fear laptop
3 years ago
 

Fear and loathing in airline distribution (aka NDC Phobia)

NB: This is a viewpoint by, Aleks Popovich, senior vice president for financial and distribution at the International Air Transport Association.

Providing customers with more information and choice, enabling agents to sell a wider range of products and opening up a new realm of services more closely tailored to customers’ needs.

This should be a welcome development in the travel industry.

However, IATA is well aware that many in the travel agency community are concerned about IATA’s Resolution 787, the foundation document for the New Distribution Capability (NDC) project.

Yet despite the filing of 400+ comments and motions for or against Resolution 787 with the US Department of Transportation, there has been almost no attention paid to what is really driving travel agent angst over the NDC project: fear of the unknown.

Travel agents are concerned over what NDC could mean for the existing GDS-supported agency business model.

The sooner we acknowledge that this is at the heart of “NDC phobia” the more likely we will be able to engage in a fruitful discussion on the future of airline distribution and the role existing distribution partners will play in that system.

Travel agents and travel agent associations have indicated that they would value what we believe NDC can deliver:

  • One-stop access to more content (ancillaries, low cost carrier fares)
  • Increased availability of detailed product descriptions (rich content) to customers
  • Greater ability to personalize offers to their clients based on preferences
  • Real time fare quotes

At the same time, agents do not want these attributes coming at the expense of losing the financial and back-office support they currently receive from their GDS.

Before embracing NDC, agents naturally want answers to such critical questions as:

  • How will I be compensated in an NDC world?
  • How much is it going to cost me to change my systems to accommodate this new XML data transmission standard?
  • Will enough airlines adopt this new standard and sell their ancillary services through the agent channel to make my investment worth it?
  • Who keeps the customer relationship in an NDC environment?

These are all legitimate questions that IATA recognizes must be answered if NDC is going to become a reality. But it is the market, not IATA, which must provide those answers.

Those who assume that IATA seeks to or can direct the market have a misunderstanding of the role of a trade association and a lack of appreciation for competition laws.

To be clear: today’s airline distribution network is changing with or without NDC.

The internet, modern data processing capabilities, traveler expectations and airline ancillaries are already moving the market in new directions not envisioned when today’s network was developed more than 40 years ago.

We are convinced a common data transmission standard will facilitate an efficient market that meets the needs of customers, agents and airlines. We are committed to engage with industry players in a meaningful, transparent way, with open and honest discussions on the challenges and opportunities presented by the changing marketplace.

Let’s get the posturing behind us and work together to address the heart of the matter.

NB: This is a viewpoint by, Aleks Popovich, senior vice president for financial and distribution at the International Air Transport Association.

NB2: Scared computer image via Shutterstock.

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  1. Murray Harrold

    Cobblers. There is no phobia. Agents could not give a rancid road-killed rodent how airlines wish to distribute their product. As long as there is a system which allows us to get a person from point A to point B, then fine. The main bit of this is “discussion” no-one is discussing anything with anyone. Airlines have a phobia with regard to current GDS systems and are out to create a system to bypass the current model. A Pyrrhic victory, if it works , if ever there was one.

    A lot of what agents do, cannot be done by airlines (or, at least, airlines do not choose to do it) complicated itineraries across many airlines; business travel (and a lot of leisure travel) is not simple point to point stuff. It’s not about airline A offering a bag or airline B offering a free seat reservation. Such are merely irritating incidentals. If a meeting starts at 0900, then you need the flight that arrives in time for that meeting – not “Hey, we will give you a free seat and cup of tea … fly with us – Oh! by the way, we land at 11:00 not 0800”. To do this agents need a system that we can ask the questions we need to ask and get the answers in a clear way. No fuss, no frills, no extra bits … just the facts – and certainly no slow, cubersome point-and-click.

    If IATA want to “dicsuss” things – fine, let’s discuss them. At present it’s like Margaret Thatcher said: “I have all the patience in the world as long as people agree with me in the end”

     
    • Nico Burbigh

      @Murray, all your scaremongering is directed at functions and features that either have yet to be defined, have changed a lot since 1960 regardless or are no longer part of most peoples work practices. Why would anyone try to get hold of a terminal operator to punch in 115OCTLAXPEK and hope the guy feels compelled to spend a bit of effort finding the best deal when this functionality can easily be put into the hands of consumers in form of modern applications.

