IBE Report Podcast

[Music] Hello and welcome to the latest edition of T2RL Talks. And today in the studio with me, I have Amanda Campbell, who is now I think becoming a fairly familiar voice on these podcasts. And we have a very special guest in Surgeon Prokage, from Air Serbia. Air Serbia is perhaps not as well known amongst our audience as some of the airlines we talk about. And I'm going to ask Surgeon just to introduce Air Serbia briefly in a moment. What we're here to talk about today is the market for airline online direct sales. We fairly recently published our market survey of the vendors, of technology that supports airline direct sales. And we're struck by the way in which the market for airline booking engines has evolved over the last 30 years, since the first online bookings were made by British middle and airlines in 1996. So without further ado, let's just introduce Surgeon and maybe talk a little bit about Air Serbia, set it in context. Where are you, what sort of markets do you serve and what's the outcome for Air Serbia right now? Sure, hi, Amanda. Thanks for having me here. It's a great pleasure. I'm head of e-commerce of Air Serbia, been in a company for the last seven years, did many interesting projects. And shortly about Air Serbia, we are actually quite old company, even maybe we are not known for, like you know, many of your listeners. So company will turn 100 years actually next year in 2027. It started as a Iroput or in English Airway, then it transferred to Yat, Yugoslavia Air Transfer Company. And then Air Serbia. We were in a line sweet tight hug for around 10 years. And since the last two years, we're actually here in a half. We are completely state on company. Company is just briefly like, you know, to tell you growing from year to year, last year we had a more than four and a half million passengers. We are hoping to reach 5 million this year. We are expanding like, you know, every year we are adding like, you know, around 10 new destinations, mostly serving Europe destinations. We are also flying to China. Two cities in USA, Chicago, New York. We have just launched or we are about to launch the flights to Toronto in Canada. We launched the flights, direct flights to Baku and like, you know, many, many, many other destinations. So, yeah, that's it short. And from a technology perspective, going back to the days of Yat, Air Serbia has a rich technological heritage. And in fact, you used to run your PSS in house based on on Unises hardware. Yeah, that's actually was a surprise for me since I'm relatively new in the industry and in the company for just about seven years. And just a few weeks ago, my colleague from PSS showed me the manual for all the ad reservation system. And like, you know, we quickly went through it and like, you know, just remember how actually advanced it was for its time. Of course, like, you know, then we had some issues. It was probably I'm guessing hard to maintain, like, you know, huge internal IT team could keep developing that. So after that, we moved to Amadeus, used it for probably several years. And once we joined that, it had a lens. We moved to Saber, like every other airline that was part of a lens. And we can like, you know, kind of more tightly integrate with other partners in the lens. Okay. And just on a personal note, we were saying before we started recording that I had the privilege and pleasure of visiting yet. And they're in in house PSS setup in the late 1990s. And very impressive. It was too. Amanda, we've just published the outlook for airline direct sales. And once again, we see that the market broadly speaking is split about 50 50. So airlines across the world, taken on average are doing about half of their business in direct channels and half in indirect channels. Am I reading that right? Yeah, absolutely. I think the variations are like 1% plus or minus over the last few years, certainly since 2022 anyway. I think what shifts that we do see is very much in terms of the business model mix in the industry. So for example, if we see a lot more local carriers flying, for example, then the market share the PBs that they carry will have an impact on the market share. If there's more network airlines flying PBs, then we see that the mix change. So it's been very, very stable after the last few years, absolutely. Yeah, and we still see some regional variations. I think some regions are a little bit more likely to go direct than others. Asia Pack is the one I'm thinking of that is probably a little more indirect at the moment. Yeah, I think Asia Pack for a lot of reasons are probably favoring the indirect channel. There are a lot of full service carriers in that particular area. There's a lot of partnerships as well, which the GDS relationships are very conducive to supporting. There's a lot of O and D journeys and so forth. So yeah, just generally it's an area that's very conducive to indirect sales. Okay, and in terms of where the technology is coming from, still more than a third of the market by passenger volumes is developing their online booking solutions in house. But surgeon despite the despite the heritage at SBA, you've very much gone with the online booking solution from your PSS vendor from Saber. Yeah, actually, we are taking hybrid approach that you like, you know, really nice, nicely described in your report. And I was quite surprised that there is so many airlines that are building something in house or something custom with their partners. So we are actually taking hybrid approach