Ai Editorial: Is the future of comparison shopping in jeopardy with NDC?

Would it be possible to gauge the lowest available price for a personalized offer coming from an airline in the NDC-driven environment?

NDC, as a new, XML-based data transmission standard, continues to be in the limelight. The standard is moving on, with the lure of the industry drifting away from commoditization of air travel. 

A prime example of this exercise is the drive to do away with any process and technology that was designed to manage static price information. Either way, associated stakeholders have concerns or case for improving upon the state of affairs. The likes of aggregators and travel agencies are guarded against what would happen when there would be an end to looking out for options among all pre‐filed fares. It has been openly stated that this would result in loss of transparency.

This concern stems from the fact that there would only be case-by‐case personalized offers, in the absence of a detailed comparison shopping in CRS neutral display. However, equally important is to understand how comparison shopping would shape up – is there a provision for a like-for-like comparison for what a passenger is seeking, on the basis of what the indirect channel partner has requested from the airline.

As for putting an end to pre-filed fares, there is a case for bringing in efficiency, too.

“The current pricing model is bizarre when you look at it from the context of almost any other industry, or even other travel verticals. An airline will tell you the current availability using RBD letters and single digit numbers (e.g. M4), and the retailer or distributor needs to have previously subscribed to millions of complex pricing records from ATPCO to be able to convert that into a price,” says Paul Byrne, SVP Development, OpenJaw Technologies, and Member Board of Directors, Open Travel Alliance. 

Byrne further adds, “Not only is that so complex it requires specialist companies to provide consumers the shopping experiences they expect at a reasonable price/ performance, but every step from that point on through ticketing, revenue accounting, reconciliation, interline billing, agency settlement, etc. has added and unnecessary complexity.” In the long run NDC has the possibility to simplify this process, to one of API based offers and orders that can be reconciled with standard off-the-shelf accounting and ERP software, says Byrne, who on behalf of OpenJaw, is an active contributor to the Order Management taskforce as part of the DDXWG pushing forward IATA’s NDC initiative.

The future of comparison shopping

Commenting on this, Byrne points out that NDC would not put an end to comparison shopping; in fact, it is one of the underlying principles i.e. it allows a like for like comparison where the consumer can see exactly what is included in the offer price from one airline versus another airline’s offer.

“It is also bizarre when considered in the context of almost any other industry that some retailers would rebel against getting better product information. The real threat to agencies is that airlines want to be the retailers themselves. That is a commercial issue airlines and agencies have to work out. As in any supply chain everyone from suppliers and distributors to agents and retailers need to add value,” said Byrne.

It is also being asserted that airlines would gain an upper hand with the possibility of the direct connect model featuring airlines and travel agencies. Also, there is an apprehension that the new standard would result in escalation of costs for agents.

Byrne doesn’t deny that airlines would have greater control of their pricing in NDC​; however, as he points out, it is not true that this will inevitably lead to higher costs/ prices for agents. “If an agent sends an anonymous request to the airline where the airline knows nothing about the traveller, a different offer may be returned than if the airline knows something about the traveller e.g. his/ her FFP tier status,” shared Byrne.  

Paris-based Hélène Millet, Senior Consultant, Conztanz, (she was New Distribution Processes Director when she quit Air France KLM in 2013), believes pre-file fares aren’t going to disappear completely as of now. She adds, “There are concerns whenever there are changes. NDC comes from the IATA, of course, so those standards have been designed by airlines first, indeed. It is quite natural that travel agents would have concerns. But the goal was not at all to unbalance the airline economy against the agents. The initial need of the airlines was to be able to distribute their product as a whole to travel agencies too, the way they were able of doing it on their website.” She further adds, “As for offers, (it would be about) only show what you can sell, avoid proposing something which is not available anymore! Sounds like a better situation for agents, too, doesn’t it?”

Over the past few months, a couple of distribution and e-commerce executives associated with airlines based in the U. S. and Europe that I have spoken to are in favor of NDC.

NDC is an opportunity for airlines to start controlling their own content and how it is presented in GDS and other indirect channels. “The major threat is that the adoption will cost airlines a lot of money, but at the end the additional content will be another opportunity for GDS to charge airline extra. It also seems that they are not clearly adopting the NDC XML standard, but building their own XML schemes, which also add complexity related to interfacing and data flow,” says an airline executive.

More to come on this…stay tuned!

By Ritesh Gupta

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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