Ai Editorial: How does Amadeus see NDC connection and commission for agents?

First Published on 23^rd August, 2017

Ai Editorial: How quickly can NDC connections bring about a big change in the manner in which travel agents go about selling airlines’ offerings? What about the long association between GDSs and travel agencies? Ai’s Ritesh Gupta spoke to Cyril Tetaz, Head of Commercial, Asia Pacific, Airlines, Amadeus, about the same.

A couple of months back, American Airlines with their NDC connection, featuring end-to-end shopping, booking, and ticketing capabilities plus new content and functionality, introduced $2 per flight segment NDC commission as part of their NDC incentive programme. 

There are interesting aspects associated as far as the participation of travel agents is concerned. For instance, how would agencies go about developing an NDC connection? What happens to agencies-GDS volume agreements?

American has mentioned that NDC is not designed to create extra work for travel agencies, and in fact, this will provide agencies with richer sets of airline products and services to compare when using NDC, “which increases consumer choice as compared to today’s legacy GDSs, which may be constrained by outdated technology“. At the same time, travel agencies are responsible for their own hardware costs.

So it is also important to assess how does a stakeholder of Amadeus‘ stature foresees such developments shaping up.

Association of agents with GDSs

Is the dependency of travel agents solely on GDS getting reduced year by year?

“We don’t believe that’s true,” Cyril Tetaz, Head of Commercial, Asia Pacific, Airlines, Amadeus. 

“Travellers want consistency, transparency and choice and the GDS remains the most cost-efficient way for travel agencies to deliver that to their customers. Amadeus allows our travel agency partners to connect to the richest and most relevant array of content on a single platform. We imagine that managing multiple connections or platforms would require a substantial level of investment, effort and IT skills for travel agencies. “

Tetaz also emphasized that what Amadeus offers no other GDS or channel can replicate – the Altéa community model.

Over 130 of the world’s airlines, including some of the largest, use Altéa for their PSS.

“Altéa and the Amadeus GDS are built on a common platform which means Amadeus travel agencies booking Altéa airlines enjoy best data accuracy and cross-channel consistency. Benefits include fare accuracy, automatic frequent flyer validation, instant SSR (Special Service Request) confirmations, and guaranteed last seat availability,” he said. “Any changes made to a traveller’s PNR by the travel agency is immediately seen by the airline and vice versa. This is a level of service that our travel agency customers appreciate they can offer to their travellers.”

Business processes and functioning of agents

A section of the industry is pushing airlines to re-look at the process of creation of their offers, sharing of fares via static filings, and even 3rd parties creating the offers on behalf of the airlines.

Today airlines typically publish fares through ATPCo and all distributors have easy access to them. Furthermore, the current model also relies massively on caching technology for fares and availability.

“This brings speed (in response time) and cost efficiency for all travel players. As a result, travel agents do not depend entirely on airline systems to make an offer for the traveller. As we’ve seen in their public response to NDC, these are things that concern travel agencies and must be taken into consideration for whatever new model comes into play,” mentioned Tetaz.

If we talk of XML connectivity, Amadeus has also been distributing LCC carriers with XML connectivity since 2008. What are issues with adoption of NDC, is it “too much flexibility in the initial versions of schema” and interpretation being different the main issue? How agents need to move along?

Tetaz highlighted that the cost and difficulty of integration remain quite high and may be difficult for some parties to address.  He said airlines have been largely focused on Level 3 connectivity (Offer and Order Management) that would allow airline offer creation as well as order creation, retrieval, change and travel document issuance, payment and refund to be done via NDC-XML technology.

“IATA has also been highly focused on providing standards around this. But this represents a major booking flow redesign and requires travel agents to invest in NDC interface adaptation and costly IT integration,” he said. “In fact, there are many ways of integrating NDC, and Level 2 connectivity (Airline Offer Management) is one of them. Here, airline offer creation through search and pricing of flights and ancillary services would be done via NDC-XML technology, without impacting the booking, servicing, payment and ticketing steps. However, Level 2 connectivity has not yet been defined by any industry player. “

Options for integrating NDC are still in the making and being discussed by all players.

“Within the context of NDC, our vision is to develop an integrated solution that can be widely adopted by both travel agencies and airlines to deliver sustainable results at a scale that matters. The objective is to ensure easy adoption in the marketplace with minimal disruption and to meet the business objectives of all parties. Collaboration across the industry will be a key factor in driving success for all players,” mentioned Tetaz.  

Merchandising, GDS and agents

Amadeus says they are making sure that branded fares and ancillary products are available through all channels – direct and intermediated. The team has been working with over 128 airlines to date to bring to the market their ancillary services offerings. During the 2014-2016 period Amadeus has witnessed a 125% CAGR on ancillary bookings done through travel agencies using the Amadeus system, with a significant growth in attachment rate across travel agency segments.

“Furthermore, we have seen double-digit growth when it comes to the number of airlines selling their fare families through Amadeus. This has facilitated the selection. of fares by travel agencies for their clients, as well as being a powerful upsell tool that has generated significant incremental revenues for airlines,” said Tetaz.

Meet executives from Sabre, Amadeus IT Group, Datalex, Farelogix, Travelport, OpenJaw Technologies etc. at this week’s The Mega Event Asia-Pacific 2017 - 4th Annual Profitabilty Summit, to be held at the Grand Mercure Roxy Hotel in Singapore (23-25 August, 2017).

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