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Innovation in the travel industry: Steve Domin and Kevin O’Shaughnessy in conversation

Innovation in the travel industry: Steve Domin and Kevin O’Shaughnessy in conversation
Jonny Blackler
Jonny Blackler
18 March 2022

Steve Domin (Co-founder and CEO, Duffel) and Kevin O’Shaughnessy (Founder, CityHook; Chapter Lead, Travel Massive Dublin) sit down for a discussion about the hurdles of getting into the travel industry, opportunities for innovation, the Duffel journey up to today, and a look ahead at the future of travel tech.

Steve introduces Duffel, a developer-friendly API platform for searching, booking, and managing flights. He shares an analogy where an API is like a utility company: in your house, you have electrical appliances connected to electricity from a power grid that links your house to the energy companies. The electrical appliances are like apps and websites on the web, Duffel is like the power grid, and the energy companies are airlines.

Innovation in the flight booking experience

Kevin poses a question around innovation in flights; there is typically only one way of booking flights where a traveller chooses an origin, destination, and dates. ‘How much innovation can we bring to this space?’.

Steve discusses how selling flights is only part of the journey. The shop and book experience is fairly standardised in the industry although there has been some innovation, especially when it comes to searching multiple destinations at once and getting ideas for where we want to go. Steve thinks we can do better than that.

One interesting area for innovation in travel is the point of sale. There are opportunities to embed the travel shopping experience beyond traditional travel agents. He gives the example of event organisers – sports, festivals, concerts, conferences – offering flights or other modes of transport for attendees.

Steve reiterates that ‘search and book’ is only one part of the travel experience and that accessing and managing bookings presents powerful opportunities. He shares an example of an Uber passenger on their way to the airport. An exciting new experience would allow the passenger to access their flight booking and buy ancillary services: if they’re running late, they could buy a fast track security pass. Steve clarifies that Duffel doesn’t sell these experiences and ancillaries to customers, it enables the transaction – communication and financial – between businesses and airlines.

Accessing flight inventory

Kevin moves the conversation on to how businesses can actually access flight inventory, also known as flight or airline content, ‘It’s not as easy as it looks, right?’. Steve notes it isn’t easy at all. There are a lot of barriers and Duffel is trying to tackle them one by one.

The first and arguably largest barrier is the technology that allows businesses to access airline reservation systems to search, book, and cancel flights. The technology currently exists through Global Distribution Systems (GDSs) that have been around for a long time. They offer APIs to connect to airlines, however, these are dated and documentation and support aren’t as comprehensive as many businesses need.

Kevin notes that new businesses getting into the industry will need to spend considerable effort and resources to build airline partnerships. This means that new travel sellers focusing on one channel of entry will build the same experience as other sellers instead of focusing on differentiation.

Kevin goes on to ask about which airlines Duffel has connected to. Steve describes how Duffel started by building direct connections using the New Distribution Capability (NDC) data format with large full-service carriers – American Airlines, British Airways, Lufthansa, Emirates, and more – and added low-cost carriers over time: Transavia, Vueling, and more. In 2021, Duffel announced a partnership with Travelport to expand the content offering to non-NDC airline content.

Improving the traveller experience with Duffel

Steve has an engineering background and founded Duffel with Tom Bates who’s a product designer. While this may seem like an unlikely duo for an API company, he thinks it made a lot of sense: APIs are intangible in some ways but it’s also important to think about how they’re going to be used by end-users. Traditionally, travel user interfaces and experiences haven’t been great, so there’s an opportunity to improve on these.

‘Why is user experience so hard in travel?’ asks Kevin. Steve explains that poor user experiences are a reflection of the complexity of the business logic it sits on top: airline rules, system mechanics, restrictions depending on where you are in the lifecycle of your booking. This all leads to complicated UX/UI.

Democratising access to the travel industry

Kevin asks about the Duffel experience in the Y Combinator accelerator programme and Steve describes the parallels between Duffel and the notable YC alum, Stripe: both companies have API and technology at the core, heavy investment in developer experience, and a focus on democratising access to the industry.

Steve goes on to describe how the travel industry is very hard to enter. You need to build a lot of relationships and you need to understand the complexity and rules. Duffel is helping to break down these barriers so anyone can enter the travel industry.

