A path to profits

After years of battling downward pressure on revenue, much needed transformation is coming, bringing with it both challenge and opportunity for airlines.

IATA recently released v1.0 of a business case on value creation of retailing transformation. The brief validates projections from a 2019 McKinsey report to arrive at a benefit of $7 per passenger per year.

$40B of additional value creation or $7 per passenger per year – however you look at it, retailing transformation presents an opportunity airlines can’t afford to pass up. With transition costs estimated by IATA at somewhere in the range of $1 – $2 per passenger per year, the math speaks for itself.

How can airlines claim their share of the prize?

Leveraging the McKinsey findings and working with their Modern Airline Retailing Consortium partners, here’s how IATA sees the financial benefits of transformation breaking down:

We believe the numbers present a compelling business case for transformation towards an offer- and order-based retailing model.

Airlines must evolve their strategy, technology and organization towards a customer-centric modern retailing model to generate more revenue opportunities and satisfy traveler demands.

  • Early movers stand to gain most. Sabre offers a range of next-gen solutions that enable airlines to take meaningful steps towards modern retailing by creating dynamic and personalized offers for every customer – start with SabreMosaic, our revolutionary airline retail platform. Designed and built to be modular, open, and powered by Sabre Travel AI™ technology.
  • Airlines must be bold and make the necessary medium-term investments in retailing capabilities – technology, skills, fulfillment – to ensure long-term success. Capturing incremental value throughout the transformation journey is imperative. The development of rich and personalized offers will deliver revenue opportunities for airlines that can solidify the business case for change and fund future developments along the path to realizing their retailing ambitions.

Explore the path to offers and orders

The value creation opportunity unlocked by transitioning to a modern retailing model is significant, but it demands a new way of thinking. It will require airlines to think and act holistically, considering not just technological requirements but also the strategic and organizational changes needed to operate efficiently in a world of offer- and order-enabled modern retailing.

Progressive airlines are looking to unlock the huge opportunity that transformation presents by preparing now, building their transition-readiness and prioritizing progress over perfection. At Sabre, we are ready willing and able to embark on the journey alongside you.