Air Black Box Update
Air Black Box co-founder and group head of product Timothy O’Neil Dunne discusses how the technology company has evolved over the last two years. The U-Fly and Value alliances selected in 2016 ABB’s Air Connection Engine, which enables LCCs to connect and interline without the traditional complexities or cost. However, U-Fly Alliance members have not yet implemented the product and implementation by Value Alliance members has been slower than initially expected, leading to limited cross-bookings. Mr O’Neil-Dunne talks about the challenges encountered and the future opportunities, particularly at the Value Alliance as it starts to focus more on interline connections.
Timothy O’Neil DunneWhen 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? We said, oh 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. Stuff means helping airlines to actually sell themselves, helping airlines to sell their friends products. 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 life cycle, 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 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. That's going to be one of the issues that how different airlines operate in different ways, and aligning those parts, not the software, but aligning the operational processes is part of the challenge that the companies, sort of groups rather like U-Fly face.
The volumes are low in terms of what they are capable, 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're 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 it's the old, if nobody knows about it, who's going to come and buy it? So the airlines have to engage in the marketing of that, remember we're the software company.
They're by far the largest carrier first of all, 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 others 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 two 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, lets say Manila. Or 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 it's brand because it's 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. For which we've been granted a patent.
A, it's a very big challenge, and B, it's a little tricky, 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 airlines 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, if he's a real value customer, like a guy who's going to be real cheap, cheap. He's going to go okay will I take a six hour layover in Manila in order to save 20 bucks? Some people, you'd be surprised, some people do that. Whereas another guys 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 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 five partners, one is an airline holding company, that's ANA Holdings, is one of our owners. Scoot who as you know is the daughter company of 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 off? 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 we tried 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 [Inshaan 00:08:20], like Manila. 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 market place. What we do is provide that ease of connectivity to any other partner.
If you look at the world today you have the big three alliances comprised 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 none 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 always good, and that's what we essentially provide.
Like I said we're a software platform, we're 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 two 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 customers first engagement all the way through onto the aircraft, off the aircraft the other end. So that it is a complete engagement, that's something is an enhancement to our existing platform that we can now offer inflight as well as on the ground.
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