camp fire singing
4 years ago
 

Can there be Kumbaya between airlines and Global Distribution Systems with NDC?

This is first article in a two parter on distribution and the airlines. In the first part I am going to try to cut through some of the partisan rhetoric and focus on why IATA’s NDC is such an important issue for the industry.

In the second part, I am going to hypothesize how the industry as a whole can get behind the ideas of this New Distribution Capability being proposed by IATA and find common ground for moving forward.

That’s right, the question I am posing and hopefully answering is whether some kind of Kumbaya is possible between the airlines and the existing players in the distribution ecosystem over NDC.

Two weeks ago the glitterati of the airline world gathered for the annual Airline Information and IT Summit, hosted by SITA. It’s an event I have attended for the past three years and I find it a fascinating study on the state of the airline product and IT.

[highlights of the conference]

As readers of Tnooz know all too well there is a certain tension between airlines and the GDS companies. This tension was very much in evidence in Brussels.

The airlines managed to play to the faithful in the audience and several speakers wanted to show their spurs by pouring scorn on the GDSs. However this year there was a more subtle note of almost conciliation between the airlines and their GDS cousins.

The theme of the conference was in fact collaboration.

Aleks Popovich, IATA’s senior vice president for industry distribution and financial services, has become the kinder and gentler face of IATA with regards to its sometimes confused position to the industry on the topic of NDC.

It should come as no secret that IATA has, to some of us closely watching this saga unfold, put out a series of conflicting messaging on what NDC is and the importance of it to the industry.

This conflict has allowed the traditional GDS supporters for whom FUD (Fear Uncertainty and Doubt) has become the order of the day a platform to hammer IATA on behalf of the travel agent community.

Popovich went to great pains to show how IATA is now embracing that community, and stressed the importance and progress in the agency community’s participation in the NDC work groups.

Indeed the level of the participation in the workgroups from the agency community is low. But there is a lot of work to do and it’s not difficult (nor inexpensive) to attend these meetings.

We as an industry have to deal with some hard questions. It would take many posts to lay bare all the ways and reasons why some believe the current distribution model is broken.

There is enough guilt from just about all stakeholders to fill volumes of testimony if this ever goes to court! If you are bored and want to read some of the arguments for and against NDC, flick through some of them here at the US Deptartment of Transportation’s website.

This is the approval submission on NDC, thus far the only public place where comment has been possible.

In this first of two posts, I am going to simplify the arguments for and against NDC. (I am sure there will be many people who want to expand, but humor me here on getting at least a list on the table).

These two lists are my top ten reasons for change and reasons against it. They are not qualitative nor are they in any particular order.

For:

  • Time for a change – the old standards such as (AIRIMP and EDIFACT) have been out for a long time – they are stretched and cannot achieve airline aims for distribution
  • Replacement of two separate sets of standards with a single universal standard for messaging based on XML
  • Personalization and differentiation available from the supply side to the consumer/user side
  • Consistency of communication systems for direct and indirect
  • Cost savings
  • Opportunities for revenue and yield improvement
  • No accounting for the new intermediaries such as search providers who need to be embraced in the overall process of airline product distribution.
  • Enhanced or “true” bi-directional communication with the end user
  • Enhanced capability – adding new functions
  • Ability to unbundle standard products such as a ticket

Against:

  • Cost to change out distribution messaging
  • Massive disruption to existing systems
  • Operational usage issues
  • Challenging the GDS gateway/gatekeeper position
  • Travel Agents don’t want to have to change. While this is unpleasant to realize – it is a fact of life.
  • Complexity of the entire process
  • Lack of consensus machinery. Airlines leading change without full participation of rest of the industry.
  • Personal information required to enable personalization this is a hard one as officially no personal data is used but frankly they only way to get true personalization is to share personal data.
  • No accounting for caching of availability of data.
  • True consideration of all the industry stakeholders including non-air

No matter which way you can look at the issues – one can distill everything down to four major elements:

  • Capability
  • Economics
  • Control
  • Change

Given the positions of the respective parties, we can be in no doubt that on the face of it, industry consensus is hardly possible.

  • For the airlines it’s a $7 billion a year cost. If we look back at history over the past twelve years, an annual savings of this amount would have turned many of the bad years into OK years. [Editor’s note: this rather controversial figure is often used by IATA’s Tony Tyler, citing work by author and ex-FT journalist Nicholas Kravel]
  • For the travel agents who have seen commissions and airline based revenues shrink to nothing in this time – for many of them it has been a matter of survival.
  • For the GDSs it is their lifeblood. Thus its very easy to see that this could be a worrying scenario for them.

The challenge is how to get beyond these issues and partisan positions and get to success.

Is it possible? If so how?

In the second article I will try and bring an idea to the marketplace that could results in a positive result for everyone. I can see us all around the campfire now holding hands and singing.

NB: Disclosure – author was a guest of SITA, which supplied travel/accommodation during the event.

NB2: Disclosure – author is acting CTO of Lute Technologies, a partner of Farelogix and member of the OpenAXIS standards group adopted by IATA for NDC.

NB3: Camp fire singing image via Shutterstock.

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Timothy O'Neil-Dunne

About the Writer :: Timothy O'Neil-Dunne

Timothy O'Neil-Dunne is the managing partner for venture firm VaultPAD Ventures– an accelerator devoted exclusively to Aviation Travel and Tourism.

VaultPAD also is the parent company for consulting firm, T2Impact. Timothy has been with TNooz since the beginning, writing in particular aviation, technology, startups and innovation.

One of the first companies to emerge from the accelerator is Air Black Box. a cloud-based software company providing airline connectivity solutions and in production with airlines in Asia Pacific.

Timothy was a founding management team member of the Expedia team, where he headed the international and ground transportation portfolios. He also spent time with Worldspan as the international head of technology, where he managed technology services from infrastructure to product.

He is also a permanent advisor to the World Economic Forum and writes as Professor Sabena. He sits on a number of advisory and executive boards

 

Comments

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  1. Marianna Koos

    “They are not qualitative nor are they in any particular order”.
    Would be fantastic to actually read more qualitative facts and have a true research done on the “for” and “against” supported by real numbers. A recommendation for TNOOZ.
    Read more at https://www.tnooz.com/2013/07/03/news/can-there-be-kumbaya-between-airlines-and-global-distribution-systems-with-ndc/#rMBBBj2MaGT7JGk2.99

     
  2. Glenn Gruber

    Timothy, I can’t wait to see Part II. There is no doubt that the old messaging schema has got to be replaced, but I think you may agree that NDC is far more than just a revised schema. So a few things that I hope you will address in the subsequent post or the comments below:

    1. When you talk about cost savings, that is clearly for the airlines in the form of GDS fees. But there will be some replacement of these costs savings, which needs to be factored in and understood. Has IATA outlined the incremental costs to build and support the new systems? Who will be paying the segment fees to the travel agents under NDC? Surely no one expects agents to work for free (although it’s pretty close today; Cue comment from Murray).

    2. re: lack of consensus machinery, it’s not just other elements of the travel sector that seem to be left out of the process. From the scuttlebutt I’ve heard both from SITA and IATA’s recent meeting in Montreal, this is being led by a few super-carriers and many of the smaller airlines feel left out. Many of which don’t have the wherewithal to make the technology investments and ensure worldwide distribution without a GDS. Thoughts on that?

     
 
 

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