Industry incumbents can work both internally and with partners to drive innovation, Rashesh Jethi, tells Airline Executive Summit in Prague
For years the Global Distribution Systems that sit at the heart of the travel industry have faced accusations of being too big, too slow and too corporate to foster innovation in the sector.
Much of the criticism was unfounded and some came from quarters with vested interests in undermining the status quo that has served travel so well for decades.
GDSs insist they have and are changing and as B2B suppliers of systems to airlines and their distribution networks they are only as innovative as their customers’ willingness to adopt new tech.
They have also pointed to the fact that running solid, reliable, business critical systems, without which airlines could not operate, does put them in a position to be natural disruptors.
However, a shift to cloud-based systems and open source technologies promises a future in which the big incumbents in an industry can work internally and with partners to drive innovation.
This is the path European GDS Amadeus has been on for a number of years as Rashesh Jethi, head of innovation for airlines, explained at the recent Airline Executive Summit in Prague.
“We made a very important decision about seven or eight years ago to decommission all of our mainframe infrastructure. That was a beginning of a journey to completely open systems.
“Mainframes have been around for 50 years. They were obviously reliable, the problem is there is a very limited number of suppliers that actually offer mainframes and there is a shrinking talent pool.
“Once people who programme them retire who is going to maintain them? Kids do not want to learn mainframe coding.
“They are all about open source and open systems. We are now investing in forward looking technology platforms.
Decommissioning its TPF mainframes was a “massive engineering feat”, said Jethi, but was also a “natural evolution” in how Amadeus is to develop and grow.
“It wasn’t something we really talked about but it involved hundreds of people working for years and if we did it right it would mean no one would notice.
“With increased look to book ratios we see a lot of increased transaction traffic coming in, but we saw no drop in transactions despite moving from proprietary mainframes to open systems.”
Jethi said this has already allowed Amadeus to move some airline systems to the cloud but that it was operating a hybrid model.
“We have taken the approach where we can run in a public environment like Google or Amazon and we can also essentially run private cloud within our data centres,” he said.
“We also run an open ecosystem approach recognising our customers want to have choice, want to work with other partners and sometimes with start-ups.
“We have organised ourselves with a dedicated set of teams around innovation. There is a group that does fundamental research in machine learning.
“There’s a very strong data science team and we have started an artificial intelligence academy within Amadeus.
“This involves a combination of online and classroom sessions to bring people up to speed on machine learning and reinforcement learning.”
Jethi said the firm has also established an AlphaZone, a small team that’s given the space to “constantly tinker with stuff” outside of the main customer delivery teams.
They are tasked with looking at how things they see in other sectors like automotive and banking could be applied to travel. “They do a lot of cross-pollination,” said Jethi.
“It allows us to be free from constraints. We take ideas that have legs and see if they pique customer interest and we will let it have a path to market and then work with product engineering teams to make sure it’s integrated into our lifecycle.”
Amadeus’s work with start-ups involves a partnership programme and venture fund run out of Madrid which invests in promising early stage firms focusing on areas it does not specialise in.
“We are constantly looking at start-ups to introduce to our customers or to invest in. We have made about 12 investments so far.
“We only look at early stage companies and only those there are solving fundamental pain points in travel,” Jethi said.
Examples of successful investments Amadeus has made include Flyr that is focusing on different approaches to revenue optimisation, a frequent flyer data and redemption specialist 30K, Situm, a smartphone indoor positioning service and people tracking software developer Crowdvision.
Jethi added: “Typically we offer seed investment and take a small stake. We have stayed away from the traditional incubator. We look at start-ups from a pure venture investing perspective.
“Our model is to nurture good ideas and help them develop technology, see where it makes sense and also introduce them to our customers.
“We’ll bring them in to our partnership programme, give them access to our APIs and they can build working systems using our search algorithms.
“It’s hard for start-ups to get access to decision makers in large organisations. We do not charge, it’s truly based on merit and it’s really to make those connections.
“We are trying to nurture an ecosystem. A lot of that is driven by our customers and what they expect from us so we are investing in things we need to stay ahead as a technology leader.”
Another way Amadeus is looking to foster innovation and collaboration is with co-located teams with strategic partners like Accenture in Dublin.
“We understand travel and Accenture understands other industries and digital. It gives our guys the chance to step outside their business and think not like an airline or business travel agency,” Jethi said.
Finally, Amadeus has forged partnerships with academic institutions, like the Massachusetts Institute of Technology (MIT) Computer Science and Artificial Intelligence Laboratory, to explore possible applications of machine learning in travel.
The importance of keeping up with trends and how younger generations are growing up with travel has also seen Amadeus sponsor ten PHD students at Imperial College, London.
“These are younger students who have never had a paper ticket or ever walked into the travel agency. They look at things in different ways,” Jethi said.
“The idea is that we understand that good ideas come from everywhere; from start-ups, people doing academic research and from our own teams, and we give them space to think differently.”
Customer choice, both at airline and their end customer level, is driving this change and behind it is the spirit of openness and sharing of knowledge that optimises the digital age rather than creating walled gardens.
Jethi said: “The value has moved up the stack. It used to reside in owning the data centres, the networks, then it was hardware, now increasingly it’s the software.
“It’s a model where we compete at a business level in certain ways but there is also a level in which you partner when you have a common customer.
“Consumer expectations are changing. Consumer demographics are changing. Airlines are aware of the dependency they have on fixed costs and are absolutely looking to do things differently.”