on the web. We are using the Saber digital experience, which is part of Saber sonic solution, I be. And for our mobile app, we have joint forces with one of our partners, it's company IAR that is famous in checking world and more ever that is kind of famous in in their new accounting management. We build a retail retail app basically for booking tracking and all the support services they were looking for a partner, we are looking to build the app from scratch, so we joined for this and build something custom. Yeah, so sorry, I didn't interrupt you. No, no, no problem. No problem. I will just like, you know, maybe tell you a little bit about each of those platforms that we are using. So on web, I would say that like, you know, the solution that we have, like, you know, premade by big vendors is quite good because like, you know, it's a low risk. It's like, you know, developed like, you know, on a defined cadence with other partners. There is a like, you know, predictable roadmap. And of course, it's supporting like, you know, many airlines services, bundles. But I would say that most important feature and most valuable feature is that two years ago, we have added the dynamic pricing and the name availability to to our booking engine. And that has made us very competitive on the market, but that also created some challenges because pushing this dynamic price is that are available on your direct channel is actually not easy, like, you know, to to other, let's say acquisition channels like meta searches, for example, that are quite quite important for each airline and where we are competing with the TAs. So what we have did is actually we have built the custom direct feed for one of the big OTAs. While the other big ones are using actually static prices filed in 80 pico and then like, you know, using availability messages to construct prices. And what we saw is that the meta searcher having direct dynamic pricing feed is actually having a double conversion rate compared to those core using a Tp of prices. So for us, like, you know, now it's very important to try to push this dynamic prices to as much meta searchers as we can. And also thinking about, like, you know, how will we push this to AI agents that will most likely become like, you know, the new meta searches, like, you know, some places where people will discover flights, plan their trips, compare prices, airlines and offers. So. Right, I mean that's something really, really interesting and and I suspect we would see it reflected across other airlines as well which is that where you're able to push your dynamic pricing into the market, you're seeing tremendous return on that investment. Yeah, Amanda, just picking up on some of that and in the report that we've published recently we've given a little bit of a historical summary of where this market has started and where it's come from and and if we look back 30 years I know you're far too young to remember that but if we look back 30 years and ibe was really just a simple user interface that enabled the PSS to be exposed to bookings on the internet but nowadays ibe's I'm not even sure we should still be using that term because we've got really quite sophisticated integrated sets of of utilities that are part of the online booking experience and and the things that surges describing where yes we've got a vendor that we're working with for mobile and and we're working with Sabre for the main ibe but then we're doing dynamic pricing so that's increasingly common these days in the world of online bookings isn't it? Yeah it's actually hard to know where the ibe starts and where it stops these days and when I first started working in the industry it was very much was very much like the orchestration layer then plus the front end. Do you know and the some of the logic the shopping logic, the pricing logic and all that was being done in the actual you know ibe itself? Now it's absolutely complex and just knowing like you know with someone doing the front end differently someone doing the orchestration differently you know it is all changing and I think we've had conversations about it before you know I think it's going to go full circle as well as as we move towards OOSD and the integrated core systems that have built on the newer technologies a lot of the power will be in that essential technology stack and that the ibe itself will again be like a thin client sitting on that stack a little bit like it was you're back in the day or when we first had websites selling tickets where it was just a window into the pss that's basically what the ibe was so I think we're going to go we're going to go full circle in it's a very interesting space but very very complicated. Yeah and I think what we're seeing is airlines who are at the leading edge of some of these developments are looking to create an offer management solution which can then be rolled out in any channel whether that is they're indirect channels using NDC or in some cases a proprietary API or whether it's the direct channels they're mobile channels but essentially I think airlines want the answer to be the same however the customer is coming to them so let's think about one of the one of the buzzwords of today and I think it's been mentioned already AI we're hearing an awful lot about agentic AI and about how maybe agents artificial intelligence agents are going to step into the distribution chain and maybe display some of the existing players or maybe augment them. surgeon are you actively developing solutions