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Insights / Aviation

Why the travel industry needs an Ancillary ERP solution

May 10, 2021
About the author Peter CoelhoPeter Coelho
COO Omnevo

1. Peter, can you define what an Ancillary ERP does and why it is now so important to the industry?

Firstly, for any readers unfamiliar with the term, ERP stands for ‘Enterprise Resource Planning’. Basically, it’s about using software and systems holistically to support planning and management of all the core elements and processes across any organization to drive a much stronger performance. At Omnevo, we’ve evolved beyond the traditional ERP model by developing a unique Ancillary ERP system specifically designed to meet the needs of travel and hospitality providers. Our system enables us to define, manage and effectively steer the non-primary product offering in these sectors, especially for airlines, airports and railway companies.

Although ancillary revenue streams are obviously not new to these sectors, we see that many are currently set up in various silos within the same company, thereby not generating any synergies. Omnevo’s technology provides the perfect solution to break away from these silos. It bundles the various revenue possibilities under a single umbrella and so maximizes the outcome and increases the efficiencies of these new business models. 

2. So, what are the top issues when it comes to Ancillary ERP for an airline, airport or railway operator?

It's all about maximizing the profitability of the retail program - both F&B and retail - and therefore a solid Ancillary ERP system is the engine. I think that many operators make the mistake of focusing primarily on maximizing revenue. Of course that’s important but, in fact, the key for successful retailing is to manage the costs as well as ensuring agility in steering, forecasting, analytics and ergonomics for both the back and front office users. 

Our back-end system provides a state-of-the-art toolset that enables precise supply chain management based on data analytics, such as waste and leakage information, warehouse and ordering optimizer, as well as an automated load planner.

When it comes to our front-end solution, its intuitive design and intelligence provides the ability to save valuable time during the preparation process on logistics. Simultaneously, it enhances retailing performance for sellers by using our EPOS application through simple but highly efficient mechanisms, such as sales recommendation parameters and live commission trackers.  

3. Why does anything on the back-end need to be digitalized at all? Is there an argument to be done in the same way - part analog/human and part digital?

Digitalized processes are only as good as the degree to which they can be understood and effectively implemented by their users but the performance gains are absolutely clear. Therefore, for us, it has always been important to start by gaining an in-depth understanding of our customers’ operational processes. Only when we really know them do we then adapt the OMNEVO toolset in order to optimize its efficiency and ensure that all users are fluent, comfortable and fully effective with the system. From our experience, we find that a shared planning approach enables our customers to quickly and smoothly adapt and very quickly see the performance gains that can be made.

4. Can you develop the argument as to why an Ancillary ERP approach needs to be fast-tracked, and give some clear examples with adoptees?

The holistic beauty of our system is that not only do we have many examples of powerful new solutions to complex operational issues but we also have many simple engineering changes that have also increased efficiency. One of my favorite examples is one that delivered a huge impact by increasing revenue on board one of our train customers, TGV Lyria, based in France. 

Food and beverage outlets on board trains all face a core challenge; many passengers want to make a purchase from the bar, almost invariably generating long queues. Those frustrating queues demotivate the customers and sales are often lost.  We found a solution to speed-up the selling process for the crew by quickly adding a barcode scanning functionality to our EPOS devices. Instead of typing the product barcodes manually, the crew simply scanned them, instantly saving time on every transaction. 

That sounds a relatively simply system enhancement, but the gains were startling. The average number of sales tickets per trip increased by an impressive 10%, the customer satisfaction index rose by 5 points, retail revenue increased by 15% while the waste factor on fresh goods decreased by 8 points. And don’t forget the crew motivation; their sales commission increased!  So, you can see how this was a simple, pragmatic, yet highly effective example of how we look at system engineering to drive startling results - creating wins for the customer, the operator and the crew.

5. So, for guidance, what are the first steps that an airline, airport or railway operator should take if they want to digitalize their ERP? Perhaps you can answer to both these sectors?

For any operator, the first step would be to understand the weak points of their current systems and their priorities. As I suggested earlier, an Ancillary ERP system needs to be adaptive, ergonomic and efficient and we tailor our solution precisely to their specific needs. I would recommend their first step be to contact us to see how we blend our technology with in-depth industry knowledge and let us assist them in determining where to start, particularly in developing an initial MVP, which is a powerful first digital step for any operator.

6. How, then, should a vendor be selected? What, in your view, are the key criteria?

Even though costs are certainly one of the main drivers when selecting a vendor, operators should take a wider focus on the efficiency and real benefits that an Ancillary ERP system will bring, both in the short and the long term. 