When it comes to mapping and tackling the complexity, Duffel discovered that beyond technological hurdles there are difficulties around commercial partnerships, travel operations (managing and changing bookings), payments, industry regulation including IATA accreditation and local licences.

The seemingly insurmountable challenge needs to be broken down into manageable pieces. Step one in terms of technology is to get the ‘search and book’ function working before tackling anything else.

Steve lays out the process for travel sellers to quickly get started with Duffel by signing up at duffel.com and accessing the test environment in just a few minutes to search and book flights without losing money or creating a mess in the airline reservation system. The test environment is a helpful part of the process to prevent inadvertent orders from being created with test traveller details – airlines will fine travel sellers for processing these kinds of mistakes.

The Duffel approach to experimentation in engineering

Steve describes how Duffel has spent a lot of time building internal developer tools to make it safe for engineers to experiment. However, he shares that this system isn’t bulletproof and that Duffel still needs to interact with airline systems whether it’s a production or sandbox environment and mistakes can happen.

There is a ‘no blame' culture at Duffel. The engineering teams do very regular post mortems on issues that arise in production to draw out the action items and make changes in the organisation or the code to make sure it doesn’t happen again.

Hidden costs involved in a flights API

Kevin introduces the idea – via Gillian Morris of Hitlist – that it’s a cost centre to prepare a flight price. End-users and travellers assume it must be free to access the information. Steve describes how ‘the industry is almost plagued’ by the cost involved in accessing flight data. He shares that because of the systems used by airlines to manage pricing and revenue management, data requests can’t be run without a cost. However, there are new players disrupting revenue management with new models that may remove some of the limitations.

Kevin gives an example of calculating the routing between Boston and San Francisco. It’s a 3,000 mile trip with 7 million valid routings for that trip. Users will typically look for the top ten and ignore the rest – it is computationally heavy to find all the prices and routes.

The visibility of the Duffel brand

Kevin poses the question to Steve: if Duffel is doing its job right and handling the computation of flight data behind the scenes, how will the brand become famous?

Steve doesn’t have intentions to be famous and enjoys the problem and the space he’s operating in. He wants to make the product great and make the travel experience for the end consumers a lot better. He jokes that space travel comes up in conversation with new team members when discussing how Duffel can make travel more effortless and seamless: travel isn’t just across town or continents.

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On the horizon for Duffel

Steve chats about Duffel Payments, a payments solution tailored to the travel industry in partnership with Stripe. Payments is one of the very complex pieces when entering the industry. It’s difficult to find a payment provider that will work with travel sellers in the high-risk industry with large order values.

Duffel is going to continue to invest in solving payments problems as Steve sees it as an area that deserves more attention.

In the last year, Duffel has added lots of new airlines and one big focus for this year will be the post-booking servicing experience and how it can be made a lot better. There is a tonne of low-hanging fruit for Duffel to capitalise on.

Kevin asks a big question: there’s a chance that Duffel will do its job so well that it will, maybe, surpass the average airline’s ability to sell flights and service customers. Is there any conflict with airlines?

Steve doesn’t think so. He describes how Duffel really thinks about customers. As a travel customer himself, he doesn’t want to talk to an airline or travel agent to change or cancel a flight. Everyone wins from innovation in this space including airlines that would appreciate lower support volumes.

Along with improving the post-booking experience, searching for flights is the next big problem that Duffel is working on, according to Steve. The response time between flights being searched for and results being returned isn’t satisfactory for a modern experience.

Venture capital and Duffel as a business

Steve shares that Duffel received $50m+ in funding in 2019. The team has been expanding since then and will continue to grow, however, there is no immediate need for new funding.

The company's growth is strong despite a tough two years through the pandemic after launching the API in late 2019. Steve expects a big year for the company in 2022 as the industry continues to recover from the pandemic.

Surprises and lessons as a travel technology entrepreneur

Steve appreciates that, although it takes time, it’s very rewarding to build relationships in the travel industry. Steve recalls his first call with Kevin in 2018 when he joined the industry three months before. He was grateful for Kevin’s time and describes how industry professionals, in general, are very giving with their support.

Getting started with Duffel

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