bill murray groundhog day
4 years ago
 

When it comes to the NDC, every day is Groundhog Day

NB: This is a viewpoint by, Christoph Klenner, secretary general for the European Technology and Travel Services Association (ETTSA).

It was with great interest but also grave concern that I read a pro-NDC editorial from IATA earlier this week in Tnooz.

This editorial from Aleks Popovich (IATA’s SVP for financial and distribution) amounted to what IATA believes the travel agency community is worried about when it comes to the proposed New Distribution Capability (NDC).

IATA needs to stop patronising those who are supposed to be their customers and industry partners. When reading Popovich’s comments and IATA’s overall communication around NDC over recent months, I cannot help but feel I’m living the Groundhog Day movie.

At the end of every day IATA promises to become inclusive and truly collaborative. But the next morning we are back where we started with airlines continuing to deliberate on important industry-wide changes behind closed doors.

It’s not just about a data standard

Popovich keeps claiming that NDC is just about developing a common data standard.

Yet those who have read Resolution 787 and have had the privilege of attending NDC working group meetings or at least reviewing meeting minutes, know that NDC is about a lot more.

In fact, if it were merely a collaborative data standard, no one would be wasting their time writing op-eds; we would simply get to work and make it a reality.

The airline and wider travel industry have worked together to create data standards since the late 1940s.

Everyone knows and agrees that such standards — when designed and implemented in a proper and collaborative manner — can help improve the efficiency of processes, create open and competitive commercial environments, and thus bring costs down.

Representing both GDSs and major online travel agencies (including their TMC subsidiaries), let me highlight what I believe is the real issue at hand here: it is the fact that NDC goes above and beyond a data standard, and instead intends to create a fundamentally new business model by reversing the flow of data.

Let’s call a spade a spade

NDC appears to involve a group of airlines attempting to collectively impose a new business model on consumers and the travel agents who serve their needs. A model which is founded on the use of opaque fares and ancillaries to make real comparison shopping difficult, if not impossible.

These carriers hope to supplant the current model, developed in a competitive market, of transparent fares that any consumer can easily compare anonymously – a model that IATA and airlines have confirmed has constrained their ability to raise prices.

This is not only evidence of short-sightedness and poor business sense, it is also in blatant breach of the competition rules Popovich refers to.

GDS incentives not an issue

I must also add that the “elephant in the room” is not GDS incentives for travel agencies as Popovich suggests. That facile statement is, I must say, a pure diversion.

ETTSA and other travel trade associations have fully substantiated from IATA’s own documents the competition and privacy problems with NDC.

Popovich also ignores the fact that the Global Business Travel Association, the Consumer Travel Alliance and the American Antitrust Institute — none of which could conceivably care at all about GDS incentives — have urged the US Department of Transportation (DOT) to reject IATA’s application for approval of Resolution 787.

The real elephant in the room

ETTSA’s key concern is “personalised pricing”, which requires consumers to surrender a raft of personal details (including name, age, marital status, nationality, and whether they are travelling for business purposes) before they are eligible for price quotes.

While the claim is made by IATA that it is to the benefit of the (frequent) traveller, it in fact gives airlines a formidable tool to rob the market place of the transparency it is used to and needs.

Through NDC, the airlines would confer on themselves the ability to raise all fare levels across-the-board and especially fares for business travellers.

This is a particularly lucrative strategy for airlines in markets where big carriers or alliances are dominant, and competition is suboptimal.

Reversing the flow of information, and allowing airlines to tilt the pricing power sharply to their advantage, would be detrimental for buyers and consumers, and would deprive agents of the ability to find the most suitable deal for their customers.

The airlines have a legitimate interest in acting individually to protect their business, but not to act in concert to impose a new anti-consumer business model on consumers and the rest of the travel industry.

Difference between standards and a new business model

All the functional distribution virtues that IATA claims for NDC already exist in today’s world. A significant proportion of GDS transactions use XML, enabling airlines to distribute rich content.

Growing numbers of airlines are distributing that rich content, including product attributes and ancillaries, through the GDSs to travel management companies and other agents, who are able to book these complex products and services using sophisticated robust user interfaces.

In short, if NDC is being designed by IATA to enable the distribution of airline products via XML, it is a solution in search of a problem.

So what’s the solution?

Quite simply, if IATA agrees to make NDC about a data standard developed jointly by all involved stakeholders, we are done.

It can help improve the efficiency of distribution, enrich the purchasing experience, while safeguarding all the great values buyers and consumers have grown accustomed to.

I have said time and again that we are ready to work with IATA on this, and on amending Resolution 787 to this effect, but it takes two to tango.

