Ai Editorial: NDC and transition period, any change in status quo?

First Published on 1st December, 2016

Ai Editorial: With the surge of interest in NDC, the industry has to think about the transition period. Ai’s Ritesh Gupta takes a look how change is coming along.

“Don’t forget change doesn’t come easy (to airlines). We are talking about being customer-centric, but most airlines are largely driven by processes. How many airlines are evolving – 30, 40…right?”

This comment from a senior industry executive during our recent conference in Toronto summed up the current situation when we talk of digitalisation today. Ryanair, Lufthansa, JetBlue, AirAsia, British Airways…how many airlines you can think of when you talk of digital transformation?

Talking of distribution, especially via indirect channels, the progress that is being made with NDC and the adoption of this XML-based data transmission standard is being closely followed. As IATA states, the introduction of NDC based services “will represent an evolution, with tomorrow’s situation being a hybrid of today’s service provision, service utilizing NDC and other services aimed to support both”.  As we highlighted in one of our recent articles, the “existing” IT infrastructure can’t be replaced at one go. And with NDC continuing to evolve (there have been questions about the overall viability of NDC, too), how various stakeholders are finding a way out for a standardized, scalable decision-making is vital.

Status quo – is it changing?

Considering the way the likes of Amadeus and Sabre are associated with airlines, right from IT solutions, including PSS, to distribution via GDS, how airlines are picking and choosing the available options available?

Is the status quo being really challenged? Are best of breed specialists finding their way into pilots or new contracts?

The answer lies in how an arrangement can help in bringing down integration costs and also curtail the time needed to deploy new offerings. It all comes down to the value proposition that can be created between airline and intermediary, and at the same time how airlines can be in control of their inventory, distribution and sales, improve their financial performance and also serve their customers better. NDC is only a catalyst to enable a value proposition. If the airline can send new and relevant content via an intermediary that can display and transact on this content better than another intermediary, then competitive pressure gets created which is beneficial for the entire travel supply chain.

Airlines can evaluate how such initiatives are coming along, especially the control that is being desired. They can also explore issues, say, which is the fastest way to bring a product to the market. Does the traditional approach relying on ATPCo filing is still the way to go? Also, opt for connectivity that makes the most sense to a business, constantly re-evaluating the cost-benefit ratio of changing connectivity.

In case of Lufthansa, as shared by the group recently, a NDC pilot was fully integrated into its existing distribution and production processes and so involved actual ticket sales. In conjunction with TUI group’s tour operator l’tur, Lufthansa featured unique product bundles exclusively via lturfly.com. Highlights include: offers were crafted for certain routes on the European network of the group; these included bundled ancillaries, such as free checked baggage and free lounge access, set up in airline’s merchandising engine and worked around a flexible and rule-based product compilation; featured product descriptions, icons, and images etc. The focus was on AirShoppingRQ and AirShoppingRS messaging to evaluate offer management.

There are several interesting aspects when we talk of how all of this is being implemented, especially in the context of how much airlines are ready to drift away from the legacy environment (do they believe their existing partners are too slow to respond) and rather go with the best of breed offerings. Entities like Sabre and Amadeus assert they are evolving, too. Amadeus recently shared that as an IT provider to airlines, the team has been delivering NDC XML-specific enhancements, and is already using NDC XML in its solutions using NDC XML AirShopping verb, the NDC XML FlightPrice/ServiceList verbs, the NDC XML FileRetrieve verb etc.

In case of Lufthansa, their direct connect IT platform is being used in new initiatives. If we look at new arrangement with Siemens and Volkswagen, it was about Amadeus Cytric bypassing Amadeus GDS to hook into Amadeus Altea!

“Till the point all the inventory is being controlled by Amadeus or Sabre, the industry can’t witness a major change,” stated a source.

Being realistic

Don’t expect pilots to run smoothly in every instance.

In case of Lufthansa’s pilot with l’tur, the airline acknowledged that banking on NDC to have a real-time, transaction-based offer process “did not easily link to the cache-based solutions that are widely used in the European tour operator business”. So an NDC converter was developed to feed NDC offers into l’tur’s cache-based production environment, shared the group. Lufthansa’s pilot achieved IATA NDC Level 2 certification (focuses on offer management) and used NDC schema 1.1.3, an early version that was current at the time of the project’s inception.

Strong foundation

With NDC, there are schemas for shopping and, order management, and the end result is the creation of Offer ID and Order ID, featuring order creation, ticketing, issuance, payment authorization and BSP reporting.

Airlines need to evaluate what is needed to support NDC – be it for profile (mainly rules to determine which shopping requests should be sent), offer and order management, as well as content.

Basic requirement is astute merchandising system to create offering dynamically, and work on the most relevant offer at any given time, through any point of sale, any channel, direct or indirect and through any device. Gear up for delivery of enhanced airline content at the point of sale, whether in the direct or indirect channel. And plan integration of systems with PSS for an end-to-end traveller journey across key touch points such as servicing, delivery, disruption management plus ticketing and fulfilment.

If we talk of airlines and APIs, they must learn how to build, deploy, manage and upgrade them so that connected parties, too, can benefit. But there are cases where airlines that already have API XML connectivity have it in a proprietary way. This needs to be avoided. The technology behind the API is generally related to the functions one wants to deliver through the API. In the airline world its things like flight search, flight price, PNR create, ticketing, etc. When it comes to a distribution approach to an airline’s selling channels, the delivery methodology would be quite clear, i.e., a centralized and standardized API that would be consumed by all channels – web site, kiosk, GDSs, mobile, etc.

As for GDSs, it means accepting the fact that the airline’s systems will be responsible for processing all distribution-related transactions, not their distribution system anymore. It doesn’t change the intrinsic value of GDS, i.e. the unmatched reach they deliver. The biggest issues are in understanding the various workflows that have been established by a GDS or OTA and understanding how the schema from the airline will impact the established workflow.   

Travel agents obviously prefer to consume content that does not disrupt their processes, in particular when it comes to comparative shopping, mid- and back-office integration and customer servicing and this has a major impact on the success factor of any strategy involving the channel.

Also, messages may change and improve with new versions thanks to the addition of new elements (e.g., sending video images) or enhancements to existing elements (e.g., split PNR improvement). Plus, while deploying an NDC API between airline and intermediaries there will be evolving versions of the schema that will impact the specific XML messaging, in that messages themselves will change over time – new ones added, existing ones modified, etc. 

Of course, standardization in this case isn’t easy, since we are talking about big, heavy systems that need adjustments.

There are valid concerns around the cost to support implementation, employee training to use NDC-enabled processes and ongoing product and technology support.

Follow Ai on Twitter: @Ai_Connects_Us