Customerland
Customerland is a podcast about …. Customers. How to get more of them. How to keep them. What makes them tick. We talk to the experts, the technologies and occasionally, actual people – you know, customers – to find out what they’re all about.So if you’re a CX pro, a loyalty marketer, a brand owner, an agency planner … if you’re a CRM & personalization geek, if you’re a customer service / CSAT / NPS nerd – you finally have a home.
Customerland
Reimagining the Airline Industry with Technology Innovation
What if the very systems that airlines rely on are the root cause of your travel hassles? Join us for an eye-opening conversation with Paul Sies, CEO of Journey Mentor, as we uncover the antiquated technology that still governs major airlines today. With Paul’s 37-year aviation journey, we explore the early days when he worked to dismantle regulated airline systems and the subsequent rise of low-cost carriers. Despite technological advances, why do these outdated systems persist, causing frequent outages and poor customer experiences?
Ever wondered why airline tickets cost so much? The cost isn't just in the airfare itself but in the complex distribution systems that airlines are reluctant to abandon. We also tackle the industry's hesitation to innovate despite the clear cost savings from direct online sales. Discover how major players like Amadeus and Sabre maintain their grip on the market by absorbing emerging technologies that could otherwise disrupt their stronghold.
Say goodbye to clunky travel booking systems! Paul and Shane introduce us to Journey Mentor, a revolutionary platform aiming to transform your travel experience. By connecting directly with airlines, hotels, and car rental companies, Journey Mentor promises transparency and efficiency, cutting out unnecessary intermediaries. Learn about the innovative backend designed to minimize costs while maximizing user-friendliness, and explore the pricing models that could change the future of travel booking.
I believe that with the money a Sabre and an Amadeus make, which is billions and billions, they could reinvent the way they distribute and do that in a cheaper way. But if you're making so much money, then why would you, why would?
Speaker 2:you Today on Customer Land. I'm with Paul Cease, who is CEO of Journey Mentor, and, because most of our audience is US-based, you may not be familiar with the work that Journey Mentor is doing, but I hope that you will be soon For a broader explanation and a deep dive into what is going on within the travel sector, specifically airline technology. I'm delighted to be speaking today with Paul Cease. So, paul, thank you so much for being here. I really appreciate it.
Speaker 1:It's my pleasure, really nice being here. Thank you very much for the invitation.
Speaker 2:Well, of course. So can you explain to us, maybe just for context, who you are in a nutshell? It's too broad a question. Maybe I'll narrow it down just a hair for the sake of this, but you have a pretty impressive resume and it happened over a very long period of time. I'm hoping all that will inform the latter part of this conversation. But give us a little bit of background. How did you get to where you are and what are you doing at Journey? Mentor.
Speaker 1:Well, I'll try to do it in a nutshell, but I think it's going to be more like a coconut shell. I started 37 years ago in the aviation industry. In a nutshell, but I think it's going to be more like a coconut shell. I started 37 years ago in the aviation industry working for a small airline.
Speaker 1:And basically at that stage, trying to break the mold. When I started, the airline industry was regulated, as it was called at that stage. It meant that national airlines and the larger airlines were basically working together under sort of cartel. You could say, using all the same system, using the same fares, using the same fares and agreeing who would do what. I set up a small regional airline in the Netherlands and was breaking the mold, although I needed to do it with my larger brother, klm at that stage, the National Airline of the Netherlands.
Speaker 1:But we were smack in the middle of deregulation. And deregulation was started in America, and your ex-president, ronald Reagan, was instrumental to that. Basically, deregulation rolled out into Europe early 90s, whereby the power of aviation was no longer only with national airlines, but also entrepreneurs were allowed to start airlines and were able to do their own thing. And what happened was that the technical landscape at that stage was formed by the fact that there were a few big airlines in the States it was mostly American Airlines and in Europe it was mostly Lufthansa and Air France that were setting the stage on the technical side.
