In The Big Chair - Alex Zoghlin of ATPCO

Alex Zoghlin, CEO

Alex Zoghlin becomes CEO of ATPCO today, following a two-month transition in tandem with retiring CEO Rolf Purzer.

Zoghlin founded Orbitz in 1999 and left at its first IPO. He then launched a GDS alternative, G2 Switchworks, which was acquired by Travelport in 2008. More recently he was an executive with Hyatt Hotels. 

Why did you decide to come back to travel – particularly at such a challenging time?

My mom owned a travel agency, and from my youngest years after school she’d plop me in the back office where I’d see the Sabre network concentrators and all those ATPCO books. So even though I have left the industry a number of times ... it’s hard to stay out of it too long if you have it in your DNA. For me it’s absolutely in my DNA.

I left Hyatt in 2019. ... I did a number of investments. When you’re doing investments in other businesses, you are just sitting on the sidelines. You are making a bet on the team or the tech or the space and then you are kind of a coach. You go to board meetings. You don’t actually get to do any of the work. It’s just not fun. Maybe If I was ready to retire it would have been different, but I’m not ready to retire. 

So I started looking at maybe doing a startup again and some other stuff and that’s when ATPCO came around ... I was really surprised it was not the ATPCO I had remembered that was a very conservative, behind-the-scenes, slow-moving legacy organization. They have in the last couple of years really managed to change the culture and the thinking in ways that really surprised me. I don’t think that journey is complete, but the fact it was started ... really led me to believe I could really help the organization take a new and interesting direction. 

Being in the middle and being that honest broker and continuing to try to drive innovation capabilities in new ways is really a role I find very interesting and one that I think ATPCO is uniquely positioned to be able to do in the industry.

What is your 100-day plan? And how do you manage it in a COVID-restricted environment, when you might otherwise be on the road meeting partners, etc.? 

That is a challenge, but I am still traveling ... I am not afraid to travel, I believe that the actions the airlines have taken have made us safe.

There are a couple really tangible things [in my plan]. The first one is probably the most important and that is that ATPCO as it stands today is still a hard company to work with. I say that not because the people are hard to work with – they are not. They are some the nicest, hardest working people that you will meet. But in order to use – especially in our core business - all that giant data of all the fares and schedules and rules, today if you want to work with that, you can do anything you want as long as you take it from our mainframe in the single format that we offer it, that we’ve offered it in for 50-plus years. That works fine for some folks but for a whole lot of others it’s impenetrable. 

An example is just doing ancillary service, if you want to know how to do a baggage calculation, that’s a 42-page document – just on that one little ancillary, optional service. We’ve created an incredible barrier to be able to use all this capability that’s been generated over the last decades. And we’re going to do a lot of work to make sure we are significantly easier to do business with than we are today.

What is your timeline for when you expect to see progress in that area?

I’m hoping very sooner rather than later. Here’s a concrete example. If you look at some of our newer products like our retailing data - does this plane have Wi-Fi, etc.? You could [provide access to] all that information via what’s called a modern API ... like if I want to use Google Maps, Google doesn’t just send me all of the raw map data and say good luck, go build your own solution. They have an API that you can connect to that just gives you the information you need to solve your particular problem. And they even have reference implementations that say here’s an example way to use it in ways you probably want to use it. We have none of that capability today for any of our core products, which makes it very difficult for new and modern software development shops to try to use us.

So you’re going to see us really trying ... to make us significantly easier to work with and not just us but the whole ecosystem. You can’t use our data in isolation. Very often you need schedules, that comes from another company. If you are actually going to book tickets you’ve got to go to ARC, and that’s another company. You have to get availability from someplace else. It goes on and on and on. And all of that adds up to large barriers to entry or even trial from an innovation perspective. So you’re going to see us start to knock those things down one after another to essentially help facilitate a renaissance in travel. 

Can you talk more about solutions you think will be most impactful in the next 12 to 18 months as travel begins to recover?

There’s a few things we have to do in our day job. There’s a whole lot of people sitting around with a whole lot of credit, because we changed all the rules, relaxed all the rules to waive all the fees. If, as I believe, this industry will start to see a meaningful recovery in the second half of the year, you’re going to see a lot of people wanting to use a lot of those credits. So you’re going to see ATPCO once again jump in to help mode to make sure that we lower the barriers, put the infrastructure in place, have all the rules and schedules in place to make it easier for GDSs and airlines and other partners to be able to facilitate all of that rebooking that is likely to happen.

