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NDC - Getting Your Ducks in a Row

Comments filed with the US Department of Transportation show widespread support for New Distribution Capability among airlines

In March 2013, IATA filed an application with the US Department of Transportation (DOT) for approval of Passenger Services Conference Resolution 787—the foundation technical standard for the New Distribution Capability (NDC).

On one level, this is simply a definition of an Extensible Markup Language (XML) messaging standard to update the existing pre-Internet standard. But on another, it could mark a sea-change in how customers interact with airlines.

“Today’s air travel consumers who visit a travel agency or an online travel site don’t have easy access to all of the options to add value to their travel plans,” explains Tony Tyler, IATA’s Director General and CEO. “This is because the indirect sales channel remains largely dependent on pre-Internet messaging standards. Agents have been unable to easily see important product characteristics such as the availability of Wi-Fi or seat features. And it is difficult to distinguish pricing alternatives like fares with fewer restrictions on travel changes. Consumers can already find all of this on airline websites. NDC will make the same choices—and future innovations—available wherever consumers choose to buy their travel products.”

Airlines great and small

The application has underlined the extent of the debate over NDC, with more than 300 comments filed with DOT.

Not surprisingly, many airlines have called for DOT to adopt Resolution 787. Richard Klapf, Head of Distribution Systems at Air New Zealand, highlights the example of the carrier’s Economy Skycouch. “[This] is difficult to promote and sell outside of our home market, unless we are able to provide graphical data, including pictures and seat maps, so travel agents and/or customers understand what Air New Zealand is offering,” he writes. “NDC has the potential to be the distribution solution for Economy Skycouch.”

What is interesting about airline support is the sheer variety of carriers that have filed comments. They come from all corners of the world, they are large and small, and they cover all manner of business models. Even though, as Turkish Airlines President and CEO Temel Kotil, summarizes—“when adopted widely, NDC will result in airlines having to compete directly on service offerings as well as price”—no airline thinks it’s a bad deal.

“NDC works across boundaries because it is a consumer-centric proposal,” says Eric Léopold, IATA Director Passenger. “Every business wants to be able to better serve the customer.”
The same rationale can be applied to technology companies. Global Distribution Systems (GDSs) still rely heavily on EDIFACT, which has limited capabilities. NDC’s adoption of the more widely-used XML standard opens up the aviation distribution chain to new entrants and new possibilities.

It means that travel agents will have more opportunities to provide value to their customers as they will have access to the full range of options at the point of sale.

As comments filed with DOT testify, technology providers stand ready to provide greater innovation to the market. “NDC will makes it easier for us to access airline data and build applications allowing our customers to better compare and contrast complete airline offers,” says George Khairallah, President of software specialists JR Technologies. The classic example here is the iPhone. There is one standard but anybody can create an app around that standard and offer it to the market. The end user is a clear winner.

A winning proposition

NDC is not a way to cut out the travel agents or the GDSs. Far from it. Airlines that want to be exclusive and sell only direct to consumers are already doing so. In fact, GDSs are well positioned to take advantage of NDC. One of the largest GDSs, Amadeus, has filed a comment with DOT that expresses qualified support for the objectives of NDC, including improving airlines’ ability to differentiate and merchandize their product offerings.

Amadeus says it supports attempts to standardize processes and notes that it has shared its own XML schema with IATA. Amadeus also notes “that the market is moving quickly in the direction of the technology and the standardized communications protocols of the type that IATA seeks to promote and that Amadeus supports.”

GDSs sit squarely in the middle of the distribution chain, holding contracts with airlines and travel agents. And even with NDC, the need for an intermediary is still apparent. “While the role may change, the travel agent will still need a technology solution to formulate and submit the request, to filter the request to send it only to airlines that provide service on the requested route, and to organize and display the responses received from airlines for comparison, selection, and booking by the agent,” says Nawal Taneja, Emeritus Professor at Ohio State University and the author of several highly regarded books on the airline industry.

He believes the GDSs have enormous advantages over any prospective new entrant. GDSs have established relationships with travel agents and connectivity to the world’s airlines. And the business model, which includes incentive payments to the agents and business support such as back office software, combine to make a formidable business proposition.

From agent to consultant

The Consumer Travel Alliance and the European Travel Agents’ and Tour Operators’ Association have expressed concerns in their submissions to DOT. But Taneja calls travel agent objections “perplexing”, asking why an agent would want to block access to information that consumers clearly want. Airline direct website sales are up, ancillary revenue is up. Consumers have voted with their wallets to show their preference for choice and transparency.

“As airlines offer more complex choices, the travel agent’s role expands,” says Taneja. “Whether it is harmonizing corporate travel policies with a broader array of inflight amenities, or guiding an occasional traveler through the alternatives, the value of an experienced, knowledgeable travel professional seems likely to rise.”

