Airline Controlled Offers – Will Your PSS Allow Them?

Of course it’s hard to believe that we even have to Ask the Question as to whether or not the major PSS’ will allow their customers to innovate. After all, it is a “customer is always right” relationship whereby the airlines purchase a technology suite from their PSS provider, and then the technology is delivered with no strings attached. Done. Dusted. Right?

Not exactly; because in the airline industry, the “customer is always right” relationship (when the airline is the customer) is not the norm. In fact, airlines are contractually forbidden from seeking out some of the innovative new solutions available in the market today, based on the agreements they have in place with their PSS/GDS. So, when we ask whether an airline’s PSS will allow airline controlled offers, the shocking answer may very well be “No!”

Hypothetically speaking, let’s say an airline shifts its strategic direction or finds itself wanting to create, control, and deliver its offer across all channels (a.k.a.: be the “single source of truth”). The airline decides to adopt third party technologies– let’s call them offer engines – that can integrate with and work alongside its PSS. Is this technologically possible today? Absolutely! Is it contractually allowed? The logical answer is: “well, sure, of course it is.”

But things are not as obvious in our world, as we recently found out from information exposed to all of us during the USAir vs. Sabre jury trial where the jury determined that certain contract provisions found in most GDS/airline distribution agreements were anti-competitive. These provisions, generally grouped together in contracts and labeled as “full content provisions,” include a full-content provision, a content-parity provision, a surcharge prohibition provision, and a direct-connect prohibition provision. Similar provisions are in the very fine print of more than a few airline-PSS contracts.

Provisions such as these undermine an airline’s ability to offer customer choices through things like dynamic bundling and pricing, content differentiation, sales channel optimization, direct connect content delivery, etc. – essentially tying the hands of the airline when it comes to adopting innovative airline distribution.

So the next question is: “How many of those contract provisions have found their way into the airline’s PSS contract?” You may think the answer is “none,” but we suggest airlines check their contracts closely as words may be different, but the intent could very well be the same.

And the next question: “Can the airline, through its existing PSS agreement, decide to deploy its own offer engines (Shopping/pricing, Merchandising, Dynamic Availability, Optimal Schedule Building) and have these engines integrate with its PSS?” Again, we suggest that airlines dig well beyond the simple “Yes” or “No” answer they may get.

They should also ask about cost reductions as the airline may end up handling many services itself rather than relying on the PSS. The airline should also ask about its ability to maintain an acceptable PSS service level when deploying its own engines. And lastly, the airline should ask about the costs associated with deploying its own applications connected to the PSS.

It’s really important that airlines Ask The Questions now before spending precious time developing an offer and distribution strategy, only to find out later the PSS won’t allow it. “Are you wearing handcuffs that will prevent you from being competitive in the coming years?” There’s the real question!