either using AI or designed to interface with AI in Serbia? we are definitely working on that scanning market talking with a lot of potential vendors like you know maybe even planning for some proof of concept projects. Like you know very very I would say early and hard to integrate AI and to achieve what actually Amanda was describing like you know how to unify the whole experience like you know not just have let's say I be as a transactional layer and then when you go to let's say submit the claim that's a totally different app that doesn't know what you booked like you know and like you know your history if you're maybe high value loyalty a member that maybe should be treated differently than someone who just like you know sporadically travel with us so like you know the issue is actually the AI is pretty advanced like you know it can on orchestras understand a lot of data but like you know the connection part airlines still don't have these MCP layers that can connect to PSS to let's say claim systems to DCS like you know and many other systems that are involved in in whole customer journey. So I'm thinking that's that's the biggest challenge they are we are facing right now and probably to have like you know the AI experience that we are imagining we need to have some orchestration layers that will help AI on top of it to understand all the data and to actually provide a good experience for our passengers. Yeah and based on announcement so over the last year or so Saber as an organization is very much pivoting towards AI as a critical part of its development going forward. Are you working with your friends Saber on some of this stuff? Definitely definitely they have a pretty good solution they're calling it Travis which is kind of like you know connected to travel. Really nice name. I can say it's pretty advanced Saber of course has a disadvantage they understand the the the travel information the data structures like you know the how to connect with different systems probably better than some new companies that might be maybe more technologically innovative but Saber definitely has a pretty interesting solution and potentially maybe we will use it in the future. Currently their solution is quite good for I would say booking helping passengers to discover like you know when are the best prices to travel for certain destinations or maybe to discover destinations that airline is flying like you know based on their interest or goal of travel like you know if you want to celebrate anniversary or maybe you are traveling with the family for a summer trip whatever. So that is already quite good where it's missing like all other solution is that like you know you can start chat on your website then you go to booking engine it's a completely new chat then after the trip maybe you go to checking it will be a different chat and then if you need to submit some claim or ask for some support it will be another chat like you know so still nobody have solved this this problem and this is actually what Amanda said like you know we still don't know where I be starting ending but in a deal world like you know it should like you know be the unified experience so okay and obviously as the world moves towards offers and orders and I think we T2RL are fairly convinced now that the world is moving towards offers and orders and this will this will continue to evolve and the old simple ibe will will be consigned to history. Amanda I'm looking at the report that we published and I'm somewhat astonished even after all these years of doing these reports that there are about 50 vendors of ibe solutions who are active in the market today that seems like an awful lot of vendors for a fairly limited number of customers. Yeah it does Ian I think a lot of the relationships have been around for a while I think a lot of the vendors you know have formed ibe partnerships with their airline customers you know many years ago when the the ibe was so important to delivering the direct channel and I think some of the close relationships that these vendors have with their suppliers has probably nurtured the size of the ecosystem. But I think you know we've still got in terms of passengers boarded we still sort of see some of the big names or the big trends still playing out. So you know in house provision for example it's still ranking number one in terms of you know solution providers and I think we touched on that before I think we've got Armadayis, Navataris you know is second clearly the importance of the direct channel you know websites and so forth. for LCC customers is definitely supporting that market share. And you know, Armadayas is third, you know, probably given the full stack kind of approach that a lot of the airlines do like and do go with Armadayas. But just a couple of shout outs to my friends at a data lake and open jaw technologies in fourth and fifth position. Both Dublin companies, I've worked for one of them. And they're still playing a very important role there in the industry, so it's really nice to see. Yeah, and looking down on the list, there are one or two new names appearing. Turkish Technologies is one that jumps out to me, which is a very interesting venture from from Turkish Airlines, obviously, looking to establish itself as a technology vendor to the industry. And then you go down the list, which I'm doing, and you go right down to Transclick Solutions, LTDA. I know I'm ashamed to say I know nothing about that vendor, but they have a customer and they're offering a