Speaker 2:Can you give us for context the era? What was the year? Span approximately.
Speaker 1:That was end of the 80s, beginning of the 90s. At that stage, all these airlines had a similar kind of reservation system, quite old-fashioned, but it worked, and they all worked in the same way. And what happened at that stage is in the deregulation. At one stage these systems broke out and became independent systems, and in America it became Sabre, well known, and Galileo, which was, if I recall well, a part of United, and Galileo, which was, if I recall well, a part of United, and in Europe it was formed as Amadeus, which was mostly the systems of Lufthansa, KLM and Air France, and they became independent system providers. They were still providing the same system, although just bundled together and charging in a way that was very much like they used to charge the national airlines expensive, expensive.
Speaker 1:So if we then skip a few years, things changed. Independent airlines came into the markets, Low-cost airlines came into the market and I think when you think about 20, 25 years ago, when low-cost airlines came into the market, there was a shift of technology. There were a few systems out there One of them was Navitaire that said we do things differently and created a system for low cost airlines which was actually a little bit of a copy of what the bigger airlines were doing, but then in a different way.
Speaker 2:Can you explain what that difference might have been, just for people in the know?
Speaker 1:Well, what they did is they tried to avoid the very expensive central reservation systems, gdss, which were again a monopoly or duopoly of Sabre and Amadeus, and they tried to prevent doing that by using the internet in a much more active way and selling online in a much more active way, but still quite, very much in the same paradigm. Now let's skip to where we are now. We're now, in my case, 37 years further. 37 years further, the Air Frances, the KLMs, the Uniteds, the American Airlines of this world are still using the same systems.
Speaker 1:Nothing really changed, although the name changed because they centralized the service and they say they privatized it. It's still the same system. It's still running the same technology, which is an old TPF, iparse technology, with some nice front-end GUIs that make it look modern. But we all know that when we travel we've all experienced in the last years when we travel, that travel outages are not a new thing, that most of the airline systems are not very customer-friendly. They're still very difficult to understand, they don't always work and, yes, in the past you needed to call somebody. Now there's a chatbot.
Speaker 1:But even that chatbot, when you try to work with the chatbot, it sends you around in circles and sends you back to the internet for a for a resolution yep I'm making it sound a little bit black and white, of course, but it's not as bad as maybe I say, but it is very much where the airline industry finds itself is, let's say, 50 years on from where it started to automate itself. If we look at the reservation systems, they're still very much the same. If we look at the aircraft used 35 years ago, the A320 and the Boeing 737 were introduced, and guess what aircraft are still used around the world? The A320 and the 737 were introduced, and guess what aircraft are still used around the world? The A320 and the 737.
Speaker 1:Yes, they did some cosmetic changes to it. They put a new interior in there, they put some new engines on it, sometimes more successful as the other ones, but it's still very much the same aircraft and pilots that used to fly the A320 20 or 30 years ago can still fly the A320 as it is now, and pilots that used to fly the 737 20 years ago still can fly the 737 as it is now. So even in equipment, nothing has changed. Airports have not changed an awful lot. They're congested and they remain congested. They're in hands of the bigger players because historic slots are for the bigger airlines and that's where the air and the smaller airlines need to go to smaller airports, which are less desirable.
Speaker 2:So I've been in the aviation industry so that your your statement a moment ago that you know you've been in this business for 37 years. You've had a a front seat to uh, the operational hurdles, to the inefficiencies, to the way things just didn't want to change, even when technology was available to make situations better Without getting too deep into the weeds. Could you outline some of those? I'm just going to call them frustrations, even though you haven't. Some of the challenges that you've seen that you, along the way, were thinking this could be improved, needs to be improved and there's a way to be improved, and I'm hoping that leads us all to your approach and journey, mentor. But I don't know that. So some of those frustrations, just for the lay people out there who may not be quite as familiar with the intricacies of what it takes to run an airline reservations, operational equipment, etc. Um, that you've seen over time okay, very valid question.