The second thing is I don’t want to portend machine learning, but you are going to see – at least from ATPCO – a lot more automation in what we do, which will really tend to speed up our ability to get things done. And we’ll start to tackle things that you haven’t seen, that ATPCO has probably shied away from historically, because we didn’t think it was our role. 

We are one of the few companies that creates standards that doesn’t only create them but they use them, so in technical parlance we kind of eat our own dog food. It puts us in the unique capability to really do things faster than traditional standards organizations can, because we can see the pitfalls. ... So that will be an important role for us going forward, to continues to find areas where there is still high friction, where there is disagreement, where things aren’t standardized. 

And finally we are technology company. We provide a significant amount of data. We’ve got 250 million-plus fares in our database, and it’s growing every single year, including this year. You’re going to see us be a technology provider to more of the industry and probably for more industry things than we have historically, just because there are some places where it just makes sense to have one company do it, and it’s good for everybody.

What will be the role of ATPCO going forward in respect to NDC capabilities and intermediation?  

One of the challenges for ATPCO – and I’ll say this might have been a challenge for IATA too - is if you look at the board of ATPCO as it stands today, it’s primarily made up of revenue managers, because it’s the revenue mangers that care about the fare data and making sure you can reconcile all of this revenue and things like that, a lot of the core that ATPCO does. 

But if you look at NDC and you look at who is in those working groups, you see a lot more of the airline distribution folks. So one of the challenges and one of the things I’ll be working on - and I’ve actually already talked to the board about – is how can ATPCO have a more balanced view of airline needs and not just revenue management-specific. So to think about new working groups and how can ATPCO participate in facilitating distribution in a way that is helpful to the industry.

In fact in my conversations I’ve already had with IATA on the subject, they’ve also said they will figure out ways to make sure that revenue management is better represented in some of those NDC discussions going forward. So when you talk about NDC, the question for ATPCO really is where can we as an industry-owned, honest broker in the middle actually provide value. Our goal is not just to be another player, because I think there are plenty of NDC players out there today. But is there a unique role for a company that does not have a profit motive in play, that really just wants to lower the barriers of friction, lower the barriers of execution and do it in a way that’s good for everybody? I actually believe there is. 

If you think about all the publicly available fares that ATPCO has, plus NDC, you start to have a much more complete solution than what has been typically out there today. Now the question is does ATPCO do that themselves or do we facilitate others? I don’t have the answer to that today. A number of our customers already do it and they do it well. Most of the GDSs have announced some type of NDC solution, and that’s because they already know how to use ATPCO, so they can combine those two in interesting ways. I’m not sure that we’ve fully answered the question internally whether that’s something that we play in, but I absolutely believe that we can certainly make the barriers to its execution go down fairly dramatically. 

We saw some significant progress on NDC in 2019. Then COVID hit and airlines have expressed differing strategies. Do you believe there is still enough interest – and resources - to prioritize NDC?

I will say that something like NDC is inevitable. Primarily because there is a lot within NDC that I think is both good for travelers and good for airlines. When you have things that wind up being win-win they will find their way to the market. And when you look at the things inside of NDC – and I’ll say there are also controversial things about NDC that I don’t really have an opinion on – but the idea that you can create a curated offer for an individual that might be something better than what is generally publicly available to everybody, that’s not a bad thing.

...we’re going to do a lot of work to make sure we are significantly easier to do business with than we are today.

Alex Zoghlin - ATPCO

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And if customers can look at that, and especially if they can look at that alongside of what else is publicly available, they might be able to make better decisions – that’s good for the airlines because they can take more of their resources and create more differentiation. It’s good for customers because maybe they already wanted baggage plus the ability to upgrade plus double points and now the airline is combining that in a unique offer for them. I can’t imagine any consumer that would shy away from a supplier that wants to give them something unique.

All of those parts of NDC are quite good, and they are good for all the players in the ecosystem including GDSs. There is the cost around it and the infrastructure around it, those are separate questions, but I think the concept of NDC is a good one. And when you look at other industries, most other industries already have the capability of doing this, certainly hotels do, all the time both on the direct website and through third parties. So there’s absolutely no reason why the airline industry shouldn’t be able to do that.