service. Yeah, it's very diverse space. It's very interesting to follow. There are a couple of new players actually that didn't make a market share report, just basically because they're so new and we haven't managed to get any customer data from them just yet. But it's a big shout out, I think, to Retailer, which is doing some really good work, sitting on top of the existing PSS and really thinking in retailing terms about dynamic pricing personalized offers, all the servicing and so forth. And then TIK systems as well, which have a very nice digital suite. So it's really good to see that innovation is still very much happening and that the industry is still alive and very vibrant. I mean, Tick has been around for a long time and has gone through all kinds of evolutions, but they're very much keen to establish a share of this market going forward. Surgeon, we've suggested we've talked about how as the industry moves towards OSD, then even the idea of an IBE becomes a little bit outdated and it becomes offer management and the channel to market. I am sure that our friends from Sabre have been talking to you about their Mosaic platform and their Mosaic system. Is that something that SIRBIR is actively investigating or do you have other thoughts from moving towards OSD? We are definitely investigating Mosaic. I mean, it would be naturally for us to adopt it once it's ready. I think now the Virgin Australia is testing Mosaic, probably the OSTMA I think. So it's still early days for offers and orders, but you are right that industry is definitely moving there and when we move the logic from the IBE to offers and orders, IBE will become the the team client, actually the surface that users are using to who can manage their trips, but it will not make it less important because for the user, they don't care and they don't know and they shouldn't know what is offers and orders, what is in the backend, like, you know, they should just have a seamless user experience in managing their trip. So we are definitely looking into Mosaic offers and orders, working actively on, like, you know, planning how to implement it. And if we will use Sabre digital experience or maybe build something custom, it depends. We will see, like, you know, how that will develop. But maybe I can tell you, for example, for our mobile app, why we have developed that and how that will fit potentially in offers and orders, actually. So what we actually wanted is to build something for scratch and to experiment because it was easy, like, you know, we didn't have that channel. So there was not a lot of risk that we can, like, you know, break something. And there we focused on user experience, really, like, you know, trying to make booking as easy as seamless as possible for the passengers. And we have used interesting technologies, like, you know, it's called hybrid technologies or cross-platform technologies where you are actually building a native mobile app for iOS and Android. But using some web technologies, like Angular, ION, React, Native, something like that, which means that actually 70 or 80% of the code that you developed can be used to actually deploy this for web and to have IB. And then, like, you know, ideally, you would have a same experience, feature parity on the web and on the mobile. That's kind of the end goal. We are still not there. And I'm not sure if we will go in that direction, but we have a capability. And what we did in mobile app, actually, we did a lot of user research. We did a lot of funnel analysis, see where we are actually using passengers in the booking process. And, understood, for example, that passenger page is, like, you know, the most critical because it's so early in the booking process and it's so complex. So, imagine if you were booking for your family, for example, you would have to add, let's say, four passports. Passport numbers, country, citizenship, and date of birth, things like that. So, people on a small screen, especially where you can, like, you know, have a lot of typing mistakes, drop off, they're afraid they might mistype something, be denied boarding, something like that, and go to web. So, what we did, we created a scan of passport feature. You can, you know, just make a picture. It will read the machine readable part of the passport, populate everything, and you can actually save this passenger in your profile. So, any additional time you're traveling with your family or friends, you would just pick a passenger, like, you know, and it will pre-populate those fields. And it dropped off, dropped off on that screen, basically, basically halved, like, you know, by 50% reduced. We have did the same on the payment page, and like, you know, a lot of small tweaks that remove this cognitive load for the passengers. And in the end, what we achieved is actually when we compared the conversion rate on mobile web using zebra digital experience ID, and in our mobile lab, the custom build mobile lab has eight times better conversion rate, which is, you know, tremendous. So, in that sense, often, orders will really help us to build this easy to use, intuitive interfaces, and like, you know, to push a lot of additional services that terrorists are actually trying to add to the booking flow, which are kind of making it more complex. So, but giving the opportunity to earn more money on your passengers. So, I'd pick a couple of things out of that. One is that mobile is, in some ways, more challenging, because of the things that you talk about, the small screen, the touch screen, and