Speaker 1:Let me try to explain. Um, when we buy an airline ticket may that be, uh, on an online travel agent or with a travel agent or with an airline then actually most likely you're not making the reservation with the airline direct. It will go through a system which is called a global reservation system, a GDS, or global distribution system, a GDS system, a GDS or global distribution system, a GDS and your money is collected by in America it's called the ARC system and in Europe it's called the BSP system, which are collectively maintained systems by the aviation industry which make travel needlessly expensive. For instance, I did a lot of analysis together with consultants when I'm reorganizing airlines and say listen, you need to do a distribution difference. An average ticket, if you buy it through a travel agent, will cost an airline somewhere between $25 and up to $50 in cost, which is cost which is inflicted, which is not necessarily needed. Not necessarily needed because if you would have a direct connection with the airline and not go through the GDS and not have to pay this system, and if you would have a direct settlement way of settling the bill with the airline with a credit card instead of going through ARC or BSP, you can avoid a lot of cost. Avoiding the cost will mean that the price of the airline ticket could theoretically come down, but as we need to maintain these massive infrastructures, the cost is maintained and the cost of distribution is higher.
Speaker 1:Of course you can say well then why don't airlines basically just sell everything online? I believe if all airlines would say, well, let's do that, let's basically dump these expensive systems and let's all go online, they're all scared to lose out on something. Um so um, the internet system works very well. Um, if you are living in new york and you're going to fly jet blue because you know what jet blue operates out of new york and it's your hometown airline so you very easily say, well, let me buy a ticket online.
Speaker 1:But if you need to fly, if you're living in New York, you need to fly out of Japan to Malaysia you have no knowledge where to buy that ticket and how to buy that ticket and you're reluctant to do that online. So you go to an online travel agency or to a traditional travel agency or Google the airline and go to the airlines, and this complexity basically ensures that we need to keep this complexity in the reservation systems there. Why are we keeping that? Because of course I believe that with the money a Sabre and an Amadeus make, which is billions and billions, they could reinvent the way they distribute and do that in a cheaper way. But if you're making so much money, then why would you?
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Speaker 1:I'm sure that a lot of people have had good ideas and said, well, I'm willing to try this and I want to take these big systems on, but that takes big investments, it takes guts and it takes time. And what we've seen happening in the last 10, 15 years is that if somebody becomes too powerful in that area is these guys just go to them and say, hey, I'd like to buy you Right and integrate that system into their system, but, of course, in the way that they want it to happen. And there's two good examples of that. I previously mentioned the way Navitaire, the low-cost system, was trying to change the mold of travel and they successfully did it. Because if you look how JetBlue started out, if you look how Ryanair in Europe starts, out, their cost of distribution was quite low. But what happened about five years ago? Out, their cost of distribution was quite low, but what happened About five years ago? Amadeus went to the owners of Navitaire and said, hey, I like your system, can I buy it? And they bought Navitaire, bring it in line with their let me lightly say legal cartel. Sabre did very much the same with an American system called Radix, american entrepreneur, ron Perry, who set up Radix with the same idea as Navitaire to be able to avoid the cost of distribution, which was bought by Sabre and now is part of the Sabre Corporation.
Speaker 1:You see that even people who have been successful in breaking the mold have been, in the end, seduced by money to surrender their business and leave it back to the guys who are doing it in the same way for a long time. Things are changing and let me stop with my doom and gloom. I think we set the stage here, mike, and it's not all doom and gloom, because I think there's an opportunity and, as a lot of things, a lot of times in history, bad wars have given the best inventions, but also the pandemic which basically paralyzed the world has changed the way we think we act in travel quite substantially, and I think that people before the pandemic saw travel as a sort of commodity and were trying to get the cheapest ticket from A to B and then find the cheapest ticket to the cheapest hotel and cheapest car rental. And we're trying to do that in a smart way, online, sometimes using online travel agents which we're using the old fashioned systems, sometimes directly from an airline which we're using the old fashioned systems. But we all got burnt and I think everybody who was traveling during the pandemic can tell a story of well, I made a reservation, the airline canceled the flight, but the hotel was not willing to cancel my booking. So I lost my money on the hotel. The airline never gave me a refund, or gave it very late, or gave a partial refund, and the car rental company didn't want to refund me either. Or you had to make changes and the airline made a change in their itinerary and you couldn't change the hotel because they said no, it's not refundable and unchangeable.