The basis of our business model takes all those elements into consideration. We provide a strong and efficient Ancillary ERP system built on real experiences, established on minimum capital and operating costs and proven to deliver powerful results.

Also, a spirit of partnership is important. We want to be a real entrepreneurial partner for the long run, sharing risks and opportunities rather than being an unambitious provider simply aiming for comfortable, recurring revenue.

7. One last question. To summarize, if there was one key message you would like to convey to the airline, airport and rail industries about Ancillary ERP, what would it be? 

We believe the time has come for airlines, airports and rail operators to take the fate of their ancillary programs into their own hands. This applies across those industries but the airline ecosystem in particular has always struck me as a strange one, where everyone around the airlines - whether suppliers, manufacturers, handlers or caterers - are all operating profitably and yet so many airlines themselves are not! Much of that has to do with the limited value chain handled by an airline internally – and it has to change. I’m sure those points will resonate with many airports and rail operators and they too have the opportunity to change.

In particular, one of the areas that will drive the most value to airlines is wider and deeper targeting of ancillary revenues. Especially in the current challenging climate, airlines should stop using the strategy of outsourcing everything – which leaves them with no control, no digital marketing capability and no usage of their valuable customer data. Instead, they need to use technology to run, steer and operate a significantly more efficient in-house operation with the help of  a technology platform that democratizes the ancillary revenue game and puts them back in control. Digitalization gives airlines, airports and rail companies the opportunity for greater efficiency, performance and control – they now have to seize it.

Aviation

Press release: Omnevo and Fraport extend long-term partnership by 5 more years

Frankfurt, July 14th, 2021 - Omnevo, leading provider of revenue-increasing digital platform solutions for airports and airlines and part of the AOE Group, and Fraport AG, owner and operator of Germany's largest airport, announced today that Frankfurt Airport goes live with the latest advanced version of Omnevo's award-winning omnichannel e-commerce solution. Additionally, the two companies announced that they have extended their long-term partnership for another five years to further develop the digitalization of the airport's range of products and services for the almost 70 million passengers (before COVID-19) who travel through Frankfurt Airport each year. With go-live, the existing digital solution platform, which Omnevo’s parent company (AOE) had originally developed for Fraport, was migrated to the latest Omnevo product version. Through its original partnership with AOE Fraport utilized the OM³ digital platform (now known as Omnevo) to become the world’s first omnichannel airport focused entirely on omnichannel both before and, especially, during the pandemic. The newly enhanced Omnevo cloud solution enables the operation of a complete airport marketplace solution for all travel retail sales at a fraction of the costs previously required for such a leading ecosystem, creating new revenue opportunities for crisis-hit airports of any size. Thanks to the highly flexible SaaS solution, Fraport has also effectively future-proofed its digital strategy by integrating directly in the Omnevo product roadmap, enabling it to benefit from Omnevo’s strategy of continuous improvements to the solution.

Aviation

A personal perspective on leadership

The past year has been extraordinary in so many ways and, while the tragic impact on lives takes precedence, we’ve also had to deal with the huge changes in our working life too. As the crisis developed early last year, I was busy planning in my new role as CEO of Omnevo - AOE’s new specialist product division - positioned as a digital solution pioneer in the travel industry, launching in early 2021. As the crisis grew, this became the most challenging experience of my career, but I’ve been surprised to find that it’s also become one of the most instructive and rewarding experiences too. Creating and launching any new company is always a huge challenge but we suddenly faced extraordinary new barriers as the way we do business had to be transformed. Much of 2020 was spent planning the new company and today, still operates almost exclusively remotely. Many of us, including some of the founders, worked together for almost a year but have still not actually met in person! Yet we already operate successfully in a global network and are scaling and winning new business. Omnevo is a truly virtual organization; this is how we were born and that is how we thrive. In this short time, we’ve already made our mark on this industry, with a culturally diverse, agile and highly committed team working alongside customers of all sizes around the globe. We’re gaining a lot of attention because we are recognized as game changers - and that innovative spirit is integral to our team spirit. We are committed to being the digital challengers and innovators in the travel and mobility industry – an ethos drives us every day. And it’s working. But what is the glue behind this, what makes us successful? Why is it working and, in these bizarre working conditions, how did we manage to get the team so well and engage with our customers so quickly? I’m obviously proud of what we’ve achieved but I want to share my personal perspective on how we made this happen and hope that it will resonate with others in the industry - and, hopefully, help you with your management challenges too.