Recently I learned of a major US company being "forced" to change its T&E product and online booking system due to a supplier closing that part of service. This is a big change; not so much the action as such, but more the consequences of technology evolution. The company had built a structure over time that was working well in its environment and as a supplier to US government. It had a well-functioning booking structure, T&E system and data warehouse. It had taken time to reach a 90% online booking share and building control systems living up to government rules and regulations.
Digitalisation and further competition forced its T&E supplier to close down its system and thus forced the company to review, select and implement a whole new structure without the industry spec they had developed. Now after 2-3 years it has reached 85% online share and probably 80% of the unique specifications available in the previous life. But add to this the direct and indirect cost of making this happen and you can imagine the effects of that news.
Elsewhere recently American Express Card has bought artificial intelligence travel company Mezi to improve the card (and travel) customer communication.
Being an avid follower of the technology development in travel these stories made me realise why real changes in this industry takes forever and in many cases simply do not happen.
I believe there is a fundamental problem in the travel industry.
Fear for the unknown and better wait for the "white elephant" to materialise
And the argument is: the systems work!
The travel industry is absolutely not the only one where this happens. Cars are still mostly produced with combusting motors, ships still use diesel engines and food production is still mostly handled by human workers. What sets travel apart is the fact that it was one of the first industries utilising software and technology.
Over the last couple of years, we have read and talked about a long range of tools and ideas entering the market. This includes names and products like blockchain, bots, AI, NDC and many others. Everybody talks about them and the impact they will have in the industry, but the fact is that very few actions or launches have actually happened so far. The ones getting off the ground are yet to become the Airbnb, Amazon and Google of their world. The few real interesting ones have been acquired by the big players.
NDC has been around five years and no airline has fully embraced it, yet. There are scores of online engines, but not one is independent from the global distribution systems (GDS). The hotel world still relies on the GDS, Booking.com, Expedia, TripAdvisor, HRS and others while paying through the nose to receive one booking.
The airlines buy formidable new aircrafts but the service inside the plane still relies on the same wagon the crew push through the cabin, and no one is still pricing the middle seat different from aisle or window. I know some are trying to change this, but we talk of exceptional few.
And so I ask
- Why are so few of the products available designed and built from a customer perspective?
- Why are so few designed with industry details and needs like government, wind, manufacturers and services?
- Why is no one able to deliver precise to the consumer requirements?
- Getting from origin to destination is in many cases is a tiresome experience, why
- Why is it we never develop products based on the real need of the various industries and consumer groups?
Most of what is made and done is a puzzle based on correcting or adding to existing solutions and to avoid the hassle of new entrees.
Very few suppliers have created solutions making individual requirements possible
One example I can think of is Swedish firm Samtrafiken together with HaCon/HAFAS GMBH in Germany. They have developed a CONNECTION BUILDER, where they simply collect, specify and build a database and from there make it possible to design, book and sell any service a customer would want, mainly in the rail and public transport areas. Any company with access to this database could design their own version and variation matching their customer segments and their requirements. An example is the Resrobot app for the Swedish market where users can plan and book public transport across the country's biggest cities.
I know of one GDS trying to replicate this, but did not finish the work.
Looking at the industry today, we see very few dominant players sharing the market. This is whether we look at aviation, intermediaries, accommodation or other sectors. This may be right but I wonder why a company like the first I mentioned had to go through the pain and cost simply because the industry takes its cue from what is available instead of what the customer needs.
Governments are now taking actions such as introducing VAT, tax on pollution, GDPR and consumer protection laws. Very few players in the industry are ready for these changes.
If all the players changed the focus from what is available to what the customer needs, the travel industry would again be the model for other service industries, and not leave the market to Google, Amazon and Facebook.