Speaker 1:So people have become more reluctant going for individual reservations and are looking for more security, how they can basically bundle their reservation, have your flight itinerary, your hotel and your car rental in one booking with one responsible person, which I think a lot of the online travel agents are trying to address, but again addressing that with old technology. So although that on the front end, you think, well, listen, I've solved my problem You're still using the old technology of the airline, the hotel or car rentals company to basically create a package. And why does the online travel agent still do that? Because the big guys like Amadeus and Sabre basically pay the online travel agency a kickback per booking. So, if you are, let me name a well-known one Expedia. Expedia will make the booking through a GDS, could be Amadeus and could be Sabre, and Sabre will charge eight euros or eight dollars a sector to the airline for making that booking, but will pay the travel agency four euros for every time they make a booking. So this travel agency says, well, that's a good business, why would I change? So on a very artificial way, although the travel patterns have changed, we're still keeping the old way of doing things alive.
Speaker 1:And this is where myself and my partner, shane Batt, both veterans in the aviation industry myself more on running of airlines and starting up new airlines and reorganizing airlines. And Shane has a fantastic history. He was actually one of the inventors of the traditional system when he was an employee at American Airlines and later became a director at Sabre and was one of the people who invented the way, the old fashioned way. The companies still do business, the companies still do business. And in 2000, I think 16 or 17, he said listen, I'm getting too old for this and I don't see this business changing. I'm going to take an early retirement and I'm going to do. What I think I need to do is build a system that is different, that is flexible, that has an honest pricing structure, that is easy to implement, that takes out the complexity of travel and can connect directly to the airline or directly to the hotel or directly to the car rental company. So, trying to keep out the unnecessary IT middleman no-transcript. Have a question tell me which hotel is the best or why shouldn't I go to this part of town? There is somebody who can tell you that and service you. He was working on that during the pandemic. He was working on that during the pandemic and, of course, when he wanted to launch it during the pandemic, that became a very tough cookie and it took him a few years after the pandemic to basically realign that.
Speaker 1:My background, as you already said, is one of my last airline jobs was CEO of Cypress Airways, where I was in a turnaround capacity, but I've worked for over 30 airlines in the last 37 years, some of them basically just doing turnarounds, but some of them longer term management positions in CCO or CEO positions and earlier this year, when my a week, 365 days a year, because Pilot X went sick, or we had a bird flying into an engine, or this aircraft broke down in Tel Aviv and doesn't want to come back.
Speaker 1:Yes, it's exciting and yes, it's really fascinating. It's like being a conductor of an orchestra to take all these pieces of building a network, creating clientele, creating a product, creating a fleet, getting that fleet maintained, getting it to fly to A to B and getting people on board and seeing it work. It's thrilling, but at one stage it's also massively intruding into your private life. And then, at one stage, you have to say is this something I can do until I'm 70 years old? And I can assure you that's not the fact. Until I'm 70 years old, and I can assure you that's not the fact. So I had the choice. Being in my early 60s when my project ended, I could have gone back to another five years of running an airline.