Having founded an alternative distribution company - G2Switchworks - do you believe third-party NDC alternatives, such as Atriis, Duffel or TP Connects, have a future? 

There’s a flow of funds question within the industry that really has to be worked out long term. It has nothing to do with ATPCO. That flow of funds really defines a lot of how the ecosystem works today. The other reality is there are a lot of things GDSs do that NDC doesn’t replicate, that travel agents and travelers still need, especially on the corporate side... 

And I think what you will see is new entrants are going to have to get more sophisticated in their capabilities if they want to go upstream and be real solutions for travel sellers. The reality is the GDSs are already there and they have been there for some time. So I don’t think they [startups] will go away, I think you will just see them get more sophisticated and get better over time. 

Even when we were a new entrant back in the day, we recognized that as a distribution solution you can’t be a one-trick pony, otherwise you push back onto the travel seller that they now have to have this sophisticated technology infrastructure to be able to handle all of these connections to all of these places and keep it all synchronized. It’s not necessarily a realistic option. So they kind of started in because NDC is easy to connect to, but as they [startups] get to understand the industry better, I fully expect them to start to offer more and more service capabilities.

Just as we’ve seen with the GDSs - I think for the first couple of years I didn’t see any announcements from GDSs that they were doing anything on NDC. I think they were probably giving it the "Let’s pretend it doesn’t exist." But in the last year ... you are seeing announcements from all the major GDS with specific airlines announcing NDC capability within their distribution partition. So just as I think the startups will get more sophisticated on the traditional, you are seeing the traditional guys are getting more sophisticated on the NDC. And I think all of this is good for the industry long term. 

What did you learn from your time at Hyatt that can be applied to the airline industry? 

There’s a tremendous amount. One of the more important things from an ATPCO perspective - we’ve historically been very far from the traveler. But at the end of the day, it’s the traveler that drives this entire business. We all make money because people decide to travel, whether that’s business travel, leisure travel, transient, corporate, not transient, group, it really doesn’t matter. 

You’re going to see ATPCO start to try to get a little bit better and smarter at understanding the end traveler’s needs, because from that perspective I think that we’ll be able to better serve the ecosystem in which we work. ... We just set up this year ... a committee to say what can we do as a standards bearer and an intermediary in the middle to lower the barriers and to make sure travelers find value in all of this. We have Expedia, Kayak, GDSs, Booking.com and others participating - those insights are really going to help ATPCO better understand the traveler and all the things that a traveler needs in order for it to be successful.

The other interesting thing from the hotel business and one that I don’t think ATPCO really needs to be afraid of or shy away from is – there is no equivalent to ATPCO in the hotel business. It all looks more like NDC in which Expedia actually connects directly to Hyatt, they connect directly to Marriott and so does Booking, etc. And if there are any intermediaries they are private, for-profit companies that cost a lot of money. But those players still have a role even with direct connection happening. So you can find a place in which both of those tend to work pretty well. I think that that bodes well for ATPCO in where and how it plays long term. And actually I think the industry is at an advantage because of an ATPCO.

It would be interesting to see if we even see GDS consolidation – that wouldn’t surprise me at some point just given how bad everything has been.

Did you ever conceive a time when three former competitors – Expedia, Travelocity and Orbitz - would all be part of the same family? And will the COVID crisis spur more consolidation?

Yes and yes. As the OTA market matured, it was inevitable that it would consolidate. Primarily because the most expensive part of it is customer acquisition. If you can get economies of scale there you really have an advantage in that business...

It would be interesting to see if we even see GDS consolidation – that wouldn’t surprise me at some point just given how bad everything has been.

Alex Zoghlin - ATPCO

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The irony for me is Google is now the most efficient from a customer acquisition perspective because most people, at least on the leisure side, start their booking there. If they ever decide to get into it, they are going to have a natural advantage that is going to create a lot of turmoil in the business. It’s not clear to me that they ever will. I’ve never seen them get into a business in which they actually have to talk to a customer, so I think Expedia and Booking are quite safe. But because so much traffic from Booking and Expedia winds up coming through paid search, that’s a cost for entire industry and it will be interesting to see how all of that plays out. 