NB: This is a viewpoint by, Christoph Klenner, secretary general for the European Technology and Travel Services Association (ETTSA). It’s in response to a pro-NDC editorial from IATA earlier this week.

Image via Sony Pictures’ Groundhog Day

Share on FacebookTweet about this on TwitterShare on LinkedInEmail to someone
 
 
Special Nodes

About the Writer :: Special Nodes

Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.

 

Comments

Your email address will not be published. Required fields are marked *

  1. Timothy O'Neil-Dunne

    Glenn,

    The debate rages on without deciding anything. And it just seems that there are so many people who want to take potshots without contributing to solutions. You of all people should know how to contribute. So why not put the dukes up and propose something rather than dishing what’s there?

    I will pick on your Sony/Amazon analogy. Sony has warehouses and production lines that feed them. They in turn give a view of physical product. Sony doesnt make products on the fly and then “unmake” them. So your analogy I dont think holds up. What does hold up is that we ALL GET DIFFERENT RESULTS TODAY FROM ONLINE QUERIES.

    Try this at home folks. Walk across the street to your neighbour with your laptop (or tablet or smartphone or better ALL of them) and make an identical query in Google then look at the results. You get many a different answer. Who made that decision? You, me? Nope Google made that decision. And who made Google god?

    The flap over Snowden and the NSA should also illustrate to everyone that data driven answers exists and that data is collected mostly without our knowledge and that we have no control over it. Try the old trick – from your Gmail account send an email to a friend that talks about maxillofacial surgery. Watch the ads that will appear on everything you see. It would seem that no one cares. (I do but then I am a bit strange)

    In its simplest form – NDC is trying to fix a very broken framework of how suppliers interact with the indirect distribution systems. That is no small order. We have a very stupid two tier system which contributes greatly to the cost of getting us the answers that we need. And I will mention EDIFACT because it needs to go. But let’s have a common data standard for Peer to Peer and well as tier’d relationships.

    This is not easy but stick to the facts and end with the snipes and counterproductive BS.

    You are a smart guy – make a contribution. I think you know where to do that.

    Cheers

    Timothy

     
    • Glenn Wallace

      I can’t go into specifics but I know of several companies that have tried to sway the discussion towards a more broadly beneficial solution but it seems like both the goals and solution were already set before the discussion commenced. My horse in this race is as a consumer, and in the general interest of fairness.

      If someone wants to hire me to help I am available for a small fee.

      I agree that Sony doesn’t make a perishable product that benefits from being yield managed, but the point is the current system allows some pretty sophisticated pricing schemes from the RM teams in a way where the calculations are distributed, the CPU load shared, and the customer benefits from each search engine innovating and finding better itineraries for customers. Right now the airlines get to set the price but the resellers can innovate by optimizing what is shown to the customer. I would argue that in a world where it is very difficult to show EVERY possible option and combination, the customer benefits from multiple search engines. For example, if an American airline decided to show fewer solutions of itineraries that connect to a British airline, and that is the single search engine behind every query what other choices does the consumer have if they are in a city that depends on those feeder flights? These combinations and assortments are a big benefit to consumers and having multiple engines trying to creatively put them together within rules published by the airlines seems pretty good to me.

      And this is precisely how Google could hurt consumers, they have a single search engine that nearly dominates the marketplace.

      I don’t disagree that the connectivity between suppliers and intermediaries needs to be upgraded. But first the industry needs to agree on shared goals, and then decide where the information should reside, how it should be managed and which way it flows. To my knowledge that discussion hasn’t happened.

      Making the discussion about XML vs EDIFACT is just specious lobbying.

      Some great work from airlines, GDSs and agencies went into APTCO Optional Services (OC). The GDSs are implementing it and it provides pretty good control of product, pricing and applicability. Some steps have been made to fill the inventory and fulfillment gaps.

      Is NDC just about selling new airline products? Moving inventory selection and search out to the suppliers? Or sunsetting ATPCO? I believe it is a solution in search of a problem.

       
  2. Glenn Wallace

    Great article! Couldn’t have said it better myself.

    One thing that isn’t being talked about is how it will be tougher for smaller airlines on hosts with limited CPU capacity to service the large volume of complex consumer requests that would be funneled through NDC. Right now many of these airlines don’t even support seamless availability, which is a far lighter weight request than building connections and pricing/faring.

    Also tough for smaller airlines because the plan for interline support is “unclear” at best (seemingly relying on other larger airlines to build and serve up those connections), those airlines with more limited route capacity that depend on interline feeders and connections will be disadvantaged in the display.

