Some airlines today are just beginning to manage their ancillary revenue, while most airlines have very simple pricing structures, says Mike Barrera, Chief Product Officer at Radixx.
Sabre’s $110 million acquisition of passenger service system provider Radixx in October was seen as simply the latest example of consolidation in the travel tech space, particularly in the case of airline retailing for expanding low-cost carriers.
But as Mike Barrera, Chief Product Officer at Orlando-based Radixx, the combination with the Southlake, Tx.-based global travel data and distribution platform, that’s only a part of the story.
At least for the foreseeable future, Sabre and Radixx will continue to operate as independent brands. Longer term, the goal is to explore ways that the companies’ respective technologies can influence and enhance existing offerings.
Kambr Media: Radixx was initially focused on LCCs when it started about 27 years ago. This was also pre-internet era, obviously. How would you characterize Radixx now? How is the company evolving its services for airlines?
Mike Barrera: From the very beginning, Radixx always delivered its services centrally to remote locations via IP communications, so, in essence was born with the internet. At that time, our very first carrier was a hybrid carrier and distributed via the GDS. Since then, Radixx has continued to support LCCs, hybrid, tour operators, and traditional carriers that saw the value of retailing strategies.
Over the years, Radixx has evolved from a one product, bundled PSS company, to a multi-disciplined product company offering best-in-breed solutions, regardless of the core system. Today, Radixx offers four distinct cloud-enabled product lines: Radixx ezyCommerce, Radixx Res, Radixx Go, and Radixx Insight. Launching this year is our fifth product, Professional Services which is dedicated to providing our customers with dedicated teams oriented towards maximizing the benefit they receive from our products and services.
What’s Radixx’s take on the state of airline merchandising now? How important are issues like New Distribution Capability standards in terms of what Radixx does?
NDC is extremely important and the core design of our system has always been an order management system. The Radixx core reservation structure can store air and non-air items as well as organize all accounting data. The Radixx internal API is based on an NDC oriented structure.
What has the impact of Amazon and on-demand ride-hailing apps had on the way airlines conduct retailing?
Amazon and on-demand ride-hailing apps have solidified mobile devices as the primary way that consumers interact with services. Amazon, Uber, and Lyft have normalized dynamic pricing and forced airlines to up their mobile game to a point where an airline without a mobile application is at a significant disadvantage. Customers expect to be able to fulfill their order within the mobile app and those airlines that can meet those needs will have a better relationship with their customers.
When you shop on Amazon, they know who you are, what you normally shop for, your home address, and they will give you pricing based on those and many other factors. Amazon has shown airlines the value of leveraging customer data to provide personalized and relevant offers to consumers.
For airlines that excel at retailing, the experience doesn’t end when the plane lands or the purchase is over.
For example, an airline can use geolocation features of their mobile apps to provide travelers with information about their destination, sell them an airport transfer or upgraded boarding or security processing. During their stay at the destination, an airline can interact with the traveler by engaging them in useful ways to commute to their hotel, tips for dinner, offer sightseeing suggestions and provide the weather forecast. The authority and trust that the airline commands provides them the opportunity to become the traveler’s trusted partner not just for the flight but for all things travel which, in turn, can greatly increase a traveler’s loyalty with that airline.
What are the main Radixx products and what specific issues in airline merchandising do they address?
i. Radixx ezyCommerce: omnichannel e-commerce platform, designed with retailing and merchandising best-practices at the core.
ii. Radixx Res: micro-services based passenger processing (call center) application that enables centralized management of flight and value-added products.
iii. Radixx Go: cloud-based departure services suite that offers innovative mobile and self-service features that increase customer touch points and reduce passenger handling costs.
iv. Radixx Insight: analytics and revenue optimization platform that enables airlines to leverage data to make real-time adaptive decisions that increase the effectiveness of their retailing and improve the efficiency of their operations.
v. Radixx Professional Services: comprehensive knowledge-based service enabling the effective utilization of our products using industry best practices.
Our mission with every product we offer the marketplace, is to enable our airlines to become effective retailers and efficient operators. In today’s digital era, omnichannel retailing is a large part of what passengers expect and what airlines want to offer. One Radixx differentiator is that each of our products retail from the core enabling airlines to be able to sell anything over any channel.
Radixx addresses single source of truth for retailing across all channels providing a consistent experience for travelers regardless of their stage in the journey and device they choose. Radixx also provides a single source of truth for reservations providing ease of administration and management for airlines. Airlines have the ability to have a unified view of pricing and are able to achieve greater revenue as a result.
Is it fair to say that the commercial aspects of an airline have grown more complex than they used to be? What’s your take on how airlines can master the complexity of revenue management?
An airline of 20 years ago was essentially managing fares and inventory buckets. There was very little to no personalization available other than the standard length of stay and channel rules. Today, airline’s profitability comes from the ability to maximize the amount of ancillary revenue they can generate from the traveler experience. This presents significant challenges in revenue management given that most revenue management systems still manage fares and inventory buckets.
Some airlines today are just beginning to manage their ancillary revenue, while most airlines have very simple pricing structures.
Airlines that are truly able to optimize the total revenue spend not just the fare, will have a significant advantage over their competition. This is where dynamic pricing along with dynamic bundling of ancillaries is having a significant impact on the concept of revenue management. This is a very active area where new vendors are emerging, and existing vendors are adjusting to respond to this change.
What is Radixx’s view of the role of technologies like artificial intelligence in managing aspects of airlines’ retailing strategies in the cases of selling and targeting ancillaries?
Identifying and enhancing the customer experience at different points in the customer journey requires efficient usage of intelligence, available within stated data (such as customer profile information) and behavioral data (interaction with airline products and services). Usage of AI help us identify these opportunities where we have a gap in value (or lack of) received (or perceived) by customers, to be leveraged through effective retailing strategies.
The ability to travel with a bag is a privilege, while sometimes it’s a value that is not applicable to my travel. A seat with extra legroom may be a value-added service for some, while unnecessary for others. AI helps us identify needs across the two dimensions here – along the personalization/segmentation as well as along the time dimension of the customer journey.
How did the merger with Sabre come together, and what does the timing and structure of the deal say about the state of airline merchandising? Has it been decided that Radixx will remain a distinct entity within Sabre?
Sabre and Radixx will continue to operate as separate businesses with no immediate changes to daily operations. In the longer term, Sabre plans to nurture Radixx as its own standalone subsidiary focused on the LCC market. SabreSonic will continue to be the PSS for full-service carriers.
Had the company partnered with Sabre previously in any significant way?
Since the very beginning, we have partnered with Sabre to deliver distribution services (GDS) to our airlines.
What made this deal right for Radixx and Sabre? What are the complements between the two companies?
As a combined portfolio, Sabre and Radixx will offer innovative and comprehensive solutions for all segments of the market – from LCC to network carriers – backed by best-in-class technology and broad expertise.
Aside from completing the integration, what’s the focus for Radixx’s product strategy looking ahead to 2020?
With Sabre, Radixx will continue to invest to make the Radixx platform better. Our overarching ethos for our product is to enable efficient and innovative worldwide travel commerce for our customers.