And then, it’s inevitable it’s going to happen on the supplier side as well. We’ve seen a little bit of it at ATPCO – we are entering 2021 with less airlines. We’re still well above 400, but we have less airlines than we did in 2020, and I expect that that will continue. This has been the most brutal, financially damaging thing that has ever happened to the airline industry by a gigantic margin. And I just can’t imagine all of the players making it out in the form that they are in today. So we expect consolidation in the space. I hope and expect continued government assistance as well, just because it’s such a vital part of the ecosystem and economies of so many countries.

Are you interested in pursuing any acquisitions? 

There are absolutely some economies of scale to be had integrating some other players, whether they are airline-owned or not. I do think there will be more consolidation. So the short answer is yes. And like ATPCO believed that all of those services and rich data that Routehappy had would be a great utility for the industry, I do think there are other things that are also of value for the entire industry.

What are the pros and cons of ATPCO’s ownership structure - being owned by the airlines? 

I’m pretty transparent on that too. I talked to almost every single board member before I took the job. I asked some pretty tough questions. Obviously this isn’t my first roadshow. Orbitz had an all-airline board, and we had a steering committee of all airlines at G2 as well. 

The advantage is you can see a common denominator fairly quickly through our board that helps you get to an answer. The downside is - and this is where whenever anybody argues antitrust with airlines I always laugh because they don’t always like each other - they have very different opinions. Even within our board I will tell you we have certain airlines who hate NDC. They don’t like it, they like a transparent marketplace, they don’t like it at all. 

And then we have others that love NDC, but they all love it for very different reasons. Some like it because it has a different financial model, some like it because they can offer unique things, some like it because their transactions go dark to a new entrant. So you’ll never get the same answer twice from most airlines – that can be frustrating. But what you will see is at the end of the day they are all in the same business, and there is absolutely some commonality on the things that are necessary that an entity like ATPCO can kind of get to consensus quickly and help everybody out in those areas of commonality.

What is the biggest challenge ATPCO is facing? 

There are two. There’s still one internally and that is I came on board because it’s not the ATPCO I remember, but we are still not a nimble type company by any stretch of the imagination. So we still have a fair amount of work ahead of us to take us to where I really think that we need to be and where I think we can provide the most value to the entire industry. That’s a fair amount of work. 

The other is I do worry that there has been so much damage done to the industry that it’s just not going to look the same coming out of it [COVID]. It would be interesting to see if we even see GDS consolidation – that wouldn’t surprise me at some point just given how bad everything has been. When you have that kind of consolidation happening, it doesn’t really matter what we want to do, we are going to have to adapt to our customers’ needs in ways that continue to be relevant to them. So in some ways the ecosystem in which we work is going to dictate a little bit of what we are going to need to do, irrespective of what we want to do.

What advice do you have for startup founders today?

This is an old one, but it is more true today than it ever has been at any time that I have been alive – and that is keep your eye on the customer. And when I say customer, I mean traveler. That is really what matters the most. Even if you are selling some product to a corporate travel agency, that corporate travel agency has to adapt to the travelers’ needs. So if you are front and center and really understand the needs and issues of the traveler today, it almost doesn’t matter what part of the ecosystem you are in, you are going to be in a really good position. 

I’ve seen a number of companies, they are airline-focused or they are travel agency-focused and that can only get you so far ... I’ll use NDC as an example. Your success is really dependent upon the airlines’ willingness to make that particular distribution connection competitive. You never want to be in a position where your success is dependent upon the actions of some other company. Never a good place to be, no matter what you do in business. So in the travel business all of us at the end of the day are subject to the whims and the changes of the traveler, and anybody who takes their eye off of that is, in my opinion, in peril. 

Finally I noticed your bio says you are a proud college dropout I’m curious if you think in today’s environment it is more or less difficult to succeed without a college degree?

I really think it depends upon what you do. ... Things like technology - the reality is technology moves so fast. The number of languages that I’ve had to keep up with from the time that I was in college, which I was not a technology major, until now, is amazing. So it’s really that growth mindset and that willingness to be a lifetime learner that is significantly more important in my opinion and more likely to be an indicator of success than a college degree.

Here’s the deep dark secret that my mom is still mad at me about – I actually dropped out of high school too to start my first company, dropped out of college to start my second company. But that was because I was comfortable in my own knowledge and capability and that I had some insider secrets that I thought I could bring to the market that I thought would provide value. If somebody really has that, I’d say go for it... 

When I think and look upon the most successful people I have known, it hasn’t been the college that they came from. It comes from all walks of life, but it’s that mindset that is most important.

*This interview has been edited for brevity.