Air Black Box Update

Transcript

Timothy O’Neil Dunne:When we started Air Black Box, we started it with the vision that the world was moving digital and that what we had to do was to change really the analog airline thinking in how products were distributed. So what we were trying to do is to say, look, what's the hardest product you could possibly think of? And we said, ah, cross-selling airlines, because airlines are going into greater branding and product differentiation, but the airline systems, typically the distribution systems, still think of an airline ticket as the common denominator. So what we wanted to do was to build that type of solution. And what we've evolved to is we've already solved the problem of airlines cross-selling each other. So our marketing slogan, if you like, is connecting airlines to sell stuff. And stuff means helping airlines to actually sell themselves. Helping airlines to sell their friends' products and helping airlines to sell a compendium of different products and services and engage with the customer. Because the customer is the guy who doesn't think necessarily of all the things he possibly could buy. He could buy at different moments in the lifecycle, but he really does want to buy products that he needs for his trip. It's very interesting. U-Fly is still emerging. I think as you've heard from some of the panels today, there's a lot of things that the airlines have to do. When it comes to this type of technology, it's no longer just technology in isolation. You have to think of the commercial relationships. You also have to think of the operational interfaces. Now, we're a technology company. We're not a travel agency. We're not an intermediary. We're a technology company. So we can produce things that solve a lot of problems. It takes airlines, because they are very focused on taking care of their customer and operational processes, They take a lot longer to get themselves aligned, and that's going to be one of the issues, that how different airlines operate in different ways, and aligning those, those parts, not the software, but aligning the operational processes is part of the challenge that companies, sort of groups rather, like U-Fly face. The volumes are low in terms of what they're capable of. I mean, you've heard Rick today talk about what they're actually doing. Now we're seeing significant take-up on the searches. So when he talks about these people who show up and are actually cross-selling, we are actually feeding a lot of these searches. So the number of searches that we do are in the millions. We were part of the sale, for example, at Christmas that our friends at Cebu ran, which resulted in massive numbers of transactions. We have to build a system that in essence has to be hugely scalable. So we're ready to service that need. They are getting themselves ready and lined up for the marketing because, you know, it's the old, if nobody knows about it, who's going to come and buy it? So the airlines had to engage in the marketing of that. Remember, we're the software company. They're by far the largest carrier, first of all. They have— clearly they have the most passengers, they have the most routes, they have the most places. It's interestingly when you start to look at the data, and we are generating lots and lots of data, When you look at the data for the different airlines, how different brands do with their customer bases, we get to see this view of how the individual airlines work. So up until now, we've been focused on helping each individual airline brand to extend out to their own customer base. What we're going to be doing is looking more at the cross-alliance level to say how the alliance as a whole works. So that the alliance can actually cross-sell, so that airlines will be actually helping themselves to sell each other's products. Not something that they do today. Let me give you a sort of a pretty specific example. Airlines say that if I can fly the route, I will exclude the possibility of selling my partners. If you are an airline in the middle of the network, that means there's lots of different routes that you can possibly fly. Let me take a specific example. From Singapore to, let's say, Narita. So Scoot has 2 flights a day that go there and back with the same flight number. But I can go via Bangkok, I can go via Taipei, I can go via Hong Kong, and I can go via Manila. So all of those are possible. But if Scoot is selling, they say for the Scoot brand, no, no, I'm sorry, I don't want to let a connection over, let's say, Manila Well, I don't want another connection over Taipei to work. I only want to sell my flight first. So it's where it gets to that differential of what is— how a product is being sold. You realize, actually, I'm going to be a little bit dog in the manger because I'm worried about my own brand, as opposed to an alliance that says, let me sell all of my products. Look at it from the customer's perspective. The customer is very interested in coming to you because you have a network. and you're a brand that I trust. So all airlines are about networks and products. But an airline is very precious about its brand because its brand actually means something. What Air Black Box has been able to do is to create the products and allow the brands to extend their reach, which is something that's never been done before and for which we've been granted a patent. A, it's a very big challenge, and B, it's a little tricky to— and we don't have enough time to go through it. Suffice to say what we've done is to make the processes look like an airline's own processes. So when an airline makes a reservation— takes a reservation, excuse me, from a customer from a Value Alliance product, like when he's selling his partnership with Scoot and Cebu, then we solve that problem so it looks like a normalized product that they're used to dealing with. So we essentially make the disparate look normalized. So for a customer, he's going to go in here, and if he's a real value customer, like a guy who's going to be real cheap, cheap, cheap, he's going to go, okay, will I take a 6-hour layover in Manila in order to save $20? Some people, you'd be surprised, some people do that. Whereas another guy is going to say, okay, make it as frictionless for me as possible. I want the shortest possible connection time. I might not even check a bag because I want to get there as fast as Fast possible. So you're saying that the value is going to be different for as different customers? I possibly can at the greatest value. Every customer is different. We have to provide the service through software in the same way that the airline provides its own product. So we like to call ourselves a ghost PSS. I think you have to look at it more as a marketing JV. So they have the ability to say these are the products that they want to have that are different but based upon the Air Black Box product. So we have a platform a very broad platform that not only services airlines but also services technology companies and also services airports, whereas the airlines are only concerned with what they want to do in just the airport world. So what has happened is that we have these 5 partners. One is an airline holding company, that's ANA Holdings, is one of our owners. Scoot, as you know, is a daughter company of Singapore Singapore Airlines, Nok Air, which is partially owned by Thai Airways, Cebu Pacific, who you know is the largest carrier in the Philippines. Gosh, who have I left out? Sorry, forgive me. And Jeju Air in Korea, who is our latest participant. So they all actually own a chunk of the marketing company that exists here in Singapore. At the moment, we're only servicing the members of the Value Alliance, who are just the Value Alliance themselves. Now what we get a lot of demand for and where we try to persuade the airlines that this is a good thing is people who would like to come in and buy into the network. Excuse me. So they see that the network, it's 200 points in Asia-Pacific. My goodness, wouldn't it be nice if I can drop a long-haul flight into a location like Singapore, like Narita, like Incheon, like Manila? And then they can fan out from there to all these other places. So if you're looking at somebody who is at the periphery of a network, they need feed for that marketplace. And what we do is provide that ease of connectivity to any other partner. If you look at the world today, you have the big 3 alliances comprise about 65% of all airlines are members of some sort of big alliance. You've got 25 to 30% are low-cost carriers, and then you've only got a very small number of, let's say, these independent carriers. But I think what you're going to see is that as the big network alliances fragment into joint ventures and non-joint ventures, there's going to be a bigger demand for the cross-connectivity with those carriers who are have versus have-not. So everybody needs to have feed. Feed is all Always good, and that's what we essentially provide. Like I said, we're a software platform. We were kind of indiscriminate about who we have as customers. Obviously, we want to focus on our customers who are here today. World Airways is a very good example. They are a long-haul, low-cost carrier. But when you look at them, they're pragmatic. They don't need to go back and go through the general evolution, which is you start as a pure LCC. Then you maybe add a couple of friends and then you become this hybrid. They can start as hybrid, but their religion is going to be still to maintain that low-cost perspective. What they need is they need 2 things. They need the feed and they need to have this digital capability that enables them to have a platform that can work from the customer's first engagement all the way through onto the aircraft, off the aircraft the other end, So that it is a complete engagement, and that's something as an enhancement to our existing platform that we can now offer in-flight as well as on the ground.

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