Speaker 1:Or my old colleague, shane, who called me and said Paul, I'm setting up Journey Mentor and on the technical side we've got it all sorted out, but commercially I'd need help, because I'm not a commercial guy, I'm a technical guy. You've got the commercial background. Is this something you would want to do? And I think it took us about 15 minutes to 20 minutes with a coffee to agree that this is something that could really one change the face of travel Right. Start I wouldn't say a revolution, because that sounds very aggressive, but start a paradigm shift in the way we think about technology in travel.
Speaker 1:And I compared a little bit what's happening with banks. For many years, banks have been stuck in the same IT paradigm and, yes, they had nice new front-end GUIs and they did create an app where you could look at the same system but through an app. But then there's online banks that have been standing up and if you look in Europe, for instance, revolut, who has changed the ways people look at banking and use banking to a functional banking instead of, well, basically, institutional banking. And this is very much how we see JourneyMentor. Journeymentor should be able to change the way that people plan their travel, experience, their travel, pay for their travel but especially get helped in situations that there's disruption and unfortunately we know that with airports being saturated, airways being saturated and also the issue with the supply chain in aviation and in commercial aircraft, there is a lot of disruption. I think the consumer is owed a better product.
Speaker 2:So what you've set up is an enormous challenge. Yes, You've done a good job outlining some of the problems that I think most consumers would relate to. Certainly people in the industry would understand Certainly people in the industry would understand no-transcript what the vision or journey mentor is and and how you think that can change the way travel is booked, managed and run.
Speaker 1:It's actually quite simple. It's too simple to even imagine, maybe, what Shane was able to do because I have to give him the credit for that is create an AI-driven parallel search solution where, in the past, when you want to make a booking, you would go to a travel agent, that travel agent would go to one airline or to an airline system and then switch and would go to a travel agent. That travel agent would go to one airline or to an airline system and then switch and would go to a hotel system and then switch and go to a car rental system utilizing one. A long time span, two, complicating the process. And three, not creating a seamless process between the travel components.
Speaker 1:And what Shane did was create, by using new technology and computing power, parallel search technology whereby we can, if you go into the system and you make a classical search, I want to go from A to B at that day with my wife, my child and stay there 20 days. In the past you would need to do that three or four times to get all that, to get a single search result per time. You put it in in journey mentor systems. When you put it in, we will send it out to um, a multitude of airlines and airline suppliers, which could anywhere be between 50 and 200 suppliers, Sometimes up to 500 hotel suppliers, which could be consolidated hotel suppliers like OTAs or consolidators, and any car rental company you want, and within two seconds or even I say two seconds, but it it's officially, it's under one second, within a second you will get the search results which are best fitting to you. And how do we do that is, if we know who you are because you're registered or you've been searching before we know what you're looking for. So we will present you the very best results based on your profile and your needs. If we don't know who you are, you will get a quite generic response which you can filter any way you want. As we're going out to so many suppliers, you will always find the best deal out there. And you will always find the best deal out there and you don't have to go to five travel agencies and 10 hotels to look individually what the price is. They will all be lined up and be given to you in a very easy format to say well, this is what I want and you will be able to one-click book it. And if you're a registered client, it's just basically one-click, because we know who you are, you know what you want, we even know your preferences, where you want to sit in the aircraft and what kind of class you want to fly. One-click and you book it.
Speaker 1:And it goes further than that. So, say, mike, you booked a flight from New York to I'm in Cyprus at the moment New York to Cyprus and you're staying here in one of the nice hotels and you booked a car and you paid, let me just say, $2,000 for that. What happens in a normal travel agency is okay. They take the $2,000 from your credit card or if you make a bank transfer. Any way, you want to pay it, and in due time. It doesn't matter if you're traveling in two days or 20 days or 20 months. You will get your e-tickets and you're on your way and in the meantime, if you're lucky, they sent you an email. Have a good trip. If you want to buy extra baggage, please buy extra baggage. If you want to buy a first class seat seat, you can buy a first-class seat.
