Q&A: Amadeus explains why airline distribution is overdue for review

Following a strong second quarter this year, global delivery company Amadeus is ready to invest in the two things it says customers want most: sustainability and better service.

With bookings still lagging in 2019, how can the Madrid-based company help airlines reach or even exceed pre-pandemic levels? By rethinking customer service and rebuilding processes and technology to meet today’s demands, says Amadeus.

To that end, the global distribution system announced a partnership with Microsoft in February 2021 to migrate its services to the cloud, a process estimated to take three to five years.

In a question and answer session with PhocusWire, Decius ValmorbidaPresident of the Amadeus Travel Unit, discusses the position of the partnership with Microsoft and how Amadeus is abandoning the old transaction-based treatment of customers in favor of a new traveler-based approach.

Amadeus talks about strengthening the core and the complete engineering of the airline portfolio. What does that mean?

It all starts with two very simple requests from the traveler. they would like [flights]
to be more sustainable and would like the customer experience to be better. When we break this down a bit more… we get into the very foundation of how the airline industry has been built.

To make aviation more sustainable means looking at everything: engines, fuel routes, the entire infrastructure. And how do we design a better customer experience? Decades-old processes must be brought into the 21st century by giving travelers power and control through their mobile phones and not through layers and layers of people, desks and collaborating entities. So that’s where we are, and it’s a journey.

To redesign the airline portfolio, what needs to be done?

Until then, all processes, all systems were based on a transaction. The traveler is going to fly, arrives at the counter and it is as if it were the first time that he traveled with that airline. Every time you make a purchase, it’s a different process.

Here we are moving to: You are a customer, a long-standing customer of an airline. What is the information I have about you and how do I manage it throughout the trip? Whether they’re making a connection or just came from a 40-minute cab ride or spent five hours in the lounge… your mood is probably very different. How can you detect all that? Because the processes are not prepared to recognize you first as a traveler and, second, what your journey has been up to that moment.

The processes are not prepared to recognize you first as a traveler, and second, what your trip has been up to that moment.

Decius Valmorbida – Amadeus

You’re going from a PNR, which is the foundation of the industry, it’s a reservation, a transaction, to an order, which is very similar to what you have in other retail companies. It’s a very different thought, and ends up focusing on the traveler, not the transaction.

What do you have to do with your systems, your core technology, to make this a reality?

Many things. The most important thing is, how do I get my core technology to be in real time? We are moving from systems that talk to each other: some of the processes are real-time, others are batch. It has to be a world on demand; it has to be on all the time; and those services need to react in milliseconds, because at some point someone is going to give me a request. So that’s a massive architectural change. That’s what we’re doing together with Microsoft, this shift to the cloud and making our applications, which are software as a service and our technical architecture, cloud-enabled.

Going to the cloud isn’t just getting a box that was running in your own storage room and saying, “Let’s put that same box in someone else’s storage room.” Reengineering the application so that systems behave on demand, in real time, open, with agility: that’s cloud enablement, and that’s the journey we’re on with Microsoft.

We, as Amadeus, must also relinquish some control over how our applications are built for our customers. For a good reason and for stability reasons, we have always kept a tight control on those applications, which means that we are the ones who make any changes to ensure that they are working and that nobody has done anything that has created a problem in the neighbor systems. .

So how do we enable all airlines to make the changes they want to the system while providing the same security, stability and performance? It is a new way of operating that allows the cloud. It enables the virtualization of those environments and allows everyone to have their own sandbox to play in. This will also create much more responsiveness from airlines to tie their different systems together.

A third change has to do with databases and processes. When you say you need to change a process or PNR database on demand, in systems you are essentially changing the very foundation of what a system is. The moment you change the way the database is organized, the moment you change the process, you’re essentially rebuilding the system from scratch.

So how deep is this for Amadeus? Essentially, we are rewriting from the ground up what will be the new airline retail system of the future. We’re going to use the components and experiences we have to make it as fast as possible, but the reality is that it will be a completely new system.

Some of the same themes (retail, agility, simplicity) continue to emerge. What has really changed? Why do we keep talking about the same things?

Especially in the system landscape, there have been groups of airlines that did not share the same architecture. So you get a group where each website of each brand has a different provider, a different customer experience, a different approach to how the customer will be treated.

Starting from this new design point, where you need to convince different brands to converge on a single platform, is already a big challenge. So what has changed? First, the convergence of systems and various heterogeneous applications and all sharing the same thing is not enough. It is not just saying that we are all going to share the same thing. Why didn’t they all have the same? Because they were afraid it would create a time-to-market problem.

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Essentially, we are rewriting from the ground up what will be the new airline retail system of the future.

Decius Valmorbida – Amadeus

Now six, seven, eight, nine, 10 [airlines are] request the same system and make changes, we will queue our changes and lose flexibility. So how can you provide both: switching everyone to the same system platform with that system platform also allowing quick switching individually? It can only do this if providers have redesigned their platforms in a way that allows airlines to do so.

Are airlines now more prepared than before?

I think they are hungry for it. Not just because the customer wants it, but because there is now tremendous internal pressure around people connecting to the airline’s mission. How do you bring back employees or, in some cases, employees who were previously not in the travel industry? They need to be proud of the work they are doing.

Second, if there is going to be another pandemic, will I be able to provide a future where people can do that? And third, [you need to solve for labor issues
with people doing more with less].

[Both internally and
externally]Everyone is waiting for the transformation to happen. We also look in the mirror and say let’s solve some structural problems that somehow growth was hiding from us.

However, we are already back to growth, so how is that going to get in the way of this?

Although we are back in growth mode, which for many is about getting back to where we were in 2019, everyone is doing it with fewer resources. This idea that digitization is not going to happen because the good times are back is impossible because you don’t have the same amount of resources.

And you’ve got every boardroom, every management that’s been through this crisis saying, “What if there’s another major disruption in the industry?” We have to be more resistant than we were. … Those growth interruptions can happen and we need to be able to better cope with them.

What else do you hear from airline leaders?

First, is how you can explain to investors that you need this major technology investment, review it, and promise the returns. All of a sudden, you walk into this program, which costs hundreds of millions of dollars. How do you justify it when you have so many other urgent capital needs to deploy? You need to renew your fleet and invest in sustainable aviation fuel; there are many demands for capital in a market. And capital becomes more expensive as interest rates rise, so projects must have better returns.

We are used to big programs with money up front where you see the benefit four or five years from now. Those days are gone. People say, “Start delivering, and what can you show me in six months that will produce some tangible results to show my investors? So once that’s done, they say there’s a little more capital here?

In two years what will the industry be talking about?

We’ll be talking not about the impediments that the industry has, but more about the concrete examples of the investments we’ve made and the exciting things we’ve done for clients. Today, an entire conference is still dedicated to all the impediments to us being able to do what customers want, but customers say, “What are you going to do for me?” Hopefully in two years we will be able to say that because of the investment we made two years ago, we are now able to provide an A, B, C type of service.

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