7 per passenger. As mounting use cases from early adopters substantiate this figure, more and more brands will get onboard.

In the medium term, airlines ought to anticipate some wider technical challenges in making this transition. Orders-based systems will, for a time, co-exist with legacy environments. To maintain safety standards, changes on the Orders side will need to be reflected in the PSS. Similarly, upgrading Revenue Management systems to handle RBD and non-RBD functionalities at once will require time and investment.

THE NEW PROVIDER ECOSYSTEM

PSS providers will inevitably feel threatened by the redundancy of their core products. Some, such as Sabre, are already expanding their wheelhouses to handle ONE Order systems. Yet enthusiasm among this sector will likely remain muted.

This opens up space for a new stable of aviation IT service providers. Some of these companies may have prior PSS experience, while others will be pure-play NGD providers. If these second-row providers can offer a diverse set of systems, such as revenue management and departure control, so much the better.

A SOFT LANDING FOR INNOVATION

These systems could herald a boom in aviation industry growth. But this can only happen if airlines are prepared to take them on. Order-based technology is now mature enough for airlines to start the transition without fear, aided by emerging providers.

In a recent podcast, our enterprise innovation experts spoke in depth about data-driven strategies for airlines to modernise their digital infrastructure. Want to know how to upgrade your systems without pressing pause on day-to-day operations? Listen to it here.

Joachim Zintl

Consultant, Aviation

Joachim’s wide-ranging experience spans over 30 years in the travel and airline industry, with a particular focus on all aspects of global distribution, financial and operations. Alongside his work as CEO and founder of TailWind Airline Consulting, he advises Endava on our aviation service strategy.

 

Related Articles

  • 17 May 2023

    How Offer and Order Management Systems Are Expanding The Aviation Business Model

  • 23 November 2022

    5 Things We Learned at World Aviation Festival 2022

  • 25 October 2022

    How Technology Can Help Monitor the Circular Economy

  • 18 January 2022

    An Introduction to Mobility as a Service in the US

  • 11 May 2021

    Phygital in Automotive: Bridging the Gap Between Physical and Digital – Part 2

  • 20 April 2021

    Phygital in Automotive: Bridging the Gap Between Physical and Digital – Part 1

  • 03 December 2020

    Trends in the Automotive Industry for 2021

  • 03 November 2020

    Digital Challenges and Chances in the Automotive Industry

Most Popular Articles

IN-AI-ENABLE RIGHTS: DO WE HAVE THE RIGHT TO STYMIE THE DEVELOPMENT OF ARTIFICIAL INTELLIGENCE?
 

Insurance Insights | Kevin Crawford | 02 June 2023

IN-AI-ENABLE RIGHTS: DO WE HAVE THE RIGHT TO STYMIE THE DEVELOPMENT OF ARTIFICIAL INTELLIGENCE?

The Time Is Now to Start Thinking About Real-Time Payments
 

Payments | Monica Velez | 31 May 2023

The Time Is Now to Start Thinking About Real-Time Payments

An Anatomy of the Data-Driven Retail Supply Chain
 

Transportation & Logistics Insights | Jeremy Eaton | 25 May 2023

An Anatomy of the Data-Driven Retail Supply Chain

BNPL Regulation to Protect Consumers and Control Third-party Lenders
 

Banking | Annmarie Mahabir | 23 May 2023

BNPL Regulation to Protect Consumers and Control Third-party Lenders

How Offer and Order Management Systems Are Expanding The Aviation Business Model
 

Mobility | Joachim Zintl | 17 May 2023

How Offer and Order Management Systems Are Expanding The Aviation Business Model

Salut! I’m Adriana Calomfirescu
 

Meet the SME | Adriana Calomfirescu | 16 May 2023

Salut! I’m Adriana Calomfirescu

Hi, I’m David Boast
 

Meet the SME | David Boast | 15 May 2023

Hi, I’m David Boast

The Business Impact of Fan Engagement: How to Leverage Technology to Improve Loyalty
 

Innovation | Robert Milner | 12 May 2023

The Business Impact of Fan Engagement: How to Leverage Technology to Improve Loyalty

Staying Relevant – Why Merchants should Embrace Alternative Payment Methods
 

Payments | Steven Purton | 09 May 2023

Staying Relevant – Why Merchants should Embrace Alternative Payment Methods

 

Archive

  • 02 June 2023

    IN-AI-ENABLE RIGHTS: DO WE HAVE THE RIGHT TO STYMIE THE DEVELOPMENT OF ARTIFICIAL INTELLIGENCE?

