Carts, horses and readiness for a new airline distribution model

Discussions around airline readiness for IATA’s New Distribution Capability took a different turn recently with one technology exec describing it as the “cart before the horse.”

Farelogix president and chief executive Jim Davidson says only about 10 to 15 airlines in the world actually control their offers which, he maintains, is fundamental to be able to then distribute them.

He was speaking as part of a panel of customer acquisition at last week’s Flight Global/T2RL ‘New Generation of Airline Passenger Systems’ conference in London.

Davidson also says airlines need to have a host of systems, including a pricing engine, merchandising engine and scheduling and availability platform, in place before contemplating what the NDC technology standard might do for them.

The session sparked a lot of debate around airlines being the ‘single source of truth’ for their content with United Airlines director of distribution, payment and ticketing systems, Tye Radcliffe saying that if airlines could get to being that ‘single source of truth’, it would remove some of the confusion for consumers.

He believes existing existing technology has helped create the problem with a mistrust from consumers around airline pricing because they don’t understand what’s happening behind the scenes.

“We have taught consumers that if you look at this channel or that channel you could find a better or different price. It’s not necessarily due to the channel but the technology behind it with fare load times and inventory sources and things of that nature. If we can centralise that, hopefully it can take some of that variability away.”

Interesting to note that United Airlines is working with Farelogix on NDC capabilities for the carrier.

There was also an impression from the panel that developments with NDC and online distribution in general are going to make the landscape more complex.

Advantage Travel Centres corporate director Ken McLeod believes airline websites are already “hugely complicated” with carriers just thinking about their own product but what consumers want is to find what’s best for them.

He also says airlines could potentially be making things more complex with “different variations of NDC.”

“It’s adding complexity for what should be simple and straightforward.”

Recent figures from IATA reveal about 90 airlines plan to be using the technology standard by 2020.

NB: Airline distribution image via Freepik.

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About the Writer :: Linda Fox

Linda is Managing Editor for tnooz. For the past decade, she has worked as a freelance journalist across a range of B2B titles including Travolution, ABTA Magazine, Travelmole and the Business Travel Magazine. In this time she has also undertaken corporate projects for a number of high profile travel technology, travel management, and research companies. Prior to her freelance career, she covered hotels and technology news for Travel Trade Gazette for seven years. Linda joined TTG from Caterer & Hotelkeeper where she worked on the features desk for more than five years.

 

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  1. Jim Davidson

    Let’s be perfectly clear about the context of the “cart before the horse” statement. This was not in any way intended to diminish the relevance and the urgency of NDC. As a pioneer of NDC and innovation in distribution, Farelogix remains a lead supporter of NDC, along with our 20+ airlines that are using versions of the standard to distribute their content to the marketplace and issuing millions of tickets and EMDs per year. That said, if you were at the conference last week you know that my comment was made in the context of a panel on winners and losers in distribution. I was merely pointing out that in order for an airline to derive maximum benefit from NDC the airline has to have control over its product offering. Without a differentiated, airline-controlled offer, airlines are simply putting the same fungible schedules and fares down their new NDC “pipe”. In order to deliver the airline-controlled offer, the NDC distribution vehicle is essential. At the end of the day, you need both the cart and the horse!

    And in reply to the comment above about scalability – I disagree that there are technical limitations on the airline being the single source of truth. Sure, legacy PSS systems do impose such limitations but newer technologies now exist (and that we’d be happy to show you) that afford unlimited scalability for dynamic pricing, availability and schedules, with no look to book.

     
    • Glenn Wallace

      There’s a fundamental and foundational difference between shipping out the ingredients and a recipe to a cake and maybe mixing in ingredients from someone else’s recipe, and having each local kitchen bake the cake for all of their customers (the GDS/faring systems), versus having the cakes all made at one large factory (the airline PSS) and waiting for them to be shipped out to where they will be sold. The cake might be stale, the cake might not be the right one the customer wants, because they are planning an entire meal. This is the fundamental difference between NDC and the existing systems. I’m not saying we shouldn’t advance the technology beyond where it is now, and further customize and bundle the product offering, but the NDC approach still hasn’t presented any evidence as to how this will scale to billions of shopping queries across hundreds of airlines. I am glad however that the rhetoric has advanced beyond “the GDSs don’t use XML” which of course was patently false. I do agree there are plenty of opportunities to advance both the hosted pricing/offering technology, and also the distribution technology. The goal should be to get the customers the right cake for them, and the freshest possible cake that tastes the best. This will not be achieved by baking them in a bunker in Tulsa and shipping them out by truck.

       
    • Olivier Houri

      Spot on! Well said Jim!
      In reality we keep adding more lipstick to the same pig! A pig will always be a pig. It is time for Airlines to think completely out of the box and go to a totally different, retail distribution like concepts!

       
  2. Roland Heller

    IATA has 270 member airlines. With 90 airlines planning to support NDC by 2020, 180 – 66% of all IATA members haven’t made a decision yet. Was there a discussion why they don’t see a need or are reluctant? Besides the 270 IATA Airlines, there are 1100 other schedule carriers flying. What are these carriers planning to do?

     
    • Linda Fox

      Thanks Roland, it was mostly put down to them being risk averse and operating on thin margins. Many carriers don’t want to say what they’re doing. Not sure if it’s because they feel it’s commercially sensitive or they don’t know what to do!

       
  3. Glenn Wallace

    The problem with a “single source of truth” is scalability – none of these NDC articles has ever spoken to this issue. Many host systems from smaller airlines don’t even support interactive availability at scale without pricing, and with the rise of meta-search on top of the existing large number of people shopping at OTAs, nothing has been said about creating a scalable system to price the offers/fares beyond directing more traffic and “looks” to each airline host. Say what you will about the complex ATPCO pricing/rules model, and availability calculators, it has allowed for distributed calculations across a number (6+?) of disparate pricing systems, arriving at prices that are usually within a few cents of each other. The other aspect of scalability is being able to handle complex interline itineraries. All of the investment has been put into interline ticketing which has worked very well to grow airline networks and delivered billions of dollars and euros of feeder/connecting revenue to airlines without a hiccup. It is nice to imagine that your airline flies everywhere in the world but the truth is there is a passenger in Spokane WA who needs to get to Frankfurt for a meeting. As airlines have pulled back on codeshare agreements, interlining still delivers passengers and important revenue. All of the GDSs, agencies and airlines have done a great job of implementing these important technologies end to end and IATA and the entities pushing NDC have failed to articulate how it will address these critical issues to maintain the scale and growing complexity of the business. And with Google’s entry into flight search, a single source of truth for a “customized offer” at an airline makes it very difficult/impossible to support their instant search, because you need to send a message to that “single source”. The only approach to solve that is to publish from that single source of truth and have the calculation done by another system….. (or caching) which is back to what we have now. “New” isn’t always better.

     
    • Martin Cowley

      Brilliant insight, Glenn Wallace. Written by someone who ‘gets it’ and has been at the coal face. Eloquently articulated. These should surely be the last words on ndc. It’s time to call ‘Time’ and IATA must surely now close the file on this failed pipe dream.

       
 
 

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