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DRCT's Viktor Nekrylov discusses:
Airline content aggregator startup DRCT is positioning itself as a "neo-airline," connecting its airline partners directly to travel sellers with AI technology to optimize demand and pricing, including New Distribution Capability content. So far, DRCT has built up connections with more than 30 airlines, including the three major European carriers, United Airlines and Emirates. DRCT managing partner and cofounder Viktor Nekrylov spoke with BTN executive editor Michael B. Baker during the recent UATP Airline Distribution conference in Lisbon about DRCT's model, growth trajectory and plans for partnerships with travel management companies.
BTN: What is DRCT's distribution model?
Viktor Nekrylov: From the very beginning, we understood it's a good business model, because we have almost no expenditures on our own content. We are competing with guys life Duffel, TPConnects and even Amadeus and Travelport. We will be competing on the prices of transactions. The price from Amadeus, they charge airlines an average of $8 per segment, and we can provide airlines with a better price, one [dollar] or even less in many cases.
We wanted to build a new experience for the passengers because we understand there are a lot of challenges in airline distribution. One is that airlines don't understand the passenger. Even if they have information about the passenger, they have nothing to do with them, because they already have the prices prepared before the request. Being the intermediary, as we are, we can grab the information from the [online travel agencies] and work with that, which means we can utilize the demand better than airlines.
It's the same that Uber does. They're not operating the fleets, but they understand the passengers and can give the passengers a seamless experience. They build their model when they understand the passenger, they know how to deal with that, and they are creating the prices for you. They're not asking the drivers; they just create 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 flies Morocco, so the only option for me is to go to Skyscanner and to compare the prices. And even that is not a guarantee that I will find the right option. We understand the passenger demand, what you want. OTAs are eager to sell us this information, and we can deal with that and create our own added-value content. We just need to buy the seats from the airline.
BTN: How do you determine what to buy?
Nekrylov: What we are doing now, we are redeeming the seats from them because we understand an OTA has demand on a flight from London to Paris, let's say, and they are selling 200 tickets every three days. We know they are selling these tickets at this price to this type of passenger. We can rely on this information and redeem the seats from the airlines and resell that on our own routes and prices. For the airline, it means they are getting money in advance, and they will sell more than they will sell by themselves. One of the main values we can use is that we understand when you, for example, are searching on Kayak or any OTA, when [the OTA receives] the request from Paris to London, they are sending this request to different channels. When they get the answers, they should show it to you. What we are offering to the OTA [is to give the traveler] you something special, a unique offer you would not get from the airline. If we understand you, we understand the competitors on the market, and we can give the perfect offer. It's like an online revenue management system, based on the real data, which is based on real demand. Our main idea is that we can deal with data better and individualize demand better than the airlines.
BTN: How has your growth trajectory looked in terms of bookings?
Nekrylov: We are growing 10 to 15 percent per month. We're a startup. We're growing rapidly. We have difficult times during the pandemic, but of course, it was a nightmare when it started, but we were trying to find the opportunities [in] markets like the African markets and Latin American markets. When Europe was absolutely closed, Africans didn’t care about that, and it was quite 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 are super niche.
BTN: Are you targeting corporate travelers?
Nekrylov: One of the main ideas of business travelers is the service, so it is quite interesting that travel management companies are the guys selling the most expensive tickets and have the most valuable clients, because these are the clients for whom the corporations are paying. They don't want to book the cheapest fares. The corporate traveler needs service, they expect some benefits, and travel management companies in most cases know a lot about this traveler. They have travel policies, they have profiles of each client, so in terms of dealing with corporate travel, we can grab a lot of information about them, and it is quite valuable because the passengers are valuable.
BTN: So, are you working with the TMCs?
Nekrylov: From the very beginning, it was our main focus. We were focused on corporate travel and TMCs. [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., including FCM Travel Solutions.] They have difficult clients, because they are the clients who want good service, and what it means for the travel management company is that they need to be ready to support this client with changes and cancellations and so on. The tool they used to use for many years is the GDS.
When the airlines come to such clients and say you can find flights on Air France-KLM in this booking tool cheaper by €16, for a travel management company, that means when I am searching for Air France-KLM I should go to that tool, too. [Travel agents] have to remember the passwords and how to deal with that, and it should be somehow synchronized with [the] mid-office and back-office systems, which means [they] will never do that. They have the GDS marketplace, and everything is working properly and working good with their mid-office and back-office system, and that's a problem for the airlines, because they understand those are the most valued client, and they need to reach them, and it was impossible. We are delivering the price from the airlines directly to the GDSs, so that means TMCs don't need to switch from the GDS to any other interface. We are just delivering the prices to the GDSs, so when the TMC is searching for the ticket in the GDS, he will see the alternative option from us, from the airline directly, and they don't need to switch between the interfaces.
BTN: Do you ever envision connecting directly to corporate travelers?
Nekrylov: We are not dealing with the passengers directly, and we are not willing to. We believe everyone should be focused on their core business. TMCs are creating their own value. We don't want to compete with them. Metasearches are doing good with the traffic. They know how to get the passengers and deliver them the value of comparing the prices, and we don't want to compete with them. We want to be a part of them.
We are competing with the GDSs but in the future. We want to use the GDS platform to distribute our own content. Sometimes you are competing, but in the modern world you see this collaboration: Gucci is collaborating with Prada. Five years ago, it was hard to imagine, but now they are finding synergy. That is the future, when you are not trying to make everything by themselves. This is what airlines shouldn't do. They want to be the retailer, IT company and operate the fleet, but they do nothing properly.
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