This interview is part of our exclusive ‘Airline Leaders Series,’ conducted in collaboration with Branchspace – digital reinvented, aiming to transform airlines into better digital retailers. Throughout the series, we’ll highlight the key concepts that are shaping modern airline digital retailing, ensuring you gain valuable insights from each discussion.
Leader: Otto Gergye
Airline: Thai Airways
Role: Commercial Advisor to the Chief Executive Officer
Location:
Talks about: Commercial Strategy, Retailing, Distribution, Digital Transformation, Personalization, Ancillary Revenue
Why do you need to read this interview:
Otto is a seasoned leader with a diverse array of experiences across various airlines and airline vendors. This series is dedicated to showcasing different voices and perspectives in airline retailing, and Otto’s contribution is particularly enlightening. Having been responsible for the overall commercial performance in multiple airline roles, Otto brings a grounded, no-nonsense approach to the industry’s often complex landscape. His laser-sharp focus on revenue and profit cuts through the noise of fleeting trends and highlights what truly matters in airline retailing. This perspective is invaluable in an industry frequently captivated by the latest technologies and buzzwords.
Otto’s interview is a reality check, reminding us of the essential balance between innovation and practical commercial outcomes. His insights offer a glimpse into the mindset of top-level leaders, making this a must-read for anyone in airline digital roles or those looking to understand how to effectively communicate with C-suite executives about new technologies and retailing strategies.
Otto: I was brought in to manage the commercial side of the business under the title of Commercial Advisor to the Chief Executive Officer. In reality, what that means is I’m responsible for the commercial success of the airline and make sure that what we do drives that success. And that’s fairly broad, but the commercial area is very intertwined and interlocking. However oftentimes, like everywhere, one department doesn’t take into account what’s important for the other department, or we get lost in the process, or we don’t see the holistic picture. These then don’t lead to commercial gains, but they lead to a lot of projects, a lot of things that actually don’t drive what we want to drive, and that is revenue.
The hardest thing is selling a ticket, and the second hardest thing is selling it with the right margin. Everything else you can kind of buy. So everything we do, we have to strive towards that. That’s what I do in this role: to make sure that we maximize our revenues, and that involves a lot of things. That involves network planning, that involves revenue management, that involves sales, that involves distribution, and of course, it involves what I call online sales. Now it’s all digital. But that becomes a catalyst for our sales and for our revenue.
Otto: We’re focusing on expanding our connectivity. That involved a detailed network plan, a fleet plan. Now, to be able to do that, to manage that properly, that involves a change of our revenue management system . At the same time, we’re also building a new web app and a new website with functionality that is relevant to supporting all of these things.
Everything is topline revenue, so everything goes towards that. If it’s not going towards that, I become a little bit skeptical because we have so much to do now to make sure that that works. One of the hardest things, I think, in an airline is to keep that focus, because there are so many things that can distract you. And sometimes you do have to ask yourself, “Is this relevant to our revenue? Why are we doing this? Are we doing this because someone said for us to do this, or are we doing this because of customer feedback?”
One of my big things for online sales is payment solutions and acceptance rates , because out of everything, all the things you can do online, what airlines still neglect is the conversions. And when you have a look in the booking flow, where the customer dropped out, for the most part it’s at the payments page. You have to ask yourself is there something wrong with the acquirer, with the merchant, with the credit card, with the bank? And then dig into that, and usually that’s the solution. That drives far more revenue than some sort of fancy e-retailing thing, because it happens very quickly.
The other important thing is the call center. I’ve spent a lot of time at this airline sitting in the call center, and at other airlines, listening to why people call. The reason why people call a call center is not because they can’t use the internet or they can’t use a mobile phone or an app. It’s because it can’t be done on there. When you hear what people call with, you take that back and you see, what can we change? Why did they call? How can we make this more seamless? Why isn’t that working? It can be anything from payments to fare structure to a lot of tangible things. What I’ve been very focused on, is to keep things away that sound good but don’t fix core issues. But unfortunately you have a lot of vendors telling you that you need to do this, you need to do that, and it all sounds very good, but the day-to-day reality of what people actually need is very, very different.
I try to make sure that what we do is relevant for a first-time flyer, it’s relevant for someone that flies 100 times a year, and just make it easy for them to transact with us. I think that’s the most important thing. If they’ve taken the time to call us, if they’ve taken the time to be on our website, they obviously want to purchase something from us. Now we need to make sure that we’re able to provide that to them, be that with fare, be that with whatever it is. They’re obviously traveling. So to make sure that we can give that to them.
