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732 days ago
 

Industry speaks out as IATA lifts lid on open standards distribution plan

Industry bodies representing travel agents, global distribution systems and other technology players are speaking out on proposals from the International Air Travel Association to deliver a platform to help airlines sell ancillary products.

IATA’s New Distribution Capability is built around XML-based protocols and aims to enable airlines to offer personalised offers to customers.

A working group of about 30 airline representatives voted in favour of  the proposals today at the World Passenger Symposium in Abu Dhabi with IATA heralding the dawning of a ‘New Age for distribution’ on Twitter.

IATA boss Tony Tyler claimed in a speech earlier this week that the development of the NDC was being conducted in open and transparent collaboration with all segments of the travel industry that would be affected by it.

Tyler believes the use of the GDS system hinders airlines from developing relationships with their customers.

“The travel offer is put together outside the airline by third parties… it is impossible for the airline to tailor its offer to the customer via the indirect channel…. This model is focused only on finding the lowest ticket price. This has resulted in the commoditization of air travel….

INDUSTRY REACTION

In general terms, industry representatives question whether the NDC could mean the end of fare filing with ATPCO (Airline Tariff Publishing Company) and the GDSs.

Key objections raised include the following:

  • Parties are concerned over IATA’s failure to involve a wide-ranging group of industry representatives in the process from the beginning despite repeated calls for participation
  • There are also concerns that the principles laid down in the proposal were formed by a small group of airlines
  • Interested parties don’t believe the proposed NDC platform will create further transparency. Those voicing concerns range from the American Society of Travel Agents and the Business Travel Coalition to the Guild of Business Travel Agents and the European Technology and Travel Services Association
  • Concerns have been raised over whether the NDC will mean an end to price comparison and enable the airlines to engage in price discrimination thereby offering different prices to different consumers
  • Parties have also highlighted possible legal and competition issues especially around the CRS code of conduct and the Air Services regulation on transparency and access to fares
  • It is likely that airlines and travel agents would have to develop additional systems and processes to be able to integrate NDC
ETTSA secretary general Christoph Klenner says:

“I want IATA on the record, and airlines on the record, about the ultimate objective of this initiative. I see a lot of merit in this initiative, because the airline product has become more complex. We need to get our head around how to more effectively distribute it to all channels.

Yet we have to make sure we don’t lose track of ultimately what the consumer wants. We’ve seen a regulatory debate in the US about whether or not to regulate the the disclosure of ancillary fees and upgrades.

If we take a step back, IATA did some research over the last couple of years and they had a working group look at what it is that the airlines customers are looking for. And one of the major points that were raised is that customers want to have same kind of comparison-shopping experience, whether on airline website, whether on handheld device, whether OTA or traditional travel agent or metasearch engine. They want the same offerings and same kinds of transparency across platforms.

How does the NDC initiative reflect that feedback from consumers?”

The GDSs gave their view back in August and adds Sabre:

“Based on our extensive evaluation and deep technical analysis of IATA’s proposal, our conclusion is clear. We do not see how the proposed NDC approach would work in the real world without sacrificing fare transparency, limiting comparison shopping and compromising data privacy rights.”

Not everyone one is against the NDC, however, with some technology players voicing their support for the initiative.

Mark Lenahan, vice president of product strategy for OpenJaw, which unveiled its T-Retail selling platform earlier this year, says:

“We think the industry, certainly the airlines, have started becoming better at retailing and that means differentiating your product, personalisation and having better content than we currently see in the GDSs.

One issue is that the current selling model is really only doing price comparison but airlines do have different price models and can do different bundles and their product is not being well served.

I think this will end up being more transparent and someone who abuses the personalisation is going to get caught pretty quickly in this modern online retailing world.”

NB: Image of distribution courtesy of Shutterstock.

 
 
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  1. The real NDC: Decoding the planned (r)evolution in airline distribution by IATA and airlines | Tnooz

    [...] autumn, the International Air Transport Association (IATA) announced its plans for revised standards, called the New Distribution Capability (NDC), to reform how [...]

     
  2. Abdullah Nergiz

    It’s all about the growing cost pressure in the airline industry, nothing else.

    GDS segment is one of the most profitable actor in the industry, actually the second one after airport operators.

    http://www.havayolu101.com/wp-content/uploads/2010/10/Havayolu_Sektoru_10_yil_kar_marji.jpg

    I believe in the long run we’ll see the GDS companies with diminishing profit margins or leaving the industry completely.

