DRCT’s Victor Nekrilov discusses:
- Uber’s model for airlines
- Why business travelers are the main goal
- Opportunities with African airlines
Airlines content aggregation startup DRCT is positioning itself as a “new airline,” as its airline partners directly connect travel sellers using AI technology to improve demand and pricing, including content from new distribution capacity. To date, DRCT has established contacts with more than 30 airlines, including three major European airlines, United Airlines and Emirates. DRCT Managing Partner and Co-Founder Victor Nekrilov spoke with BTN Executive Editor Michael B. Baker during the UATP Airline Distribution conference in Lisbon about the DRCT model, growth path, and partnership plans with travel management companies.
BTN: What is the DRCT Distribution Model?
Victor Nekrilov: Right from the start, we knew it was a good business model, because we had virtually no expenses on our content. We’re competing with the Life Duffel guys, TPConnects, and even Amadeus and Travelport. We will compete on transaction rates. The price is from Amadeus, they charge the airlines an average of $8 per sector, we can provide the airlines with a better price, one [dollar] Or even less in many cases.
We wanted to build a new passenger experience because we realize that there are a lot of challenges in distributing airlines. The first is that airlines do not understand the traveler. Even if they have information about the passenger, it has nothing to do with them, because they have the prices prepared before ordering. As a broker, as we are, we can get information from [online travel agencies] And working with that, which means we can take better advantage of demand from the airlines.
It’s the same thing that Uber does. They do not operate the fleets, but they understand the passengers and can give the passengers a smooth experience. They build their model when they understand the passenger, they know how to handle that, and they make the prices for you. They don’t ask the drivers. They just make the prices. That’s what we want to do with airline distribution.
It’s the same situation with airlines. Three days ago, I went to Morocco, and I don’t know who is flying Morocco, so my only option is to go to Skyscanner and compare prices. And even this does not guarantee that I will find the right choice. We understand passenger demand, what you want. Travel agencies are keen to sell this information to us, and we can handle that and create our own value-added content. We only need to buy seats from the airline.
BTN: How do you decide what to buy?
Nekrilov: What we’re doing now, we’re replacing seats from them because we understand that OTA has demand on a flight from London to Paris, let’s say, and they sell 200 tickets every three days. We know they sell these tickets at that price for this type of passenger. We can rely on this information and retrieve seats from airlines and resell them on our routes and fares. For the airline, this means that they get paid up front, and that they will sell more than they would themselves sell. One of the key values we can use is that we understand when you, for example, search on a Kayak or any OTA, and when [the OTA receives] Dial from Paris to London, this request is sent to different channels. When they get the answers, they should show it to you. What we offer for OTA [is to give the traveler] Something special for you, a unique offer that you wouldn’t get from an airline. If we understand you, we understand the competitors in the market, and we can make the perfect offer. It is like an online revenue management system, based on real data, which is based on real demand. Our main idea is that we can handle data better and individualize demand better than airlines.
BTN: What did your growth trajectory look like in terms of bookings?
Nekrilov: We are growing 10 to 15 percent per month. We are a startup company. We are growing fast. We went through hard times during the pandemic, but of course, it was a nightmare when it started, but we were trying to find opportunities [in] Markets such as African markets and Latin American markets. When Europe was completely closed, Africans didn’t care, and it was impressive when we started working with small local African airlines. You can make a lot of money with them, because they have higher margins and because they have a high profile.
BTN: Are you targeting business travelers?
Nekrilov: One of the main ideas for business travelers is service, so it is interesting that travel management companies are the people who sell the most expensive tickets and have the most valuable customers, because these are the customers that companies pay for. They don’t want to book the cheapest price. The corporate traveler needs a service, expects some benefits, and in most cases travel management companies know a lot about this traveler. They have travel policies, they have profiles for each customer, so in terms of dealing with corporate travel, we can get a lot of information about them, and it’s very valuable because the passengers are valuable.
BTN: So, do you work with military service centers?
Nekrilov: From the beginning, it was our main focus. We have been focusing on corporate travel and travel and tourism excursions. [DRCT claims use by “more than 1,100 sellers from over 200 TMCs, OTAs and other travel agencies in Europe, the U.K. and the U.S.] They have tough clients, because they are the clients who want good service, and what that means for a travel management company is that they need to be ready to support that client with changes, cancellations, etc. The tool they have used for many years is the GDS.
When airlines come to these customers and say that you can find Air France-KLM flights in this booking tool 16€ cheaper for a travel management company, it means that when I search for Air France-KLM I have to go to this tool, too . [Travel agents] You must remember passwords and how to deal with them, and they must be synchronized in some way [the] Middle office and back office systems, which means [they] You will never do that. They have a GDS market, and everything is working properly and working well with the middle office system and the back office, and this is a problem for the airlines, because they understand that these are the most valuable customers, and they have to reach them, and that was impossible. We deliver the price from the carriers directly to the GDS, this means that TMCs do not need to switch from GDS to any other interface. We only deliver fares to the GDS, so when TMC looks for the ticket in the GDS, they’ll see the alternative option from us, directly from the airline, and they won’t need to switch between interfaces.
BTN: Have you ever imagined connecting directly with business travelers?
Nekrilov: We do not deal with passengers directly and are not prepared for that. We believe everyone should focus on their core business. Turkish military companies create their own value. We don’t want to compete with them. Metasearches works well with traffic. They know how to get passengers and offer them price comparison value, and we don’t want to compete with them. We want to be a part of them.
We are competing with GDS but in the future. We want to use the GDS platform to distribute our content. Sometimes they compete, but in the modern world you see this collaboration: Gucci collaborates with Prada. Five years ago, it was hard to imagine, but now they’re finding synergies. This is the future, when they are not trying to make everything themselves. This is what airlines should not do. They want to be a retailer, an IT company, and manage the fleet, but they are doing nothing right.