The Passenger Service System (PSS) has a unique history in the airline industry as a technology-based domain. A range of existing business practices and logic within the air travel sector were developed by its pioneers and adopted by airlines. They have been in use for decades and many have been considered the industry standard for years. Working within such structures, as well as training airline staff under such constructs, have solidified these business practices as the norm and have made them established and unchallenged. However, with the onset of the low cost concept, as well as the advancement and availability of technology and the Internet, a revolution took place and new momentum was created in the airline industry in the early 1990s, bringing with it new practices in sales and distribution.

This remarkable transformation marked the beginning of a new age for the PSS, which was accompanied by the “changing of the guards”, with younger executives and staff taking over the reins at airlines and willing to replace older-generation systems with the new internet-based low cost PSS providers, which were established between 1990 and 2005. These new providers attempted to avoid the complicated and expensive systems developed by the industry’s pioneers and instead used internet technology to make their processes easier, faster, and cheaper, targeting B2C simple sales. The achieved results were impassive.

However, having two completely different concepts on the market, made up of the initial low cost model developed during the 1990s, as well as the legacy concept, which matured over a number of decades, created new challenges for airlines and impacted market share and revenue of distribution providers. This marked the onset of the new-generation PSS, whose providers studied the obstacles of having two different distribution models and focused on finding a middle ground. They found the following:

System flexibility and customization

Both the legacy and low cost system had a number of drawbacks for carriers. The former had very high costs, while the latter focused on direct and easy sales. However, if its users wanted to make any changes in their business model, they had to bear huge costs with limited results, as both types were inflexible due to their architecture and use of an intermediate module, which, in some cases, needs to be integrated with a third party, while not necessarily delivering satisfactory results. Thus, flexibility and the ability to handle various airline business models is one of the main elements of new-generation system providers. They should be able to address the requirements of any airline in a simple and cost-effective way, even if the carrier in question does not fall within the legacy or low cost model.

Flexibility and easy customization have become an important element of new-generation systems. Its predecessors made it impossible for airlines to be innovative due to the associated high costs and the lengthy process needed to implement even the smallest of customizations, which proved to be a real headache for carriers in their use of the PSS and distribution tools. The PSS is a competition leverage area and needs to have maximum flexibility in terms of customization and innovations. Previously, many methodologies and processes were imposed by system providers, with its users having no other options than to follow those rules. In contrast, new-generation systems provide significantly more choice and flexibility in terms of customization and execution of innovations required by airlines, in a very short period of time and with very low costs and expenses.

Features to avoid use of other providers to manage airline sales, distribution and revenue accounting

Integrating different systems and providers resulted in making them unstable and nonresponsive in real time. In addition, making separate implementation and service fee payments to different vendors increased the airline’s costs, as there was no one responsible for the successful functioning of the entire system, with exception to the carrier’s IT department, which resulted in increased resources. Therefore, the second element of new-generation system providers is offering an all-in-one suite to cover the requirements needed to fulfill the airline’s business functionalities without involving third parties.

System implementation and data migration

System implementation and setup, as well as the migration of data from existing systems, have proven to be an extremely complicated process for airlines. Old technology and the deployment of old architecture made this process both expensive and time-consuming. New-generation systems have made these practices much easier by using newer IT technologies which eliminate the huge associated costs for airlines. IT-based solutions are in line with IT industry developments. However, there is still a big gap between legacy systems and existing technology development. This presents a big opportunity for the aviation industry. When we compare the latest advancements from Silicon Valley, this gap presents a prospect for growth for the airline industry in reducing its costs.

Rule base actions

Rule base actions are one of the major differentiators between the legacy and new-generation PSS, helping the user reduce the long staff training times, especially for ticketing agents. In this particular case, training courses may take a year in order to prepare the ticketing agents to carry out reservation operations based on the airline’s ticketing rules and procedures. These rules are usually text-based and, along with the fares in the system, must be followed by agents as the system does not have any restrictions or controls over reservation actions. This, in turn, leads to a number of errors. New-generation systems avoid this problem as the controlling process occurs during the operation by the system, which is reliable and saves significant time and resources. Furthermore, these new PSSs made great progress in implementing fare rules inside their solution (ATPCO, IATA), in line with the latest industry standards, in order to avoid third-party involvement.

Finance base and integrated PSS

Finance base and integrated PSS is a feature which brings lots of value and savings to the airline by new the new-generation systems. Similar to the abovementioned operation rules, new-generation solutions have very tight and restricted integration between the reservation and finance module, which makes sure the financial burden of those actions is protected, accurate and avoids any expected risk. In addition, this provides a huge reduction in the workload for the revenue accounting department in regards to time and resources spent as many of the processes will performed by the system automatically, eliminating many third-party system integrations.

Taking into account these six elements, airlines are still slow in moving towards new-generation systems. But why? We will review it in our next blog post.