    Let me be clear, I do not believe this is intentional – I can’t imagine larger airlines wanting to take business from smaller airlines 😐 – but just a side effect of the wonky pull-model data flow.

    I would love to know what Google/ITA think of this plan – how will they serve up “instant” shopping results when the design of NDC requires that every query goes to every airline? Sure, they can cache some of the information (which the airlines don’t want to happen) and they may host some pieces of the puzzle, but not for every airline in the world.

    NDC remains a great idea for the airlines, not so great for everyone else, especially consumers.

    (My views don’t represent those of my current or former employers)

     
  3. Jim Davidson

    Hi Christoph,
    I am sitting waiting my turn at my local barbershop. Yes I do still have just enough hair to keep up these periodic visits.

    As you know I always appreciate a good debate but this one is getting a bit old. Because as ETTSA and others continue to take the position that NDC is bad, many others are already moving forward capturing a first-mover advantage by demonstrating both benefit and value to airlines, travel agencies, GDS, and consumers through an NDC-like distribution approach.

    The facts are there is no required model change. There is no lack of transparency. There is no adverse ability for consumers to shop and compare either anonymously or authenticated. What is actually being demonstrated is that agencies get more airline product information than ever before to better serve their customers. Consumers get more airline product choices than ever before with ability to actually pick and choose the trip experience they want. And as Paul states above, the overwhelming majority of consumers, yes even those searching for airline products, are very willing to provide certain information, like name and frequent flyer number, to get personalized offers upfront.
    L
    Why are ETTSA and others wanting to deny consumers this opportunity to greatly improve the travel search and buying experience, especially when one can point to reference examples of what’s to come — Air Canada and Travelport just happens to come to mind….soon to be followed by American and WestJet. And everyone thinks this is great.

    Please stop trying to kill our industry’s “golden goose” for consumers, travel agents, airlines, and even the one GDS that is actually prepared to connect, display and transact on competitive and differentiated airline products.

    When it comes to enabling modern commerce principles, that by the way, other industries seem to be racing to keep up with, we need to simply get in the race.

    NDC is a great starting gun. It’s time we let it fire!

    Note – typed on my iPhone with iFingers.
    Jim Davidson

     
    • Ian Kuvik

      Well said Jim as always there will be a debate but in the end the customer is the one everyone should be concerned with. I fear that all Christopher is interested in is his members and shareholders and not the customer. NDC will for the first time show true transparency, you try today to search for a short haul flight with free seat, food what about innovative products like Air New Zealand’s sky couch, NDC will enable that to happen. As to his seeding fear and doubt about customers having to give away all their data to get a price well that is just false no one will have to give away anything if they do not want to !

       
    • Christoph Klenner

      Jim,

      Always good to debate with you. By the way, is that one of those old-fashioned barbershops you go to? Sadly, we don’t have those around here any more.

      Let me repeat myself: in no way am I questioning the value of a common standard so as to enable a more sophisticated retailing environment for airlines, and a richer experience for consumers. As I have said many times, we are fully ready to sit down with IATA and the airlines to recast Reso 787 to get exactly that outcome. Why on earth would we deny an opportunity to distribute a richer and better product?

      I beg to differ that this debate is getting old. On the contrary, it is more relevant than ever. If NDC is the kind of game changer IATA and some airlines are claiming it will be, it is absolutely essential that we get it right. Instead of throwing their toys out of the pram, IATA should listen to the true concerns of their distribution and retail partners, buyers and consumers.

      See you soon,
      Christoph

       
    • Glenn Wallace

      Yes Jim, I agree that NDC is a gun, but it is pointing at the agents and GDS’s heads, requiring the shopping engines give up control of selecting the right inventory to show customers, and moving the pricing back inside a “magic box” at the airline, which is the opposite of transparent. Agencies will not even know if they are showing the same fares as other agencies. I know you think full content agreements are bad, and NDC will certainly make them harder to enforce which I think at the end of the day is bad for consumers.

      The GDSs and agencies should be, and in a lot of cases are, willing to make investments to show the airlines’ full breadth of new products – that helps everyone from the consumer to the airline.

      The only issue is that the flow and direction of the data was decided behind closed doors.

      Thank you for not mentioning EDIFACT.

      I’ll restate my analogy, what is Sony told Amazon they had to check in with Sony for the price and selection of product to be shown to EVERY shopper on Amazon? That is what NDC is.

       
  4. Milind

    “All the functional distribution virtues that IATA claims for NDC already exist in today’s world. A significant proportion of GDS transactions use XML, enabling airlines to distribute rich content.”