     
    • Murray Harrold

      There is no cost pressure on airlines. There is a sanity pressure on airlines, which airlines is doing little to address. Let’s get this straight. A big Boeing costs pushing 250 million bucks. Then you have to fuel it, staff it, tell people they can buy seats on it, get people (or freight) on it get it into the air and so on. And then you have to make a profit.

      You cannot achieve this, if the thing takes to the air with 60 people on board who all paid 30 bucks a pop.

      I am no expert in aeroplane operating dynamics, but to reach the above conclusion is not exactly rocket science.

      This new distribution thing is nothing more than a suicide note written by a committee.

       
  3. Murray Harrold

    Thinking about this subject, there is a remarkably easy way for airlines to differentiate their Y class product. It could be done tomorrow, there would be no need to change any technology, no-one would get upset, it would be very easy to do … and it is staring everyone in the face.

    Pity people can’t see the wood for the trees.

     
  4. Murray Harrold

    The reason why there are only 3 GDS systems (actually, in the background – there are quite a few more as many airlines translate GDS info onto their own systems) is because no-one has come up with anything better. At least, no-one has come up with anything as quick, as reliable and one which has all the relevant input to move someone from one point on the globe to another point on the globe in a way that allows effective and simple control of an itinerary at all times. True, there are websites that sell air travel but they are slow, cumbersome and hampered by point and click and an irritating habit of producing options based on what that websites thinks one may like, rather than what one actually asked for . They do not present available options in a clear an easy to manage format. (Unless it is junk-fare airline but they have so few flights anyway, in a relative terms, that is not an issue) Just because a technology may be old, does not mean that it is no good and it is rather a silly argument to suggest that is the case.

    If you think you can produce a better GDS or equivalent, please do so. Just remember: You must include at least every interline airline on the planet. Information must be 110% accurate 24/7, 365 days of the year, it must not crash – but if it does, you have an hour tops to get back up, you must be able to issue, ammend, alter and generally muck about with any PNR at any time, it must fully integrate with every airline system – and in many cases, elements of rail as well – Oh! And don’t forget, you must include CAT35 fares, hotels, car rental and have full functionality, as with air bookings, with that lot as well. Then you need to build a traveler facing interface on top which can present his or her information in a way that they can upload it, download it, put it on a soft fruit named communication or i-bore-phone to boot.

    The failure of airlines has nothing to do with distribution. It is due to (and not in any order) corruption, Spanish practices, inflexible unions, overpaid pilots, pisspoor management, a primadonna attitude charging less than economic prices and a sheer inability to recognise that (notably in the case of most American legacy airlines) if one cannot make money flying from A to B, then one should not be flying from A to B.

    Invest in “new product”? What new product? Many airlines would not know a new product if it smacked them in the face. Unless you mean buying the odd new ‘plane – just please do not try and tell me that taking elements out of the (economy/ coach cabin) fares and making people pay extra for them is “new”….

    As to me, and personal gain. We are paid by the person travelling, not by the airline. The only people who get paid by airlines are, well, websites – through affiliate programmes. We agents are the only ones left who stick up for the customer. The airlines are not on the customer’s side, IATA is on the airlines side (see comment passim – IATA backed airlines *against* airline customers trying to recover money for delayed flights) – further, agents are some of the few people who through a holistic understanding of travel, know both how to interpret the information shown (which, incidently, with NDC airlines would like to try and make more opaque and hide fares even more and so prevent the cutomer getting a proper picture – by that, I mean our ability to interpret information) as well as how to set benchmarks and so present a client with a best value option for their travel requirement.

    I was not going to bite on the more banal comments here, but cannot let sheer lack of any understanding pass.

     
    • RL

      “You must include at least every interline airline on the planet. Information must be 110% accurate 24/7, 365 days of the year”

      Stumbled on this older article, this line made me laugh! I wish there were such a thing.

       
      • Murray Harrold

        No agent is laughing. We are deadly serious. If we have a client in Manilla booked to Beijing across two airlines, we need to be 110% sure the itinerary will happen. That’s what a GDS does. If whatever anyone comes up with can’t do it, 24/7 365 days a year – it’s useless.

         
        • RL

          I meant the current systems are not as perfect as that. Perhaps because I am on the tech side and see all the errors it’s a different perspective.

           
          • Murray Harrold

            Granted. That said, I have not had any issues with the GDS (and I have used all 3) over the last 25+ years. I think that is because an agent has an extra bonus: instinct.