Speaker 1:Our technology, completely AR-driven the moment you've finished a transaction doesn't stop. It goes on looking. You will not, as a consumer, feel anything of that. You will not, as a consumer, feel anything of that. But we all know that hotels and airlines and car rental companies have fluctuating prices.
Speaker 1:And how many times has it happened to you that you made a booking to go on holiday in January and your holiday is in July and in May you get this very nice advertisement online, an email sent to you book now and get 50% discount?
Speaker 1:And how many times has your wife said you should have waited, we could have made 50%? Well, the good thing about what we do at Journey Mentor is you will be eligible for that discount because we keep on looking and if that discount comes up, we actually already book it for you and you will be immediately notified, either through the app, if you have the app, either through an email or a WhatsApp message or whatever you want to be contacted with, saying, dear Mike, we found a hotel. We found the same hotel cheaper, 300 euros cheaper, $300, cheaper. Would you want to switch? And you will say, most likely, yes, most likely, yep, very likely, and you'll get the money back. We have seen that in our experience because in our business case, we thought that about 20% of our bookings will be eligible for a swap. We call it a swap. In our experience, since we have implemented the system and start running the data is, we can see that in 92% of the cases we can offer a swap.
Speaker 2:Wow.
Speaker 1:That could be the airline, could be the car rental company, could be the tour company, could be the hotel. We also we built an algorithm it's called a fit score whereby we know Mike, you went to a hotel here that is a five-star hotel, close to the sea, close to the sea, but next to the five-star hotel there's another five five-star hotel which is actually as good or maybe even better, and has a higher fit score. So we won't only look at your hotel you're staying, but we will also look at hotels who have the similar fit score and if they come into the offer, we'll say dear mike, um, you're booked into the corinthia, uh, but actually the four seasons hotel has a, a much better suite available for, um, a lower price. Um, is this something you want to do? And we see that.
Speaker 1:Of course, in many cases people say yes, yes, please, and we return the money to the people. When I say we, we're a technology provider, of course we work with travel agents and we work with airlines, so the airline could have their own policy on that. Some airlines, what they do is say they just refund back the money. But today I was talking to an airline and they did something really, really clever. They went to the customer and said listen, I can refund you the money, but if you keep it here as a travel credit for your next ticket, I will give you 20% extra.
Speaker 2:Right Brilliant. Brilliant Because he'd keep the money, yeah, keep the money.
Speaker 1:And locked him in for the next travel, yep, but when they booked through journey mentor, even on the next travel, if they would find a cheaper price, they can still swap from that airline to another. So we believe that, on the consumer side, we've brought a system that is transparent, easy to use. You will say then well, that's nice for the consumer, but which stupid airline would implement it? Or which stupid hotel would implement it? Because it's not working in their favor? Well, that's where we, on the backend, we've solved it by saying listen, we don't use the very expensive infrastructure of the GDSs. We have quite a big team of developers that creates an API connection with every single airline we work with, every single hotel we work with. Yes, that's an investment, but as we do it for global travel agents and global airlines, it's a one-off investment which we reuse for all the clients. So, yes, it's quite an expensive startup, but once that startup is being set up and funded which, where we are now, it is very relatively cheap to run.
Speaker 2:Yeah, you've amortized that over billions of transactions potentially.
Speaker 1:Correct. Yeah, you've amortized that over billions of transactions. Potentially, we have two types of pricing either on a transactional fee basis, which is about, I would say, about 20% of what the traditional systems ask, or we work it on a profit share basis and say well, listen, we will make a zero measurement. We will make a zero measurement If we create incremental revenue for you. We will take a small part of that incremental revenue, which is, for the airline, fantastic because they are funding it from incremental revenue.
Speaker 2:For us, fantastic because and it's no risk to them, essentially.
Speaker 1:No risk to them. We don't ask implementation fees. We just ask for a deposit to be serious, but that's basically a prepayment for their first bills, so they can, without risk, step into new technology that serves customers in a different way and takes away the barriers that we see in the aviation and the travel industry.