      Who said that NDC is not going to deliver a search capability that will allow you to find flights that arrive at a location before a specified time? Have you studied the XML schema release candidate published by IATA and verified your claim?

      NDC is very much about interaction in a modern data exchange format and in case you have not noticed, universities stopped teaching EDIFACT the data exchange standard of the GDSs many years ago (unless one attends history classes of course). The GDS business model is reminiscent of a bygone era and its practices and closed shop system vendors seem to suppress competition and innovation in the marketplace (check out the dirty laundry surfacing in all these court cases in the last few years).

      Pointing to some of your earlier vents about airlines inability to innovate, you may want to consider that without the companies that invest billions into buying and operating airplanes, building hotels or leasing car fleets, you would be selling bagels instead. These companies are about safely transporting and housing people during their travel. Your profession is the one that actually should innovate the distribution channels and improve the customer experience. No one wants to call green screen junkies anymore hence companies like kayak or tripit are gaining market share as they starting to develop new concepts and deploy modern technologies to provide a different user experience.

       
  2. Jay Campbell

    “The sooner we acknowledge …” ~ Aleks Popovich, above.

     
  3. Murray Harrold

    Who said anything about acknowledging fear? I said agents are not frightened about anything. Agents are highly skilled retailers who have learnt the hard way how to adapt and survive. If there are TMC Exec’s who are frightened, they are in the wrong job.

    The airline business, in general, apart from a few notable exceptions, are trying to solve problems by tackling the low hanging fruit whilst leaving the big issues unmolested. May keep the bean-counters happy, one supposes, but it is sure as hell irritating the customers.

    So, in the meanwhile, instead of trying to make what works, work better… off people go with NDC … re-inventing the wheel. As said, NDC has some incredibly large boots to fill … if it is thought NDC has the minerals, then put up and we shall see… until then, NDC pundits should shut up…. and stop talking poppy-cock.

     
  4. Jay Campbell

    TMC executives I talked to readily admitted to fear of the unknown on NDC. Okay, so the industry weathered commission cuts; I remember loads of fear about that before that settled out. Why is acknowledging fears childish?

    I don’t know what this has to do with pilots and unions, and it’s unproductive to opine that airlines should build it all back into the fare.

    Sure, it remains to be seen how NDC will do, but we wouldn’t know yet anyway as IATA has set out a development schedule that would involve agencies in testing and take years to produce something broadly functional.

     
  5. Murray Harrold

    What a load of cobblers and what a singular lack of any understanding of what agents do and how they operate. Coming from IATA, one could expect little else, of course. Providing customers with choice is fine – that means more people going from A to B at any given time. It does not mean taking what is normally to be expected for a financial consideration and then offering less. Who says this or that is more tailored to customer needs – Oh! Yes! “we asked our customers what they wanted” Of course you did. And all the customers asked for was cramped seats, rubbish service and lots of really irritating extra charges.

    And for the record “agents” are not frightened of anything. We had our commission taken away and we survived. Nope, not frightened by that. We had low cost carriers come (and go) . Sorry, still here. We saw the internet arrive and online travel sales channels and we were told that we were all dinosaurs that would be gone within the year. Helloooo! Sorry to disappoint … still here! We have had airlines and others do their damndest to see us off, so that all operators could achieve the holy grail offered, of direct internet distribution. Nope that didn’t frighten us either … and we are still here, stronger than ever.

    Why?

    Simple. Agents have learnt to adapt. They took on board the very lesson which airlines cannot accommodate. We learnt how to innovate, to do things differently – to really listen to our customers and to provide them with the real services they requested.

    What have airlines and IATA done? Well, tinkered a bit round the edges. Failed to tackle the real problems that beset airlines – overpaid pilots, “Spanish practices”, the iron grip of unions – but above all totally and utterly missed the meaning of the word “innovation”. Innovation means something new … something really new and clever that will make a difference. it does not mean, take someone else’s idea and try and adapt it, with a one-size-fits-all mentality.

    Ancillaries. Yes, we would like to sell them. A hotel added to a booking is “ancillary”, a car rental is “ancillary” a tour … a cruise, even. Taking a fare, stripping out all the bits any reasonable person would normally expect to find included and then banging some big drum saying “Ooooh! Look! We sold n thousand bucks worth of baggage fees” is not “ancillary” … it’s just plain pathetic.

