its own, says: “NDC has been around for more than 10 years and hasn’t transformed airline retailing in the way that everyone had hoped.” Sam Abdou, executive vice president, air, rail and global online at Amadeus, is optimistic but agrees there has been a lot of frustration around the lack of consistency. “Things have calmed down because the industry – tech providers, the airline and the agency community – has come together. Airlines are moving from the EDIFACT world to the NDC world,” says Abdou. CHANGE PROCESS There are three pillars to this NDC world. One ID in which the traveller is uniquely identified and holds the data which makes them fit for travel – passport, visa information etc. NDC, which is retailing with offers and dynamic pricing. And the third is One Order which links the whole process from initial order to fulfilment. This is the vision of airline retailing but the journey will be long. There are many reminders in the air industry, from e-ticketing to biometrics, of how change management can be a slow process. From introduction to acceptance can take a decade. But the explosion in the prominence of the word ‘retailing’ in all carriers’ vocabularies is telling. Airlines, like other businesses, want to own what they’re selling. “Airlines have their own freedom for commercials and to showcase their own products in a different way,” says Hoyles.
Just as businesses in other sectors historically had agents or outlets in different parts of the world to market and sell their products, carriers have used the GDS as a distributor. But all distributors have a cost for this service and airlines, just like other retailers, want control over how their wares are marketed and the timing of releases etc. The airlines accept that they should pay their distributor but they increasingly see the TMCs and other resellers of their content as whom they would like to pay more directly rather than through the intermediary, ie the GDS. According to T2RL’s Luck, “Airlines say they are happy to pay something but they’d like more control over what they pay to agencies and be able to decide how much to pay to whom.” Then there is the issue that the resellers (TMCs) make their money from the ultimate customer, ie the corporate. The corporate is willing to pay for a service – indeed it can be five per cent or even more of the total travel budget that goes to the TMC – but if income from the GDS drops, the TMC might very much need to get more from the corporate. Mihai Dinu, global travel manager at UiPath, sums up the thinking of many of his fellow travel managers: “Will a TMC increase the service fee for NDC content? Some TMCs have a concept [of what should incur a higher fee], eg a low-cost carrier. You can imagine NDC in the same way because it’s not standard content. How do you position the fee?” On one level, the issue is simple. Just as in many other industries the number of airline
products is exploding. However, its legacy distribution system, the GDS was built in the pre-digital age. To change the technology system is not going to happen in a day and it will be costly. It is an unspoken issue but an important one and was probably at the root of much of the discord and anxiety five years ago. The need for time and collaboration is on everyone’s lips. In the words of Lufthansa’s Walter, “We’re on a journey, a change process. We need to make sure that we bring everyone along and have some sort of alignment of where we want to go. Change is never easy.” NDC has gone through a complex journey as it matures to accommodate players from the different pillars of its eco-system. Agents, aggregators, tech companies and airlines have all sought NDC accreditation and many have achieved different layers of it. The upshot is that some 60 airlines are now on NDC, including all the major passenger airlines which between them represent more than 50 per cent of IATA’s air passenger traffic. Some of those carriers are moving very fast. Finnair is starting to move its content from GDS, EDIFACT pricing to NDC, continuous pricing. The plan is for it all to be on new channels by the end of 2025. Pushing the envelope across the Atlantic, meanwhile, is American Airlines, which has told agencies they need to be connected to the carrier’s NDC technology by April 2023 or risk losing access to 40 per cent of its fares. Airline distribution is undergoing a major transformation and it won’t necessarily be a smooth ride.
33
SPRING 2023 | businesstravelnewseurope.com
Made with FlippingBook Online newsletter maker