Source: Thai Airways website
Otto: One of the things that I’ve noticed is that the technology we use has been around for a long time. It’s definitely fit for purpose, but you have people telling you, “You can do this or you can do that.” I’m like, we’ve been able to do that for 25 years. And a lot of times even the vendors, when you look at these big software houses that focus on airlines, most of their salespeople don’t even know the products that they have because they have so many. It’s very hard to know. So they don’t know what’s relevant. And then you hear some startup reinventing the wheel and you’re like, hold on, this has been around for a long time. There’s nothing new here.
I think there’s a deep lack of understanding in what’s available currently and what’s relevant, and it’s all too easy to run and say, “Oh my God, AI, AI, AI.” Sure, fine. But in my reality, show me a use case. What’s it going to do? Show me. Don’t say, “AI’s going to predict the revenue forecast.” Fine, but where is it going to get the data from, the historical and future? What’s it going to be based on? AI could be just as haphazard with revenue forecast data as it was in predicting that Brazil would win the World Cup.
Show me a case in an airline where it actually works at scale for something that’s actually relevant to the bottom line right now. And maybe I’m just ignorant, but I have yet to see one. So I think the real issue in this industry is people don’t understand what’s available to them right now, and once they do understand, it’s very, very hard to find enough people that can actually work with it the way it’s intended to be worked with and understand from a holistic perspective what it can actually do. It’s just very, very easy to take the next shiny thing that everybody’s talking about and say, “We’ll do AI.” Like, okay, but I’ve yet to see a tangible example that is relevant in the day to day where AI would make a difference.
But I do see a lot of current technologies that are available and have been that can actually make a huge difference, but people don’t know how to use. I think we should focus on that for starters.
Otto: Airlines have been retailers forever. We sell plane tickets. I remember 10-15 years ago, everybody was saying, “You need to sell wine. You need to sell food.” If I go to an airline website, I go there because I need to buy a plane ticket, because I want to go somewhere or I need to go somewhere. If I go to the supermarket, I go to the supermarket because I need to buy something that’s at the supermarket. It’s very simple. So airlines have been retailers for a long time.
The things we are good at are displaying the prices, how to get from A to B. You can play around with that and you can do all sorts of A/B testing. But as far as conversions go and relevance goes, the most important thing is showing something that is relevant. You still have airlines where you get a car hire recommendation even though the airline sees that you’ve just got off a 35-hour itinerary in a place where traffic is questionable and foreigners are not allowed to drive. That goes back to the personalization. You can’t personalize air travel. There’s billions of people traveling. You cannot personalize it, nor do you need to. You need to show what is relevant on a broad scale.
And what is relevant? If you live in one country, you need to know, what are you selling in that country? Where are people traveling to? All the data is available. You’re going to get the most conversions if, on your website, when you’re advertising a destination, it’s relevant to that country.
Then it comes back to, if you’re selling ancillaries, do people in that market, for the type of itinerary that they’re buying, can they buy ancillaries? Because you can’t on every itinerary, or that ancillary is not relevant to them. You still have airlines trying to sell you a pass into the business class lounge when you’ve got status. We’re not one of those, but I’ve seen that as well.
So you need to focus. Less is more, and make it relevant. And do your homework. Have a look, what are we selling in that country? What do we want to be selling in that country? Start off with that, because that’s what’s going to give you conversions. And then make the steps easy, as few steps as possible, and off you go. That’s what I can recommend, or that’s my experience. The fancier it is, the more trouble you’re going to have. It needs to be simple. People are going to your website because they want to travel somewhere. They probably know where they want to travel if they’re going to an airline’s specific website, for the most part. They have a good idea of what they want. All we need to do is make it simple for them. And if that’s retailing, then so be it.
Otto: I think it will be a case of fixing the basics because personalization has now been around for 10 years.As a traveler, I’ve yet to experience it in a proper way, or in a way that actually influences my purchasing decision. So I think you’ll have people asking questions as we’re spending all this money – “What are we getting back?” In the next five years, I think these buzzwords will have plateaued.
As we see in the tech world, you have to make money. The measure of success in this industry, after safety – safety being number one – number two is, are you able to be profitable? That’s yes or no. And if it’s a no, and if you have things that are contributing to that no or not contributing to the yes, then I think they will go.
We’re not going to have holograms and all sorts of silly things. We’re going to go to the airline’s website or its app and hopefully we’ll seamlessly be able to do what is relevant to our needs.
If you want to learn from leaders like Otto about how to advance your airline digital retailing or want to be the first to know when our next Airline Digital Talk will be published, please:
paul byrne
I am in broad agreement and this is certainly what I expected having heard Otto speak. There is a lot of truth and revenue and margin to be realised in fixing what is already there, using existing systems and processes more efficiently. However, there is a limit to what can be done and certain airlines have already hit that threshold. A great job done in recent times to turn Thai around so continued success with your commercial strategy.