    Let’s face it, we have not seen anything of the NDC thing. It’s been talked about – raved about, used as big hitting stick, even. We have found that IATA can talk the talk (incessantly) … but so far, IATA has proved incapable of walking the walk. At the end of the day, there is nothing “innovative” about it – it is simply a variation on a theme – a GDS by any other name. Rather than work with what is tried and trusted, NDC is simply an attempt to re-invent the wheel. But if you think NDC has the minerals, fine put up … and we will see … or shut up.

    I will not dilate here on what a GDS can achieve. Suffice it to say, that what ever IATA comes up with, has to be able to move someone from point A on the planet to point B, instantly, securely and with the certain knowledge that, when the button is pressed, something will happen. Given that what achieves that now, is 1980’s technology and has not, as yet, failed means NDC has some pretty damned big boots to fill.

    Yes, distribution is changing. For example, the functionality of air travel has changed. It has got worse. The inter-connectivity of air travel diminishes on a daily basis. Rules become more cumbersome and restrictive and the cost of business travel have increased dramatically.

    So, No. There is no fear and it is rather insulting and childish to suggest that is the case. There is irritation as we agents can see an unwillingness to tackle the real issues. There is annoyance at increased lack of functionality and there is an ongoing ennui with this rather banal suggestion that everything can be made right simple by changing a bit of tech.

    Not impressed. Not impressed at all.

     
    • Aleks Popovich

      Thank you very much for these comments. You’ve written a very provocative piece, highly critical of the airline industry and NDC, stressing that agents don’t fear change and have learned to adapt. It’s also notable to see a response which never once claims NDC is an attempt to eliminate comparison shopping or to force customers to disclose personal information about themselves in order to receive an offer. Keeping these phony issues off the table enables us to have a proper discussion about dealing with change (and that includes airlines too) and having true customer-focused innovation.

      Much of what you covered lies far outside the scope of my op-ed but the main message I took away is that before travel agents such as yourselves will support NDC, you need to see a convincing business case for the change. Absolutely no argument there–we realize that if the business case for NDC is not compelling, stakeholders will reject it. That’s why we want to listen and collaborate.

      That’s also a reason for creating the Airline-Agents Forum (it’s been running for most of this year), to get a better understanding of how agents and airlines see the market and to try to work through the issues that keep us all from realizing more value.

      NDC has a five-year timeline to widespread implementation. We are only in year two, so the house is far from built. We have pilots underway (and more in the pipeline) and we are working with agents to try to get a better understanding of how NDC will impact your businesses and what are the cost implications.

      Thanks again for your comments,

      Aleks Popovich

       
      • Murray Harrold

        Correct… How airlines wish to present data is entirely up to them. I don’t mind what you do, as long as I can get a client from point A to point B without the loss of any functionality (incl. MCT’s, interline and all the other stuff without which, a lot of travel simply would not happen) and uses (any) system that tells me what *I* want to know when *I* need to know it. That said, “bells and whistles”, we do not want.

        I don’t know about a “convincing case for change” – that is an IATA/ Airline/ GDS matter, not an agent’s. I want to see a convincing case that whatever is produced, works, though. (see para 1, passim)

        I suspect the “agent/ airline” forum may be part of the issue. IF, from an agent perspective, you have simply taken some of the managers or Exec’s of the big name agents – then, from a real agent ‘s perspective, that is worse than useless. Such types may know about management and perhaps, the “big picture” but invariably know feck-all about how best to do LHR to JNB to LAD to MSU.

        What you need are hard-core, coal face agents who actually sit in front of a blue screen all day banging out bookings – does not matter if they are from big agents, small agents or any other agent … as long as they are people who sit there, all day, going: 115OCTLAXPEK etc etc….. the actual button-hitters. *That’s* the input required.

        “Working with agents” by the way, is invariably translated as dinner with the boss of CWT from time to time or as a rather unconvincing platitude or similar. It is treated, in the trade, as a euphemism – so one should be wary of using that expression.

        At the end of the day, we agents are open to anything. As long as it does the job – HOW you do it, is your business.

         
 
 

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