This article first appeared in The Edge Malaysia Weekly on May 13, 2019 - May 19, 2019
MOBILE apps have been transforming the travel experience for airlines and passengers alike over the past decade or so, from booking tickets to online check-ins.
Now, there is an app that lets passengers seek bargain airfares by bidding for last-minute leftover seats while helping airlines fill empty seats at the same time.
And if talks between the UK-based technology company that created it and Malaysia-based airlines are successful, it may soon be available for download here.
ATA.ONE Ltd managing director Kresimir Budinski says the company has approached Malaysia’s three key airlines — Malaysia Airlines Bhd, AirAsia Group Bhd and Malindo Airways Sdn Bhd — with the hope of securing them as its first airline customers in Southeast Asia.
It is still early days but he says the talks have been positive.
“Southeast Asia is for us a very interesting market because it has a large population of more than 650 million. We established a subsidiary in Kuala Lumpur in end-January to help promote and market our solution in this part of the world,” he tells The Edge in an interview.
The ATA.ONE app is currently only available in Europe and the Middle East. The company has four airline customers to date — Croatia Airlines, Montenegro Airlines, Iberia and Azerbaijan Airlines — and the app is connected to their inventory (unfilled seats).
“We have approached 50 other airlines such as Qatar Airways, Emirates, Singapore Airlines, Japan Airlines and Brunei Airlines to come onboard our air ticket distribution platform. It does not matter if they are low-cost or full-service carriers,” Budinski says.
About 2.2 million seats are left unsold every day around the world, he points out. “For airlines, empty seats mean lost revenue. With ATA.ONE, we can help them sell all their unsold or distressed inventory.”
The main concern among airlines, he notes, is that ATA.ONE’s solution might cannibalise their current sales.
“The solution is, in fact, attracting new customers that they never have had before. The airlines also determine the minimum price they are willing to accept for the unsold seats, as well as the number of seats and flights they would like to offer on our distribution platform, so there will be no cannibalisation,” he explains.
The solution also offers airlines the ability to block any of their passengers from accessing the online platform. “The bidding rules are fully controlled by the airlines,” says Budinski.
The platform is a “low-risk, free solution” for airlines as it is fully automated, he asserts. “The seats are only sold at prices that are within the airline’s acceptable profit margins, and there is no cost to airlines or passengers until a match occurs and e-tickets are issued.”
To use the ATA.ONE distribution platform, airlines first determine the minimum price they are willing to accept for seats that remain unsold 24 or 48 hours prior to a flight’s departure.
As for passengers, they just have to download the ATA.ONE app on their mobile phones and register, says Budinski.
“Once they have completed the registration process, they can search for the desired destination, airline, travel dates and budget. Upon entering all the information, they just need to place a bid. If it is a winning bid, payment is done automatically and the booking code is received directly from the airline, 24 to 48 hours prior to the planned departure.
“This booking code will be used for web check-in. However, the booking code does not guarantee passengers a seat on the flight they bought because it is still up to the airline. That can happen even if they buy a [physical] ticket. The thing is, not everybody turns up for every flight,” he says.
According to him, fares purchased via ATA.ONE app can be 40% to 60% cheaper than a regular airline ticket. Each time a seat is sold through an ATA.ONE bid, the passenger pays a small commission to the company.
ATA.ONE expects to break even by June. “We need to sell about 300 seats per day to break even. We did 2,000 successful bids in October to December last year,” says Budinski, who has more than 25 years of experience in the aviation industry and business in general.
He founded the company with four others — Sandra Mikuli, Ivan Janovi, Sasa Pavolovi and Jiri Marek. Budinski is the largest shareholder with a 76% stake with the remaining 24% equity interest split among 30 investors from 13 countries, including the four co-founders.
He says ATA.ONE was established in 2015 with £50,000 in funds. It started with an idea to create a tool that would help airlines to sell unsold seats through a bidding process at the last minute.
“We spoke to a couple of airlines and all were positive about the idea. During the first two years, we spent time travelling around Europe, the Middle East and East Asia, visiting airlines and explaining our business idea without any product. That was the toughest part of this business — to convince the airlines’ revenue managers that the ATA.ONE solution would not cannibalise their existing sales channel,” Budinski says.
Between November 2017 and February 2018, the company developed a proof of concept to test its idea, during which it attracted 80,000 website visits and 10,000 registered users to its bidding platform.
“That was another sign [for us] to continue the solution to full development, which was completed in August 2018. At the time, we had already secured Croatia Airlines, Montenegro Airlines, Iberia and Azerbaijan Airlines as our trial airline customers,” says Budinski, a Croatian.
The platform saw interest from airlines in Southeast Asia last December.
The company is looking to raise £5 million to £10 million from new investors in the third quarter of the year to expand its reach globally.
Budinski says he is willing to pare down his stake in ATA.ONE to 51%.
“In 2020, we intend to expand our platform to cover North and South America. We are leaving that to the last even though it is a major market as there are a lot more regulations there,” he adds.
In the long term, he is looking at an initial public offering in 2021 as an exit strategy or to sell the business to a larger tech rival. “There are three big tech companies in the world which are monitoring our development,” he says.
Based on a third-party valuation carried out recently, the company is worth £14 million, he adds.
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