Ai Editorial: Where does NDC fit today?

IT infrastructure and distribution of data - where does NDC fit in today?

NDC, as a communication standard, has been in the limelight for three years or so. Ai’s Ritesh Gupta finds out how this initiative is shaping up on a couple of counts   

There has been a continuous scrutiny of how the XML-based data transmission standard is going to pave way for superior air travel retailing.

Standard development is the core to the entire initiative. The first version of “end-to-end” schemas was published late last year. Airline adoption, from testing to deployment, is expected to be gradual this year as well as in 2016. 

As much as airlines themselves refer to the limitations of legacy distribution and the potential of a modern industry communication standard in opening gates for a differentiated product offering, they, too, have  comprehended a couple of lessons over the past few months. For instance, one can’t really foresee replacement of all the airline systems with NDC-compliant systems at this juncture. (It [replacement] is still untimely, as there isn’t yet a standard to define “NDC-compliant”,” mentioned an airline executive. Also, there is a need to gear up for the data that NDC will bring along with it. Indeed there is an option to enhance offers and corresponding take rates. This is going to be a key development for airlines in how they market their product.

Here we explore a couple of important aspects that are related to IT infrastructure and the impact on distribution of data that NDC is resulting in:

• Is NDC-XML the only answer? It is clear that airlines are looking at a mechanism such as NDC that would result in them responding to a fare request from a user, who reaches out to any indirect distribution partner. The response to such request is going to be facilitated by their shopping engine via an API. And this would mean as a user whatever I was looking for from a direct channel owned by the airline, and what it had to offer to me, same way the airline would end up pushing offers when indirect channels pass on a request from the passenger (can this passenger be directly approached by the airline has been a concern of third party intermediaries).

To their credit, carriers have invested in merchandising platforms tailored to dynamically bundle ancillary services based on a passenger’s value. There have been concerns about transparency, with questions over whether the price resulting from a specific request is lowest or not, in case pre-filed fares come to an end. Also, multiple direct connects featuring agencies can make price comparison more difficult.

For their part, GDS companies have been integrating with NDC-like XML APIs from carriers.

At the same time, a section of the industry also points out that NDC-XML is only a part of the merchandising effort underway in the industry and is far from the only connectivity standard. 

“We are already seeing that usage of NDC -XML by airlines and GDSs will vary in its shape and form, resulting in a mix of EDIFACT and XML connectivity,” shared a source.

A case in point, IT specialists are introducing their merchandising systems, integrated with their PSS offering. They promise that this would also help carriers to work out dynamic and relevant offerings: any time, any point of sale or channel, direct or indirect, through any device.

So is this just another way of improvising existing legacy technology? Can it last? Only time will tell.

It is often debated whether the IT specialists behind PSS’ deliberately tend to resist change and rather not succumb to an attempt by new players to enter their territory in any fashion.

Sebastien Touraine, Head - Airline Merchandising, IATA, says the NDC technical standard provides the opportunity to implement a modular environment where valuable assets are leveraged, out-of-date assets are renovated and new assets can be added easily.

“In effect, this modular architecture will allow airlines to respond rapidly to changes in their business environment; this is a must for retail organizations,” he says.   

• Ancillary revenue generation: It is possible to file and sell products related to the flight through 3rd party channels, including through GDS and interline partners.

But it’s time airlines move on to an API or other XML-based technology. It’s simply for the fact that even “with the frequent updates to and from the ATPCO databases, the pricing remains relatively static and is difficult to personalize”, as an executive shared. The IATA NDC initiative is expected to improve this.

It must be mentioned that airlines have been waiting for the continued rollout of EMD-A, which makes it possible to relate a non-flight item to a flight ticket, offering insight into the buying trends of flyers. Until EMD-A comes to full implementation, any ancillary sales will continue to be recognized as a separate transaction; however, that does not prevent an airline from selling it, it only makes it difficult to associate it to a specific flight activity.

The industry has been waiting for standardization of ancillary offerings to support interline sales, fulfillment, settlement and reporting, etc.

Touraine says: “Having led on behalf of IATA, the Electronic Miscellaneous Document (EMD) implementation across the industry, modernization of end-to-end process, capability and industry standard is a must. While some industry functions will be simplified/ modernized through the capabilities enabled by the NDC standard, there are definitely more opportunities to update/ modernize the order and delivery processes. As airline merchandizing provides greater options, some processes (for example PNRs, ETs) were not designed with this level of complexity in mind.”

He also referred to One Order, an industry-led initiative intended to “modernize the multiple and rigid booking, ticketing, delivery and accounting methods with a single, flexible order management process”. As a result, a flyer wouldn’t require different reference numbers and documents. One order reference would be sufficient. For carriers, this would do away with expensive reconciliation between PNRs, e-tickets and EMDs. And agencies would be able to pursue same procedure to book flights and products from airlines regardless of the airline’s business model or technology capability.

According to the IATA, the One Order business case is ready and will be presented to the Board of Governors in December this year for the final decision on whether to move forward.

Going forward it’s interesting to assess how airlines can get closer to creating their offers. Also, the NDC adoption is the way to go, but how much of IT infrastructure would be changed hangs in balance at this stage.

Gain an insight into the world of NDC at Mega Event in San Diego which is taking place on the 4/5th of November.  More information at www.MegaEvent15.com

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