Expanding Revenue Opportunities in Travel with APIs (Application Programming Interfaces)
Data Exchange Across the Travel Value Chain
A typical travel customer accesses a diverse spectrum of information before making a travel purchase. According to a 2016 Google/Ipsos Connect study, while researching travel online, average customer shifts more than 50 times across channels, devices leading to more than 100 pre-booking touchpoints. This would involve accessing sources that provide pre-flight content on destinations, hotel availability and bookings, reviews, ratings, packages, tours, airline schedules, airport shuttle bookings or car rentals, insurance, weather updates, payment options, financial services such as travel loans and currency exchange, and what not. Much of this travel data is made available to customers using slow and unreliable methods.
Players in the travel value chain today, collaborate through either expensive direct connect methods, a web of intermediaries, or through other unreliable ways of sharing travel data such as web scraping from partner websites. In the above cases, the casualty is innovation, integration cost, data reliability along with unnecessary load on servers. The world of travel, especially aviation, requires a trusted, timely and efficient way of sharing data and information with partners who can create niche solutions for the industry growth. Due to the complex nature of online travel distribution, travel providers (airlines, hotels, car rentals etc.) mainly connect with 3rd party distribution channels (GDS, metasearch, OTAs) to sell their inventory. APIs emerge as a natural solution acting as pipes of data exchange for this growing omnichannel ecosystem. APIs or Application Programming Interfaces act as conduits of communication and interaction between two applications which offer dynamic information about availability and price. These applications can belong to different partners like a car rental offer on an airline booking site or an excursion deal on a hotel booking site. Even customers are expecting travel providers to streamline travel experience with partnerships. According to a recent survey by Mindtree, “Expectations vs. Reality: How to Better Serve the Connected Traveler”, 77% respondents state that they would prefer a travel provider who is able to offer an entire travel product line in one place and this would encourage them to purchase from them.
A Boon to Travel Data Exchange
APIs provide consumers of travel information like customers, a controlled access to it from the publishers of data like airlines. APIs offer developers the opportunity to quickly connect travel data streams and functionalities between systems /softwares /applications—without having to deal with complex source code for integration. With the power of APIs, a 3rd party site has the capability to offer an airline ticket booking as well as secure payment (through the API of a payment gateway), to its visitors without making them go to the parent airline website. This helps in contextual travel research and booking experience.
APIs also help build specialized services. Fundamentally, developers gain easy control over usage, volume, access (when and where) and security of travel data from partners, allowing them to create distinctive and differentiated offerings for the market. For example, a provider of international education & career services can create niche products for students and young professionals by integrating its own applications with the APIs of airlines (which it could not have done on its own).
APIs have been popular in creating sophisticated, reliable, highly successful collaboration ecosystems in industries such as financial services and retail. In the travel industry too, IATA created the NDC standard (New Distribution Capability) to enable airlines to expose their inventory for offer and order management—using SOAP/REST/XML and EDIST schema—across the internet.
Open APIs Opening New Revenue Channels for travel companies
APIs have led to rapid, crowd sourced innovation in the travel industry in the form of Open APIs. An Open API (often referred to as a public API) is a publicly available application programming interface that provides developers with programmatic access to a proprietary software application or web service2. Open APIs are not only streamlining the travel experience making it more connected, they are also strengthening the direct distribution strategies leading to newer revenue channels for travel product companies.
The data that airlines use (or provide) via APIs need not even be free. For example, few airlines provide access to their API Playground in a freemium model. This encourages developers to create innovative solutions without large application development overheads, integration headaches, and long lead times. For the airline, the rewards lie in improved brand visibility and in providing travellers with greater convenience.
Together with the new age technologies such as Blockchain and AI, Open APIs help expand the digital ecosystem for collaboration and enhance the innovation opportunities. With the growth of Blockchain and access to airline data through Open APIs, technology can lead to innovative and reliable solutions in the travel industry. For example, the “flight data problem”, where multiple copies of subsets of flight status data exist (and thus a lack of reliability in the data) can be handled through Open APIs and Blockchain based data exchange access. Similarly, access to richer seat data can enable new AR/VR based solutions for consumers. Imagine being able to experience the insides of the aeroplane while choosing your seats before making the air ticket purchase. An increased and consistent availability of data through APIs can lead to many such interesting solutions that leverage capabilities like AI and Deep Learning.
Currently, less than 26% of airlines and airports are offering access to their APIs and only 4% of all IATA (International Air Transport Association) members i.e. 10 airlines are publishing their own APIs in a bid to let partners access their data. Forecasts suggest that this is set to change: According to IATA, 71% of airlines and airports will be publishing some form of Open APIs by 2020.
The environment for APIs is near perfect at this age. We now live in a digital world dominated by cloud services and mobile networks. Today’s customers are digital natives. Providing great, seamless and connected experience is the key to retaining them. The technology, infrastructure and demand for data exchange have come together simultaneously to provide access to trusted data in a timely and open fashion, accelerating innovation and elevating the customer experience. For airlines, this means access to flight details and statistics, booking and reservation information, airport codes and fuel and crew-related aspects.
It won’t be long before the upside of APIs becomes obvious. However, the fact that airlines will find it hard to remain competitive without participating in the API economy will become evident even faster.
What is your experience with APIs and how are they impacting Digital transformation at your travel organization? Write to us at [email protected] to share your views and learn more about how our ‘API First’ approach orchestrates transformational outcomes for our customers’ digital journeys.
- McKinsey&Company research, May 2018: Travel and logistics: data drives the race for customers
- IATA research, Oct 2017: Industry Direction for Open APIs A Discussion