Big Data and Disruption Q&A With Richard Quest

Transcript

Richard Quest:You keep saying, all of you keep saying the phrase again and again and again, giving up control, giving up control again and again.

Ian Heywood:I said taking control.

Richard Quest:Well, same thing.

Ian Heywood:It's the opposite.

Richard Quest:It's the same thing differently expressed. You're getting the sense of But isn't this a little bit like trying to hold back the tide?

Ian Heywood:No, I don't think so. I think the ultimate control is with the end customer, and that's where it should reside. But it's what is put in front of that customer. That's what you're talking, I think, when we're talking about control. Is the airline going to be able to do that, or is someone else going to do that for them?

Richard Quest:But is it possible For the airline to be in control, bearing in mind the multiplicity of distribution channels and the revolution, the disruptive revolution that is underway, is it possible for the airline to be in control of the— or to own the customer, own the passenger, other than just giving the best offer it can at the moment of inquiry?

Bobby Healy:I think it is possible. I mean, and, you know, with the tide, I mean, hopefully all boats rise with the tide, right? And I think that that's what's happening is the airlines have given up on that in many cases. I think they absolutely can do that. It depends on the strategy if they want to do it. I think that they certainly can play a much larger role and own that journey. We see that across different segments within hospitality where companies getting involved in all aspects of the journey and making a great enhanced experience, and they are in no better position, I think, technically. than the airlines, but other industries have made a better go of it and have taken that control.

Paul Pessutti:Yeah, I mean, the airlines are the gateway for the travel experience. They should— take control is a bit strong. I don't think consumers like to think about that, but, you know, Michael O'Leary says it very well, I think. You know, we want to be the Amazon of travel. You know, now it's a little bit of a lofty goal, but you should be within the scope of travel offer the customer everything relevant to their needs. So the flight is really the base product, but anyone that looks at a relationship with a customer shouldn't be thinking about the base product. That's a, you know, that's just the breathing. Everything should be layered on top of that, the full experience, the hotel, the car, the activities.

Richard Quest:Right, but this idea of— you all talked about this idea of you sort of taking back control. What was the phrase you used?

Ian Heywood:No, taking back control.

Richard Quest:Right, taking back control. The downside of losing control is what?

Ian Heywood:Is that you're under the control of someone else. You're not controlling your own destiny.

Paul Pessutti:You're commoditized. You're flying aluminum tubes compressed with a load of highly flammable liquid full of passengers that everyone else is making money on. Like Booking.com, Expedia, all these guys are making all the gravy. And you're doing all the hard work.

Richard Quest:But the point I'm saying is that as long as those— the difference now from before is that the Expedias and the Kayaks and the Googles exist when they didn't exist before. And I am suggesting to you it is not possible to take back full control as you used to have it.

Paul Pessutti:I disagree. I think if airlines acted like technology companies, they would put together a platform that marketed merchandise in airlines on their own terms. It used to be called— Bob Crandall did it 50 years ago with Sabre. You know, create something that you can work together on, on your own terms.

Richard Quest:Well, wasn't that what NDC was all about? Isn't that exactly what NDC was supposed to be about?

Ian Heywood:Hold on. The main thing of mine was about collaboration.

Richard Quest:With who?

Ian Heywood:The industry. The industry needs to collaborate. And what we're—

Richard Quest:Hang on, he seems excited at the idea of collaboration. Collaboration's another word for collusion.

Ian Heywood:No, only in a journalist's mind. What we're talking about here is 2 ends of the spectrum. So what I'm saying is we need to work collaboratively. An airline will not mind a third party selling their product, so to say, even if it is Google, if they're presenting that product in the way that the airline wishes it to be done. And if they're telling them if they've got the— so if you've got a flatbed, if you've got a better, superior product.

Paul Pessutti:Right.

Ian Heywood:As long as the customer is knowing that, It's beyond price. And I think the problem is that at the moment it all comes back to price. And that is what people are searching and buying on.

Richard Quest:No, you're talking about owning the customer, owning the passenger.

Ian Heywood:No, the customer owns themselves. I think anyone that thinks they own—

Richard Quest:What if you had owning the journey on your chart?

Bobby Healy:I think the airlines could play a much bigger role in putting together and building ancillary services other than—

Richard Quest:I think you're all living in a different world.

Bobby Healy:No.

Richard Quest:I think you're living in a world that is divorced from the reality of the revolution underway, and you're trying to hold back the tide.

Ian Heywood:No, not at all. We're trying to make it happen. But for you as a consumer—

Richard Quest:The tide doesn't— you don't need to make the tide happen.

Ian Heywood:But you as a consumer, surely you want to see when you're buying your products, you want to know what product you're buying rather than just it's $99 or $150. What do you get for your money?

Richard Quest:Right, and NDC as it's postulated is going to do exactly that. It is going to allow the airlines to create a channel to offer the consumer the flatbed, the connection, all the information.