            With any internet booking, Jo Public has to accept what is offered – be it by an OTA or (usually the worst culprits) airline websites. Agents don’t. We have the ability to look at something and think “that’s not right” . Likewise, we can scroll through the flavour-of-the-month mash up site and pick out useful information from between the lines of their offerings..

            But, agents still have to be right. Every time. Unlike a techy, who can fix a wrong bit of code, if we make a mistake, we have a guy sitting in Delhi who should be in Bombay. Further, we have to fix it now. Unlike our tech bretheren, we cannot hum and hah, escalate it, create a ticket, send an email saying we are fixing it, that we don’t work at weekends etc etc….

            Sometimes, agents do not feel that the tech side of our industry understand that :-)

             
  5. AB

    Well done IATA for finally listening to the airline who they represent.
    There shall, no doubt be many Murray’s in the industry who will shout as loud as possible to be heard but the crux of the matter is come out of the 60′s for God’s sake. We are in 2012 – remember. Use the tools as best possible and learn from them to enhance them further for the benefit of all.
    It is a good start and only wish it comes to fruition will co-operation from the relevant stakeholders.

     
    • Steve Wlison

      Well said AB, it’s clear that the murray’s out there are in it for thier own business and personal gain. How can anyone justify that the average ROIC is 27% for GDSs and 24% for TAs and the airlines is 0.3%. How are the airlines able to invest in new product for the customers with those results. Just look at the airlines failing at the moment Kingfisher, AA, BMi, even Delta had to go into chapter 11 and LH having to make major cuts to survive. How can there still only be 3 major GDSs as Paul says above that’s unbelievable in 2012.

       
  6. Paul Jones

    Well done IATA finally someone standing up for the customer. The 3 GDSs having been stopping new tech entrants coming into the market therefore the customer has had to endure years of no innovation in this space.

     
    • Sean O'Neill

      Sean O'Neill

      Thanks, Paul, for your comment.

       
    • Murray Harrold

      IATA stands up for customers? Really? Is that why IATA backed TUI and BA against the CAA:

      BA, Easyjet and TUI, backed by airline association IATA, had argued that the Civil Aviation Authority in the UK was wrong to force them to pay passengers on delayed flights the same compensation as passengers whose flights had been cancelled

      … really customer supportive, IATA, eh?

       
  7. Sean O'Neill

    Sean O'Neill

    Lively debate!

     
  8. Milind

    “We have all the information we need – the main factor in selling (business) travel is a) Does it go to the right place and b) does it arrive at the right time. If anyone thinks that “Ah! This flight arrives at midday and not at 09:00 – but Hey! – You get a free extra bag and a cup of tea thrown in” needs their head examining.” A lot of heads need examining then, if this discussion was taking place 15 years ago it might have made a difference the fact is that airlines have headed down this path to “differentiation” through fare families or charges for checkin / baggage / carry ons / seat assignment and there is no turning back particularly when the likes of RyanAir are making a packet of money and are not represented in any GDS.

     
    • Murray Harrold

      Oh! For heavens sake. I am talking about biz travel, not about individual airlines. RyanAir is one of the many “less than 2 hour -ish point to point” airlines that make no pretence about such things as interlining and or falling in with minimum connecting times or anything else that makes the global biz travel function. That said, they are part of the holistic travel setup and are used as such.

      RyanAir are very profitable. Granted. That said, there are many low cost boys that are here today, gone tomorrow.

      Legacy airlines have seen how they function and are trying cherry pick bits of the low cost airline model and make it work on a pan-global network at the same time giving all this bullsh-ont-t about “options” and what not. It doesn’t work and it’s just irritating the hell out the customers. If you are on a RyanAir flight you sign up for “No prisoners taken, no quarter given and if you don’t like it – feck off” – which is fair enough. On a legacy airline, you do not sign up for that at all. And certainly, someone who has to pay £1,200 across the pond and has to sit beside someone paying £300 and still has to pay for a cup of tea, does not sign up for that.

       
  9. Murray Harrold

    This is the most inane, moronic, mind-boggling inept proposal I have ever come across. It shows a complete and total lack of any understanding how the whole (certainly) business travel system works. Sabre’s reaction is probably a rather mooted version of what they really think…. and I have this vision of Sabre Exec’s (and probably Amadeus and Gal Execs) making a few telephone calls to the local loony bin.