The Arab Air Carriers Organization agrees with this assessment in its submission. In a letter signed by Abdul Wahab Teffaha, Secretary General, it says that NDC will allow travel agents to recoup some of the share they have lost to direct distribution channels and will turn agents from a price offering service to true travel consultancy.

There is a question of cost for travel agents. Many of them rely on support from a GDS, which may be supplying them with terminals and connectivity. With the market opening up to greater competition, a new business strategy for travel agents may be the order of the day.

NDC isn’t shirking the challenge and will move on to provide concrete proof of its value to customers. DOT has now closed submissions on the IATA application and the association has the right to make a further comment before the final decision, which is released at DOT’s discretion.

Meanwhile, the scope and locations of NDC pilots are being discussed and the hope is to have them running by year end. The pilots will provide travel agents with feedback they can use to work out a business strategy that takes advantage of the new messaging standard.

“We can’t turn the clock back,” says Léopold. “The consumer and the technology have moved on; airline distribution must embrace the changing environment and move on as well.

“NDC is challenging each stakeholder in the distribution chain to raise their game, including airlines. The comments filed with DOT show that this is already well understood. Everybody is now seriously thinking about how airlines and travel agents, as business partners, can improve the offering to the customer.”  

IATA assumes Open AXIS license from ATPCO

The Airline Tariff Publishing Company (ATPCO) has assigned its Open AXIS license to IATA. This makes IATA the custodian of the Open AXIS XML schema, with full governance over schema evolution, including further development, maintenance, and standardization efforts.

“XML schemas are one of the building blocks of NDC, setting the parameters for transmitting data between partners,” says Eric Léopold, IATA Director Passenger. “The Open Axis framework is well advanced. And it will continue to evolve to ensure that NDC is open, robust, and transparent.”

IATA XML standards are released under Passenger and Airport Data Interchange Standards (PADIS) governance, and Open AXIS’s schemas in the interim are open and available for use by the entire industry.

Under the license agreement with ATPCO, IATA has assumed the Open AXIS website. ATPCO will remain actively involved and provide assistance to the NDC initiative, including participating in the Distribution Data Exchange Working Group that is detailing NDC business requirements and XML schemas.

 

Debunking the Anti-NDC Myths

NDC should fly, says Karen Walker, Editor, Air Transport World

It’s one of those bizarre quirks that the airline industry found itself this spring with two 787s needing to get off the ground. No one doubted the 787 aircraft’s return to service. But the flight path remains less certain for Resolution 787, IATA’s application with the US Department of Transportation (DOT) to approve an agreement that would establish the framework for its New Distribution Capability (NDC). Resolution 787 and NDC, IATA’s proposed new set of standards and procedures for how airlines better manage the distribution of their services and products, has met with considerable opposition.

In particular, the US-based Business Travel Coalition (BTC) has effectively created an anti-Resolution 787 campaign that has cast NDC as anti-competitive, a cunning way to bypass travel agents, a violation of privacy rights, and a bid to end airfare transparency. All of this is bunkum. NDC undoubtedly is a big-thinking, ambitious plan and a potential industry game changer. It would also shift more distribution control from intermediaries to the airlines, which is how it should be. But NDC will not bypass travel agents—in any case, airlines can already elect to ignore agents—nor will it limit an agent’s or traveler’s view of comparisons.

Quite the opposite. One of the frustrations among airlines is that they have invested in new and innovative products that improve and broaden customer choices and allow passengers to tailor their services, but the GDSs have failed to keep pace. So customer options are not always available or even viewable unless a consumer goes direct to an airline’s website. NDC would make comparison-buying more consistent, transparent, and customizable, regardless of how a passenger chooses to make a reservation. It could also attract more budget carriers into the distribution system, further widening customer choice and allowing passengers to more easily make side-by-side price comparisons.

Importantly, NDC is a non-mandatory, XML-based data transmission standard. It has nothing to do with how airlines price their offers.

The privacy accusation is also a red herring. NDC won’t require any more personal information than is required by today’s systems, although passengers can volunteer information for more customized offers, as is the case now.

DOT, in its review of Resolution 787, must carefully study and understand the true motives behind BTC’s campaign, which is an effort to maintain the status quo, hang on to old technology, and preserve a lucrative business model for the big GDSs. DOT should seriously question what the naysayers are so afraid of.

IATA member airlines, meanwhile, must do their share of the work to ensure NDC flies. They should show unity and provide strong support for NDC as it works through trials and pilot tests so that ultimate adoption of this new standard is assured.

This article first appeared 16 April, www.atwonline.com/blogs

 

 

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