  • 31 May 2023

    The Time Is Now to Start Thinking About Real-Time Payments

  • 25 May 2023

    An Anatomy of the Data-Driven Retail Supply Chain

  • 23 May 2023

    BNPL Regulation to Protect Consumers and Control Third-party Lenders

  • 17 May 2023

    How Offer and Order Management Systems Are Expanding The Aviation Business Model

  • 16 May 2023

    Salut! I’m Adriana Calomfirescu

  • 15 May 2023

    Hi, I’m David Boast

  • 12 May 2023

    The Business Impact of Fan Engagement: How to Leverage Technology to Improve Loyalty

  • 09 May 2023

    Staying Relevant – Why Merchants should Embrace Alternative Payment Methods

  • 02 May 2023

    How IoT is Changing Insurance

  • 26 April 2023

    A Veteran Game Developer's Perspective on Tool Development

  • 24 April 2023

    How Digital Ecosystems Enhance the Healthcare Experience

  • 21 April 2023

    Green machines: how tech can help companies hit Net Zero targets

  • 20 April 2023

    The Role of People and Technology in the Future of Underwriting

  • 19 April 2023

    Media 2030: Why Advertisers and Publishers Are Racing To Find New Strategies

  • 18 April 2023

    Alright, I’m Adrian Sutherland

  • 14 April 2023

    How Synthetic Data Could Solve The Patient Privacy Dilemma

  • 11 April 2023

    Payments makes the world go round! How banks can get creative

  • 06 April 2023

    Higher Fidelity: Good Outcomes and Harnessing the Challenge of FCA's Consumer Duty

  • 05 April 2023

    AI in Pharma: How Machine Learning is Revolutionising Every Step in Drug Development

  • 04 April 2023

    Hello! I’m Leane Collins

  • 31 March 2023

    The Dos and Don’ts of Successful Carve-Outs in Private Equity

  • 30 March 2023

    Cage of Reason: FCA's new Consumer Duty heralds the rise of the 'Reasonable Insurer'

  • 28 March 2023

    A legal view on the ownership and future of AI-generated works

  • 24 March 2023

    Championing Women in Tech

  • 23 March 2023

    5 Ways Capital Markets Firms Can Ensure Resilient Operations to Improve Credibility and Efficiency

  • 15 March 2023

    Buenas! I’m Leticia Chajchir

  • 14 March 2023

    4 Ways to Improve Customers’ E-Commerce Search Experience

  • 28 February 2023

    4 Healthcare Innovations That Can Benefit People and Profit

  • 21 February 2023

    Hey, I’m Lewis Brown

  • 17 February 2023

    Top Considerations for Financial Services Providers Entering the Cross-Border Payments Space

  • 13 February 2023

    Better Together: Harnessing the Power of Digital Ecosystems

  • 09 February 2023

    What to Include in a Customer Re-Engagement Content Library

  • 07 February 2023

    Supercharging Wealth Management with Hyper-personalisation

  • 02 February 2023

    How Innovating the Insurance Customer Journey Creates a Competitive Advantage

  • 30 January 2023

    G’day, I’m David Marsh

  • 26 January 2023

    Empowering Underwriting and Unlocking Revenue with Legacy Insurance Data Sets

  • 24 January 2023

    Four Stakeholders Who Win the Most When Healthcare Innovates

  • 23 January 2023

    Journey to the Centre of the Cloud with AWS – Part 3

  • 20 January 2023

    Journey to the Centre of the Cloud with AWS – Part 2

  • 18 January 2023

    Journey to the Centre of the Cloud with AWS – Part 1

  • 17 January 2023

    The 4 Most Common Mistakes in Retail Site Design

  • 13 January 2023

    Boost and bolster your innovation. Three tips to help get it to the next level.

  • 10 January 2023

    5 Questions in Smart Energy That Will Define the Net Zero Transition

We are listening

How would you rate your experience with Endava so far?

We would appreciate talking to you about your feedback. Could you share with us your contact details?