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Judging if something is pro-consumer

Tony Tyler, IATA's Director General & CEO

By Tony Tyler, IATA's Director General and CEO

Last month, IATA filed with the United States Department of Transportation (DOT) for approval of a resolution setting the foundation standard for New Distribution Capability (NDC). Previous DOT approvals actually cover the new resolution. But asking for DOT approval will take away any questions of transparency by allowing interested parties to comment.

Put simply, NDC is about agreeing upon standards to modernize the communication format between airlines and travel agencies. As the existing standard pre-dates the Internet, consumers are missing out on a lot when they shop for travel via travel agents.

Of course, the standard will only have value if it is used to drive innovation in response to consumer and market needs. Amazon and other online retailers have created expectations for product descriptions, personalization, customization, bundling and unbundling, and easy comparisons when shopping online. Travelers can have some of those expectations met when buying from an airline website. When comparison shopping through travel agents (online or brick and mortar), however, they may be disappointed if they expect the same options and rich product information. NDC aims to close this gap.

We expect consumer demand for NDC-enabled innovations to be high. But some vested interests are trying to muddy the waters with misinformation to avoid change. Two points must be made quite clear. 

  • NDC will not force anybody to provide more personal information than today. If consumers choose to provide personal information, NDC will enable personalized offers
  • NDC-enabled shopping will be an option, not a mandate, but we do expect a richer set of travel choices to prove popular

By building NDC on open XML standards we are inviting greater innovation into a market that has been dominated by three global players. Better service and lower costs are generally the results of more competition. So I am confident that DOT will see the value for the consumer of enabling this innovation.

I am far less confident that the European Commission’s latest revisions to its passenger rights regulations will bring net benefits to consumers. In contrast to NDC’s founding principles of transparency, flexibility and creativity, the EC is proposing a rigid set of rules for passenger rights. These will bypass global standards and bring both unintended consequences and hidden costs. Travelers deserve protection. But this is not the way to provide it.

Not least of our concerns is that the EC proposal places the entire liability for a journey involving connections on the first carrier. This puts the EU out of step with the Montreal Convention. And it could put some smaller carriers out of the interline business because the liability risk is too high. If that happens, Europe’s small and medium-sized cities will lose connectivity. The economic cost of that would be high and shared much more broadly than the traveling public.

In the end, NDC is about empowering consumers with the knowledge to make fully informed, transparent purchasing decisions. By contrast, Europe’s passenger rights proposals impose costs on the flying public that are largely hidden, to address a small but highly visible issue. Like an iceberg, it’s the part that can’t be seen that will do the damage. Governments should keep that in mind, when deciding what is in the consumer interest.

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