    I must have fallen behind on this one – when did this happen on a GDS?

    Only in June this year did I hear a major airline exec stand up at a conference and claim they had no standard way to distribute rich content today other than through their own website.

     
    • Glenn Wallace

      GDSs have been using XML interfaces for years.

      “Only in June this year did I hear a major airline exec stand up at a conference and claim they had no standard way to distribute rich content today other than through their own website”

      If you look at Amadeus and Sabre products, you will see they have delivered some and will deliver more ancillary product capabilities. Do they support every product from every airline? No.

       
  5. Paul Byrne

    Chistoph,

    Your statement:

    ETTSA’s key concern is “personalised pricing”, which requires consumers to surrender a raft of personal details (including name, age, marital status, nationality, and whether they are travelling for business purposes) before they are eligible for price quotes.

    is in itself fundamentally flawed.

    Consumers are not required to surrender a raft of any such information. They can indeed interact anonymously and received non-personalised pricing. Providing information in return for something of benefit to the consumer i.e. differentiated pricing, is something that all consumers are willing to do. This has been substantiated in both travel and non-travel market segments.

     
    • Christoph Klenner

      Paul,

      The devil is as always in the detail.

      IATA’s High Level Process Description for aggregators, which has been made public inter alia in DOT filings, clearly states that “when the traveller makes a request, the aggregator interrogates the airline profile to determine the minimum criteria required in a request. If the airline’s minimum criteria is not provided (note: this is verbatim, but should probably read “are not met”) by the traveller and/or aggregator, then the airline does not support the request. The shopping request will not be sent by the aggregator. If the airline’s minimum criteria is provided by the traveler (again verbatim), then the airline supports the request and the shopping process can proceed.”

      Unless IATA explicitly states otherwise, this leads me to believe that it is the airline which will determine the level of data the traveller has to surrender in order to be able to make an (intermediated) request, and not the traveller him/herself.

      Christoph

       
      • Milind

        “this leads me to believe that it is the airline which will determine the level of data the traveller has to surrender in order to be able to make an (intermediated) request, and not the traveller him/herself.”

        If an airline wanted to they could setup their web site to force the traveller to surrender a certain level of data in order to make a request.

        I do not know of any airlines websites that force such in order to see prices.

        Why would an airlines suddenly want to do so with NDC?

         
  6. Timothy O'Neil-Dunne

    If I may challenge one statement…

    You made a claim that GBTA is one of several organizations…. if I may quote you directly…

    “Popovich also ignores the fact that the Global Business Travel Association, the Consumer Travel Alliance and the American Antitrust Institute — none of which could conceivably care at all about GDS incentives — have urged the US Department of Transportation (DOT) to reject IATA’s application for approval of Resolution 787.”

    I think the GBTA – a fine organization – has skin in the game.

    For example I refer you to their website where the following link shows sponsorship by some subsidiaries of one of your members is prominently displayed.

    http://www.gbta.org/convention/2013/Sponsorship/Pages/Sponsors.aspx

    Everyone is entitled to their opinion but it would be more appropriate if there was some indication of vested interest.

    And for the record I am a firm believer in the need for NDC and yes I too am investing in the belief that the current model is in need for change. Obfuscation aside – the industry is in dire need of reformation for how airline products are distributed.

    My question to you is to ask If your organization is prepared to step up and propose a solution to this issue that can work rather than trying to shoot down a legitimate effort at fixing a very broken situation?

    Cheers

    Timothy

     
    • Christoph Klenner

      Thanks Timothy,

      In re your points:

      1) GBTA is a membership organisation which first and foremost represents the interests of its members, i.e. travel procurement professionals. That being said, their events (incl. the GBTA Convention) attract sponsorship from a wide range of travel industry players. The list of sponsors you link to indeed lists some ETTSA members and/or their subsidiaries, but it also sports just about any major airline under the sun, two of the three major alliances, as well as numerous other travel technology companies.

      2) We are not trying to shoot down IATA’s effort at establishing a standard. We are raising serious concerns about the fact that the NDC exercise:

      – may go far beyond a standard setting exercise,

      – will destroy the balance between suppliers and buyers/consumers in our value chain by unproportionally increasing the pricing power of airlines, and

      – will thus seriously jeopardize the ability for agents and TMCs to help their customers identify and purchase the most suitable travel products and services.

      Christoph

       
    • Christoph Klenner

      Timothy,

      Also, we have repeatedly offered to IATA to work together to define a new Reso 787 which could be supported by all stakeholders.

      Christoph

       
 
 

Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel