Ai Editorial: NDC adoption is about getting your priorities right

First published on 23^rd August, 2016

Ai Editorial: NDC-XML will need time and resources to be invested before it is widespread, efficient and effective, writes Ai’s Ritesh Gupta

Digital commerce is breaking away from the shackles of a legacy enterprise IT set up, as airlines attempt to control their own merchandising, e-commerce and API offering.

Rather than sticking to hard coded or community-model based architecture, the plan is to support a digital ecosystem where one can work with various stakeholders, including indirect distribution, and be in control of content and offers throughout. This in essence also has been the focus of IATA’s XML standard, NDC, i.e. modernize the way air products are retailed to travel agents, corporations and travelers.

Airlines need to be part of this evolutionary phase, as much as a GDS or travel search engines needs to prepare for it. But this hasn’t been the case, when we hear what some of the active players have to share. For instance, an executive from a meta-search engine told me: “The speed of airline adoption has proven challenging and we would have preferred to see faster adoption and bigger commitment up front. The initiative is a few years old and just now we are getting to a tipping point where a lot of players are starting to use the system – if there was a wider industry commitment from the beginning, it would have allowed us all to invest more resource and thus moving the NDC adoption with the right speed.”

On the positive side, there have been striking developments such as American Airlines and Farelogix working on their GDS integration to Sabre using the airlines’ NDC-style API late last year or British Airways deciding to introduce servicing options such as pre-booking of additional luggage, catering request/ meal orders etc. via the NDC standard. But has the industry been slow with adoption of this standard?

Adoption

IATA’s Yana Hoyles, director of NDC program, speaking during ‘NDC in Action Workshop’ (held as part of Ai’s #MegaAPAC Merchandising and Digital Commerce Workshop in KL) highlighted that out of 179 airlines surveyed this year to measure the adoption level of NDC across the industry, 86 plan to adopt NDC, 23 don’t intend to adopt and 70 don’t know. In comparison, 73 had planned to adopt last year. Importantly, 24 already are live with the standard (NDC APIs “Open to all”, direct connect - travel agents, connection to aggregators, and focus on business travel).

Referring to several airlines, Hoyles mentioned that InselAir is moving from being a travel provider to an experience provider, counting on full NDC value proposition and attaining complete control of products and presentation; there is a natural fit in case of Gol Linhas Aereas Inteligentes as the airline is eyeing “lowest possible cost” avenue and also working with aggregators for distribution of content; Flybe is looking at connecting with corporate customers via an API plus consistency in presentation of products across all channels etc.

Commenting on value for airlines, Hoyles spoke about offer management areas such as merchandising the entire product portfolio and expanding to a gamut of sales channels, dynamic pricing and making personalized offers, whereas under order management one can simplify interlining and revenue accounting in addition to being in control of payment. Other than travel agencies, corporate travelers can hope for better policy enforcement, cost control, quality reporting etc.

Countering  IATA’s stance, an industry source recently told Ai: “Some carriers are further down the path with their assessments and piloting solutions utilizing NDC standards for offer creation and order management, the majority of the almost 400 commercial airlines in the world are not!”

Keeping pace with expectations

The level of expectation is fairly high for some comparing where we stand today, especially after what NDC promises to do.

“If we were to see something new and different like e.g. airlines selling ancillaries on other airlines or interlining based on NDC then I think it would become interesting and tangible,” mentioned a source.

Another senior industry executive also cautioned that before labeling NDC as a slow development, it also needs to be understood that some carriers still expect their PSS to deliver all as it historically did.

“Airlines require core platforms that are highly flexible. Airlines are still using very inflexible platforms. These are either based on shared community models or platforms that requires a lot of development / programming to facilitate every change,” Paul Byrne, SVP of Development, OpenJaw Technologies told me recently. “To create and manage rich omni-channel customer experience, airlines requires platforms that provides extensive business model control (rules based) plus strong product and channel management capabilities. These platforms must have a modular open architecture that fosters a partner eco-system for collaborations.”

Continuing to move

Broadly speaking the industry, including airlines, GDSs, IT specialists etc. have accepted that the usage of NDC -XML by airlines and GDSs will vary in its shape and form, resulting in a mix of EDIFACT and XML connectivity. As Farelogix CEO Jim Davidson says this is the nature of innovation and technical evolution – mixing the old with the new until the old becomes obsolete. “This is precisely what we are seeing in the advancement of airline distribution and merchandising technology, where newer platforms and messaging protocols are being “wrapped around” or bolted onto legacy airline systems. This enables new capabilities, such as personalization, merchandising and dynamic offers to become the new normal in an industry where yes, some of the core systems are decades old. In terms of an API strategy, yes, I believe that the future lies with airline-controlled technology that is PSS, channel and device agnostic. This will enable faster innovation by both the airline and aggregators/travel sellers, and is ultimately a win for the traveler that benefits from a more dynamic, personalized, convenient experience. This is the vision of IATA’s NDC as well as a number of companies, including Farelogix, that are delivering technologies that make this possible.”

Airlines are being advised to separate the core PSS capabilities, as they work on strong merchandising infrastructure and astute API strategy.

Talking of APIs, carriers need to avoid working on proprietary ones. As Davidson says, even standardized APIs are subject to implementation interpretation, which we are already seeing with the NDC APIs. Standardization allows for developers to get familiar and comfortable with certain APIs, even when they change a bit from time to time. This all adds to greater adoption and utilization, which is a good thing, he says.

NDC-XML is not a constraint in improving merchandising capabilities, and it intends to actually facilitate them. NDC-XML will need time and resources to be invested before it is widespread, efficient and effective. In the short term, airlines can already benefit from merchandising capabilities through the existing infrastructure. NDC-XML allows for a lot of flexibility, and this is one of its strengths.

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