Ian Heywood:That's there today. We do it. We've got 220-odd airlines connected with their rich data that can get out through the consumers today. And that's part of this, what you've got to be careful of. That's why I'm saying, you know, you've got to move along this path because a lot of those component parts are there today. We act as if it's not. You're still talking about a GDS as if it's a green screen and just a few numbers come up. It's rich data out there. It's on our stand. Go and have a look at it.

Paul Pessutti:I look at it slightly differently, actually. For me, you know, I bring a Still back to Google, because right now the airlines pretty much get a free ride from Google. So they don't care. So they don't care about stemming the tide. There is no tide. They're just seeding the relationship right now. But it ends up being cost later on. It ends up being cost and almost irrelevancy. So the way I see it, the path I see gets you to, in 15, 20 years, you won't need to worry about airline.com, because it won't exist. There'll be absolutely no need for airline.com. And along with that goes brand, loyalty, everything that an airline spends decades building up wiped out by instant booking on mobile. Mobile changes everything, right? Because there isn't the time. You can't afford the latency. So my view of the Lufthansa strategy is wrong. It's keeping the customer on a Google product, not focusing on building their own brand, their own differentiation. And differentiation is not just about whether the bed lies flat or there's Wi-Fi. Differentiation is cycle time. I think that's a really good point. It's a brand relationship with the customer that takes decades to build and much shorter time to lose, to destroy.

Bobby Healy:Yeah, I think we're talking about relationships that have been built over 20, 30 years that are going to vanish in a heartbeat. But I think, you know, what to add to that, the thing that's missing here, and I talked about it here, is that it's an end-to-end platform issue for the airlines. It's not just about this, the front end of the customer. experiences, what are the airlines doing on the back end to marry together customer demand, customer engagement with things like reconciling finance, with managing your workforce, with your inventory, with your MRO? These are all critical components that only a few airlines are starting to put together in a very— in a way that other industries have figured out.

Richard Quest:So finally, because we want to have time for a cup of coffee before the next panel, Perhaps the hardest question to each of you. Do you think the airline industry has what it takes to make the— or the individual airlines has what it takes either strategically or pragmatically to take the decisions and implement them to deal with what you're talking about? Or is it what you were saying, the Lufthansa strategy, or is it the Delta strategy where they are so keen to get today's apple that they've forgotten to plant the tree for the next century?

Paul Pessutti:So one, they have the balance sheets. Two, they have the smarts. I just think that they need to really focus on what the problem is.

Bobby Healy:Yeah, I would agree. Today they don't have it. I think there's also a talent gap there. I think they're not investing in areas like data science and other areas that are clearly being focused on in other areas. I don't think they have the capacity to do that today.

Richard Quest:Turkey's voting for Christmas.

Ian Heywood:No, I think that there will be some lead-in airlines, but they need to use the industry because they don't know it all themselves. So if you move the industry forward in a way that they wish to go, then it can be successful. If you try to go off as a tangent on your own, you won't be successful. And I think if you try to force through practices that the industry don't like, then that won't be successful either.

Paul Pessutti:One final—

Ian Heywood:I think everyone sits here thinking agents, GDSs, they're not willing to change. We're changing every day, but we need to do it in a collaborative approach.

Richard Quest:But that's the problem. The change requires Or the nature and speed and direction of the disruption does not mitigate towards a collaborative approach?

Ian Heywood:Well, I laid out why it's going to take a long time. A lot of those are just in the airlines. Because once, say, the GDS, ourselves, when we've got that solution that puts the ATP code and the API content out there, that is there for So it's the airlines that are going to be slow on this because they're the ones that have got to change their processes, have got to change their systems to move forward.

Richard Quest:Have you booked a ticket or have you used Google Flights?

Paul Pessutti:I use it. I love it. I think it's great. I prefer Hipmunk.

Richard Quest:But you do use it?

Paul Pessutti:I love Hipmunk. I don't use Google Flights. I use it—

Richard Quest:Who's used Google Flights in the last 6 months? Well, there we are.

Bobby Healy:We own Hipmunk, so thank you.

Richard Quest:On that note—

Paul Pessutti:It's the best user interface, the best interface.

Bobby Healy:What we're concerned about with Hipmunk and competitors—

Paul Pessutti:But yet Google will kill that product or rip it off.

Richard Quest:Oh, so you're going to be killed by Google?

Bobby Healy:No, I don't think so.

Richard Quest:Are you sure?

Paul Pessutti:They're going to reproduce it. They'll do something like it. No doubt about it. And they'll do, first of all, an inferior version, roll it out in a test market, and then they'll just take it.

Bobby Healy:Yeah, I mean, obviously that's not something we're working on.

Paul Pessutti:But it is a great product.

Bobby Healy:Yeah, Concur is obviously still the de facto, and we move more transactions through SAP than Google does and Amazon.

Richard Quest:Oh, it's getting nasty.

Bobby Healy:Famous last words. So yeah, well, you know, 45 years, maybe one more to go, but hopefully not. No, it's—

Paul Pessutti:Have you used Hipmunk?

Richard Quest:I have. I didn't get on with it.

Paul Pessutti:So there's a little bit of an up. Ramp, and then it's just fantastic.

Richard Quest:Ladies and gentlemen, the panel.

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