all that leading to potential errors, input errors. On the other hand, most people's smartphones these days are very powerful devices with some capabilities that you don't have in other areas, like the ability to scan a passport, like the motion sensitivity, like the cameras built it, all of that stuff, and you're able to exploit those things if you're in control of your mobile development, which I think is where you're describing that SIRV is at right now. Exactly, exactly. And, like, you know, naturally, the dedicated depth will be much more responsive and faster than, like, you know, using a web browser, even though, like, your saying mobile phones are becoming tremendously powerful, but still, like, you know, dedicated depth is always, like, you know, more slick, let's say, when using them, then a website or IB, which is a web app. Do you have a feeling for the proportion of your direct bookings that are coming through mobile now versus web? So, we are, what Amanda said, actually, around 50% of our bookings are coming from direct channels, and mostly its website and mobile app, and a little bit, of course, from call center and a few workshops that you have. If we are looking at digital direct channels, web and mobile, mobile is a little bit above 20% of books. But I would say, without any paid promotion, we are just, like, you know, acquiring those users organically, like, you know, when they book a trip on web, they will receive, like, you know, checking reminders, booking confirmation settings like that, where we will, like, you know, advertise that we also have app, we will have a link to stores. So, mobile app, basically, since we started, every year almost doubled in number, in prevenue volume and number of passengers that is handling. So all the tech vendors who are saying you should be thinking mobile first or maybe maybe they're onto something there. With growth rate rates like that you know you're we are heading for a mobile first world I think. Amanda you're waving at me. I'm waving it too. I was wondering can I ask a certain question? Of course you can. Yes. Did you get a chance to read the report? I know that you're really really busy and you probably only got to scan a couple of pages but did you were familiar with some of the points of play or? No no I read the call report of course. Yeah of course of course. What do you think what could I do what could we do better in the report? What was what was good about it or what could we improve? What would you like to see next year? What was like I said it was very surprising that a lot of airlines are doing custom work which is like you know I think a good thing. There was a lot of vendors that I know about like you know the famous ones but there was also a lot of vendors that they like and I'm kind of embarrassed but hers for the first time but of course some of them are pretty local like you know so you cannot know any region and continental vendor. So that was kind of refreshing I think someone who is looking for a new vendor and to launch IB project should definitely read the report and like you know study it in more detail and CC who can be the potential next vendor that will best fit the the the airline. Maybe what could be improved I mean it would be interesting to add is like you know a lot of these vendors will say implementation timelines is from two to six months which usually is not the case like you know maybe for some basic features I would say okay of course but like you know if you plan for some customization and I think like you know every airline will have some of their own ideas how they would like to maybe differentiate and improve experience it will probably be a little bit more than that so because like you know it involves payments integration with the SS and a lot of other things so maybe paying attention a little bit more on that area orchestration between different apps in the backhand how do I this work would be probably valuable for all the airlines but I understand the the report is already 50 pages so like you know in too much details would be probably make it a book about ideas. But thank you can we lots of good ideas actually for how we can evolve it moving forward I really like that thank you so much you're welcome. Okay so we've had quite a good conversation around the report the the report is available to subscribers at ttrl.net as surgeon says it's 50 pages of good solid data on the market place and as I said earlier we've got a bit of a historical perspective because we've just passed the 30th anniversary of the first online booking which I think is quite remarkable and obviously the the world doesn't stand still and the technology and the market is evolving very rapidly and we will continue to track it. We'll also be continuing this conversation very much at the ttrl engage conference which is now just four months away in London I would like to remind all of our airline listeners that there is no charge for airlines to attend the ttrl engage conference and we hope very much to see many of you there in London in September but for right now I'd like to thank surgeon for participating in in this conversation it's been very interesting to me I hope it has been to you I'd like to thank Amanda basically for all of the work that went into the report and for the conversation right now and as always I'd like to thank you for listening and I look forward to talking to you again in the next edition of ttrl talks thank you very much. Thanks Ian. Thanks Ian it was a pleasure.