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Planes, Trains and Automobiles: How the API Economy is Revolutionising the Transportation Industry  

"The common denominator in this transportation revolution is the ability to integrate data and capabilities across channels and with third-party partners"

By CBR Staff Writer

In an industry as competitive as transportation, ongoing innovation around customer experience is essential for business survival. With continued advances in technology revolutionising the transportation industry, new standards are being set for how companies can create seamless experiences for customers across channels.

More and more, companies are moving away from trying to own the customer relationship end-to-end and towards creating a more collaborative, ecosystem-driven approach that offers greater choice and convenience for customers, writes Ian Fairclough, VP of Services, EMEA at MuleSoft.

To book flights and hotels, for example, consumers used to engage with travel agents. However, consumers today can use digital assistants or aggregators like Expedia that align travel needs with available offerings from a variety of providers playing in the same digital ecosystem. Relinquishing some of the direct engagement that travel providers have with their customers might seem like a threat. However, the upside is that there are more revenue and loyalty opportunities to be gained by tapping into a larger distribution network that will ultimately provide customers with more choice and opportunity for personalisation. To foster customer loyalty and ultimately drive revenue, companies need to set customers free.

Keeping the Engine Running in a Digital World

This shift is taking hold across the entire transportation industry, affecting organisations of all shapes and sizes, from airlines to rail operators and taxi firms to bus companies.

Change is in the air, and companies are taking action to drive long-term sustainability against a backdrop of mounting competition, fluctuating fuel prices and ever-changing consumer expectations. For example, Big Bus Tours used to drive 70% of its sales through traditional “on-street” paper tickets, so it needed to modernise the way it engaged and transacted with its customers. By opening itself up with APIs to an ecosystem of 1,000 partners—such as online travel websites—who can search for its products, check availability, make and cancel reservations and generate digital tickets, Big Bus generated a 26% increase in revenue.

It’s a similar story for Air Malta. As a smaller player competing with over 40 airlines for Malta’s five million annual tourists, it knew it needed to adapt to survive. To do so, Air Malta opened up its inventory systems with APIs in order to sell flight tickets through a wider partner network. It’s a prime example of shifting away from trying to “own” customers end-to-end and instead meeting customers where they are. For 48-year-old railway operator Amtrak, openness is also critical—almost 86% of its revenue from over 32 million customers now comes through digital channels, including its mobile app and third-party aggregator services such as Kayak. By using APIs to expose valuable pricing, scheduling and inventory data locked away in legacy systems built decades ago, Amtrak is able to innovate at its core, bringing disparate channels together and integrating into third-party partners for seamless customer experiences.

The common denominator in this transportation revolution—and a crucial factor in the success that Big Bus Tours, Air Malta and Amtrak have experienced—is the ability to seamlessly integrate data and capabilities across channels and with third-party partners when mutually beneficial.

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Connecting the Parts of the Engine

APIs, or application programming interfaces, are quickly becoming the de facto way for companies to seamlessly integrate their applications, data and devices internally as well as externally with partners. For example, Expedia can aggregate flight information from various airlines in a single view because of APIs, and similarly McDonald’s can deliver food directly to doorsteps via its partnership with UberEats because of APIs. APIs are the hidden software building blocks that allow technologies to speak to each other and ultimately make digital experiences happen.

The digital ecosystem that is emerging around this new model works most effectively when businesses use APIs to create an application network. This must reside at the heart of their business, providing a gateway into the wider API economy and unlocking countless new revenue streams. The Connectivity Benchmark Report 2019 shows that on average, 25% of organisational revenues are generated from APIs and API-related implementations amongst those that are using them.

It’s not hard to imagine how this shift could evolve, as traveling becomes even more consumer-friendly. For example, we could see the emergence of platforms that offer real-time route optimisation to help people get from A to B in the fastest, most cost-efficient way. These platforms could enable passengers to hop on and off any form of transportation without needing a ticket so they can get to where they want to go even as plans change.

In the background, APIs could handle payments so the passenger is automatically charged for the services they’ve used, in an Uber-style form of billing. This future model will require a network of interconnected businesses, relying on an application network to help various technologies work effortlessly together. This model would bake in flexibility to allow each service provider to charge for the part they play in getting the passenger from one place to another.

Making the Engine Run Faster

In the same way that the engines powering our transportation systems have evolved, so too must the ways that travel operators engage with their customers. In an intensely competitive market, the opportunity to seize new revenue streams by partnering more openly with others simply cannot be ignored. The API economy offers precisely that opportunity, enabling data to become the fuel that supercharges the engine and helps transportation companies achieve growth on a road paved with obstacles.

See also: MuleSoft Founder Ross Mason on “Frankenstein” Data Sets and the Rise of the API Economy

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