    The main “differentiation” for agents twixt any airline choice is what time they leave point A and what time they arrive at point B. Certainly, in business travel terms, if an airline offers a free seat or an extra bag – that is wholly academic.

    The “differentiation” offered by airlines is wholly mythical and is based on the simple premises that they have taken out elements of the Y cabin fares, made these “optional” and now are trying to pretend that this makes each of them somehow “different”. Anyone that believes that – then they are more profoundly stupid than previously thought.

    Who is in favour? – Oh! Yes! Some bunch of clueless techno-eegits who have about as much knowledge of how the real business travel world works as I do of nuclear physics.

    Banal. Totally banal.

     
    • Mark Lenahan

      Speaking as clueless techno-eegit quoted above, I would say I actually don’t know whether this standard will be adopted or make a long term difference. I think GDS and PSS would need to co-operate for this standard to succeed. And I think we would need to see schemas to even evaluate how close it comes to allowing the level of retailing several airlines are doing today on their websites. And it remains to be seen whether it competes with or complements OpenTravel and OpenAXIS standards.

      I think from a consumer perspective the current model leaves too much out. I can’t disagree with IATA saying they want better retailing for airlines. Whether IATA DNC will achieve this or not is something only time will tell.

      As a retailer, getting access to more information and more product offerings should be something you want to do. You can offer 100 itineraries on 10 airlines now. With more data you could offer the same 100 itineraries, tell the buyer what benefits their FFP program will include on each itinerary, accurately price the ancillaries they actually need, understand the fare families / bundles and upgrades available, and all in all offer a better customer service and probably make more money both for you as a distributor/retailer and the airline.

       
      • Murray Harrold

        IATA can get better retailing by giving a better product. Not by taking the same, tired and increasingly more confusing product, giving it a quick brush over with a tin of B&Q magnolia and trying to make everyone believe this is the new and improved version.

        We have all the information we need – the main factor in selling (business) travel is a) Does it go to the right place and b) does it arrive at the right time. If anyone thinks that “Ah! This flight arrives at midday and not at 09:00 – but Hey! – You get a free extra bag and a cup of tea thrown in” needs their head examining.

        With the current GDS I can get precisely the right amount of itineraries with precisely the right amount amount of airlines. We do not want to have to filter out all the hopelessly unrealistic travel itineraries as are proposed on many travel websites, which often include tenuous connections, hours of layovers and other such….

        No, I (and I suspect many other in the business travel agent community – who, incidently, book most of the good stuff) think this is the most bone-headed idea since a Coca-Cola said “This water from Sidcup, do you think we could get away with selling it in bottles….?”

        And before any more techy types make any comment – go and get a few years in front of the blue screen before any further comments are made – at least then, one may have a clue as to what you are talking about.

         
        • Mark Lenahan

          If you want to continue selling something you only see as a commodity – fine. I don’t think airlines see it that way. I think there’s a real problem here – if two flights land within 30 minutes of each other and the fares are within $50 difference then bags, priority boarding, and benefits based on the passenger’s FFP status are VERY relevant.

          I have no position on whether IATA NDC will be a solution to that – too early to tell.

           
          • Murray Harrold

            There you go: “…. flights land within 30 mins of each other” … Look, business travel (that is, the business of moving people about the globe) very often consists of getting people to places where it’s a case of: “that is the flight … for the week”. There may be 2 or 3 flights a day and itineraries consist of more than just A to B. Before one changes how business travel works, you must understand it. Which you clearly don’t.

            Airlines can achieve greater sales and greater profitability – but that will come from spending time tackling the problems of Unions, Spanish practices and over-paid pilots and above all, treating their passengers as humans rather than self loading freight. (I may add here, that many Gulf based and European Airlines do manage this and see the results in their annual profits) . The notion that this can be achieved by taking extra time to say: “Fly with us and you will get a nice cup of tea and an extra 2 kg of luggage” is a tad simplistic. Until airlines realise this, they are lucky to be even called a “commodity” (which would be a step up form pain in the arse, I suppose)

            Now, agents. Biz agents have not, for many years now, had the job of “selling the cheapest”. Any agent that does, will not last long. Our mission has changed – what we are about is achieving the best value for every travel dollar that a firm has to spend – which is a very, very long way from the cheapest. Indeed, “a frequent flyer card” is way, way down on the list of things to consider – and it is a very foolish travel budget controller that allows frequent flyer none -sense to get in the way of a better value itinerary scenario. Ah! I hear you say, but that FF or extra bag may add value to the travel event. Unlikely as a) Most business travelers take FF cards based on who they wind up with, not vica versa b) most are in biz class, WTP or on a higher value fare anyway (and so, are even more hacked off when they have to pay for extras) and c) on short trips, don’t carry a (hold) bag and on longer ones either i) it’s included or ii) there may be more than one stop, in which case a holistic view of an itinerary is required and so, the “fringe add -ons” are effectively, irrelevant. Ineed, it may well be that corporates will take a dim view of airlines trying to use these “lures” to move their troops onto specific airlines.

