EyeforTravel North America 2018

October 2018, Las Vegas

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Revolution in airline distribution depends hugely on GDS buy-in

More voices are confirming that IATA is on the right track with NDC but will it deliver a better deal for consumers? Sally White reports

Another voice seems to be confirming that the drive by the International Air Transport Association (IATA) to retain control on customers for its members is working. German marketing consultants’ Dr. Fried & Partner, in its Airline Distribution 2022 study, says airlines are “making progress” to achieving greater control over retailing and distribution. 

IATA’s latest update on its plan, put into place six years ago, to bring in a New Distribution Capability (NDC) says its registry of companies participating now numbers over 100, including 58 airlines. Thus it is gaining essential critical mass.

Basically, what IATA is seeking to do is introduce a standard developed to facilitate communication for travel agents and airlines. Airlines have been offering a wide variety of products and services on their websites to appeal to travellers – early boarding, preferred seating, a day pass for an airline lounge and so on. But travel management companies using the global distribution systems (GDSs) may not be aware of the full range of airline products on offer, and airlines cannot customise the offer based on who is making the request.

The industry remains split on whether this will actually result in a better deal for travellers.  

The new system is not expected to be fully implemented for another five years or more. By then, if all goes to plan, all airlines will use the same IATA-verified standards, which means that third-parties – GDSs, travel management companies (TMCs), procurement departments, plus new entrants – can access the same content that airlines are selling directly, and redistribute it on the airlines’ behalf.

The industry remains split on whether this will actually result in a better deal for travellers. Those trying to wade through the complexity of all the industry jargon and announcements must hope that they, too, will get a better picture of what is on offer. Commerce platform group Datalex believes that they will, and that it is their enthusiasm for online research and booking that has brought the changes.

Impetus for change

And, of course, there is plenty of change happening without any nudging from IATA – for example, low cost carriers (LCCs) are embracing unbundled fair structures and improving their digital retail channels.

Dr. Fried & Partner comments say that “full service carriers are adopting many of these practices, reshaping the role of GDSs. “

It adds “the legacy carriers will endeavour to regain sovereignty over their product, to sustain the depth of their value-adding activities. In a further context, the legacy carriers will seek to differentiate their distribution approaches more clearly and offer customers their products directly, especially in their home markets.”

IATA wants to speed up adoption of its new system, so it has just announced that it is inviting airlines to join a group called the NDC Leaderboard.

It has always been clear that to achieve critical mass of NDC, the industry needs the GDSs to become true aggregators

“These airlines will each have an individual goal that will consist of having at least 20% of their sales ...” it states. “This group will be comprised of large and small airlines, and is aimed to cover at least 20% of total IATA passengers carried.

Crucially for IATA’s ambitions, the major GDSs agreed last autumn to back the plan, but they must deliver for it to succeed.  

“It has always been clear that to achieve critical mass of NDC, the industry needs the GDSs to become true aggregators. An airline’s ability to deliver its individual target as well as IATA’s overall goal for 2020 is intrinsically dependent on the above GDSs’ commitments. Should the GDSs not deliver by early 2019 at the latest, then the target would be at risk.

“In the meantime IATA will be engaging with the GDSs to offer support. It will also, of course, continue to promote new entrants and other players in this area, “ said the IATA statement.

While there has been criticism of the pace at which the GDSs are moving, Datalex believes that their commitment to the NDC principles is real. An important factor, it says is “acceptance of NDC in the market, especially in the corporate travel space.”

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