Airlines are seeking to modernize their airfare clearinghouse, ATPCO, formerly known as the Airline Tariff Publishing Company. Leadership changes announced Thursday underscored the airline drive.
For decades, number-crunchers at airlines worldwide have used ATPCO as a tool for tracking price changes by competitors. But changing times had revealed its weaknesses.
“The airline industry is moving slowly toward where price points might be created dynamically at the point of sale without any filed fares,” said the clearinghouse’s CEO Rolf Purzer. “It’s a slow change, and we’re adjusting to the change.”
The non-profit firm, owned by 16 airlines, has been broadening its services. It now tries to help airlines present to shoppers images of premium cabins and other products in standardized formats that all online sellers can use. It is also working on new pricing and audit capabilities. The moves are bringing it into competition with private technology companies. To compete, airlines aim to rev up the company’s metabolism. About one in three of ATPCO’s 500 workers has joined since October 2016.
Since he became CEO in February 2017, Purzer has made changes. The biggest came in February 2018, when ATPCO acquired Routehappy — a startup that helps airlines provide rich digital content for flight shopping and that had raised more than $8 million in venture funding.
Purzer said he funded the Routehappy acquisition and all of the recent hiring and development work out of revenue. The company’s traditional core business of fare filing has been throwing off cash. More airlines have been filing fares through it, with volumes up about 15% in the past year. More travel sellers, especially in Asia, have been using the service — which means more fee income.
On Thursday, Purzer announced new roles for three of Routehappy’s leaders. He named Robert Albert, Routehappy founder and CEO, executive vice president of retailing; Jonathan Savitch, Routehappy sales head, chief commercial officer; and Jaivin Anzalota, Routehappy product head, chief product officer.
Purzer promoted ATPCO’s Tom Gregorson to chief strategy officer and the company’s John Murphy to chief information officer.
The fares that airlines file with ATPCO differ from what consumers may see at online travel sites.
Here’s an example: An airline may file a fare for a transpacific route in ATPCO’s system that matches its rival’s fare. However, its fare may have “attributes” that complicate the picture, such as how many seats are available on a particular day and rules about whether the ticket can only be bought less than 21 days in advance of departure. The total fare a consumer will see may differ from what the airline files with ATPCO.
One metaphor is real estate. When real estate agents report a house’s selling price in a shared database, the listing price often doesn’t reflect what buyers pay after accounting for side incentives. But airlines are taking the concept of pricing complexity to new levels of three-dimensional chess.
Recently, airlines have been rolling out more complicated products. Basic economy tickets are the latest example, where airlines typically limit the carry-on luggage allowance and storage options of a passenger. Products like that make it harder to draw apples-to-apples comparisons among tickets.
“If I’m a shopper and you know I’m traveling with two bags, don’t show me a basic economy fare,” said Savitch, the chief commercial officer. But to avoid wasting a customer’s time, airlines and ATPCO need to provide signals that are readable by everyone in the industry.
Earlier this month, TripActions, a business travel booking service, became the first corporate travel startup to use ATPCO’s version of what some airline executives call a “next-generation storefront” model that makes side-by-side comparison of basic economy products with premium class products easier for consumers.
“Five years ago, fare information used to sit in a database,” said Savitch. “Sales channels and airline branded sites had to either reprocess them or often hard code them into their displays. That tech hurdle meant consumers often didn’t have a full picture of what they were buying. Today’s evolution is to turn each filing into a filterable, dynamic localized data set.”
Since its Routehappy acquisition, ATPCO has been helping airlines collect and share imagery of what aircraft amenities look like in a standardized way. The standards and tools help all players in airline distribution display their products on airline branded sites and in third-party systems in a consistent way with details, branding, and photos. Today about 95 sellers, such as travel tech company Amadeus and agencies Expedia and BCD Travel, access Routehappy content.
“There’s a misconception out there that rich content is just about pictures of the flight cabin,” said Savitch. “It’s not. It’s about revealing the full value of an offer.”
Related to that end, ATPCO has been adopting new techniques, such as so-called “functional programming.” The company aims to calculate airfares by tracking all of the components of a plane ticket, such as base fare, inventory availability, and rules, and then combine them or break them apart as needed. That’s richer data to share with airlines than merely the lowest base fares published in the marketplace.
Expanding into other services
Last August, ATPCO debuted a new platform, called NDC [New Distribution Capability] Exchange, to enable carriers such as Air Canada to distribute their fares. About 25 online travel companies like Skyscanner and travel management companies like Serko have signed up and dozens more are “in the pipeline,” a spokesperson said. Seven airlines include British Airways, United, Delta, and Finnair have also signed up.
SITA, a Geneva-based technology organization owned by the air transport industry that was initially Société Internationale de Télécommunications Aéronautiques, is a tech partner providing data and customer service centers to support the effort.
One opportunity to grasp is in revenue management. As airlines create more dynamically priced fares that aren’t filed, those fares aren’t available for seeing by the revenue managers at rival airlines, making it difficult for those revenue managers to judge supply and demand.
“Airlines want to know what’s going on in the market,” said Purzer. “ATPCO is going to look into providing more offer management solutions. As more dynamically generated price points come into the market, we’re thinking about making it possible to get basically these new price points back into our fare management system.”
“Airlines and channels are finally ready to become retailers,” said Albert. However, the verdict isn’t in yet whether ATPCO will remain essential to airlines. The speed at which they grab the new opportunities will matter.
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