            I would (and I am sure many of my colleagues agree) be very grateful if airlines understood what agents do. Agents have changed, dramatically. We had to. We do what an increasing number of airlines cannot do. We are the only people booking travel who also have a holistic knowledge of travel. We do what airlines are not good at and what online booking tools and many websites are hopeless at… and would be very pleased if, just for once, that was recognised.

            Then there is the “America” thing. “This works in America therefore it must work in the rest of the world, right?” Wrong. Look, we love our cousins in the New World Colonies to death but they can be a right pain in the proverbial at times and it is instances like this which bring this to the fore. What may work for US airlines in the US does not work for US airlines outside the US or, indeed, for non US airlines outside the US. Americans are very blinkered in that they often believe that their way of using and working with air travel must be the same as what happens on the rest of the planet. It doesn’t. Deal with it.

            If this goes ahead, the effect on business travel – air travel – will be devastating. Mainly because it is driven by a few airline exec’s (who are in many cases not exactly the sharpest tools in the shed) and a bunch of techys who would be about as capable of booking LON ASB TAS TSE LON as I am of programming my central heating controls.

            Get some practical experience. Learn about what you are mucking about with. You do not employ a pastry chef to repair a diesel engine, do you?

             
          • Sean O'Neill

            Sean O'Neill

            Mark,
            Thank you for your great perspective!
            There’s a lot that needs saying in this debate.
            Best,
            Sean

             
        • Sean O'Neill

          Sean O'Neill

          Murray,
          Thanks for your great insights!!!
          Best,
          Sean

           
          • Milind

            “Biz agents have not, for many years now, had the job of “selling the cheapest”.”

            “most are in biz class, WTP or on a higher value fare anyway”

            Maybe biz travel agents for bankers fit into that category but isn’t that the minority now? The rest of us biz travellers are packed into cattle class and on the cheapest fare – having to justify each and every time to the agent why I can’t fly from Gatwick as the taxi fare makes the trip more expensive that flying from my nearest airport.

            Also a careless agent not taking the trouble to find out if a checked bag is needed is only putting that transaction onto the traveller and that expense might not be tracked as a travel expense by the company thus fooling them into thinking their air travel costs are lower than they really are.

             
          • Murray Harrold

            Ah! @Milind. That’s different. I feel for you. It also shows why we (or a least I and many of my colleagues) work on “best value” and not simply the cheapest. Sounds like you have one of those (equally daft, a mon avis) TMC’s who employ baby travel agents, give them a rigid set of rules and bollock the hell out of anyone who breaks them. This does not help you as the long suffering business traveler or your firm.

            What is “best value”? Best value means looking at where you need to be, when and what is expected of you when you get there – and then using a holistic knowledge of travel to build an itinerary that gets you there at the right time, ready to land the deal and/ or fix whatever it is you have to fix or whatever. I have known one client (a bank, funnily enough) who expected someone to fly 18 hours (with 2 changes) in cattle, overnight, eventually land at about 0600 and be ready to negotiate a complex deal at 0900. Oh! And then fly home that evening. As a result of the saving, the bank lost 2 days – the bloke could hardly stay awake during the meeting so it had to be postponed, with 2 hotel nights and he was off for a week when he returned because of the trip. Great! Kept the fare down, though.

            Best value means trusting a capable agent to use their best judgement, to know when something makes sense and to know when someone is trying to take the you-know-what. To know when to contact the client budget holder. You will not get a best value judgement from an airline, which is why we agents exist. Funny thing is though, most firms never interview the agent. They are seen by a sales rep or someone similar, they never meet and get to know the person who is pressing the “End” button. And as I say, any TMC or Biz Travel Agent is only as good as the person pressing the “End” (“Book”) button.

            So, sounds to me like you need a new travel agent. (Sorry, off topic, I know)

             
 
 

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