XML, NDC and Airlines Table of Contents
Total Page：16
File Type：pdf, Size：1020Kb
WHITE PAPER XML, NDC and Airlines Table of Contents INTRODUCTION 1 1. What is XML 2 2. What is New Distribution Capability (NDC)? 3 3. Why XML is integral to NDC 5 4. XML versus EDIFACT 8 5. Why online travel depends on XML? 11 6. From Disruption to Future Vision 15 INTRODUCTION The New Distribution Capability (NDC) is an airline industry-supported program launched by IATA for the development and market adoption of a new, XML-based data transmission standard (NDC Standard). The NDC Standard will enhance the capability of communications between airlines and travel agents and will be based on XML. Triometric is a specialist provider of XML business intelligence to the online travel industry, working with some of the biggest names in online travel. As part of Triometric’s preparation for presenting an XML Web Services Analyzer for airlines at IATA’s 2014 World Travel Symposium (WPS), we decided to dedicate a 6-part article series to explain XML within the context of NDC and how it is widely used by the online travel community. NDC is poised to transform the airline distribution landscape and we are keen to share our knowledge, insight and experience to help the industry move from legacy to Open Standards. Page 1 XML, NDC and Airlines 1. What is XML? XML is a modern and open technology standard that allows structured data to be stored or transmitted. By structured we allude to the idea that there is a level of repetition and probably a hierarchy of objects and details about them. A simple example would be a list of people who all have a first name, a last name and an age. Using XML, we can gather all this data up and send an entire list of people across the internet using some relatively very simple ‘punctuation’ to show what is what. For example some data on people might be exchanged as using the following text: <people> <person firstname=”Jim” lastname=”Davidson” age=”24”> </person> <person firstname=”Tony” lastname=”Tyler” age=”24”> </person> </people> Discussions are taking place in the hotel industry about the high cost of distribution. In order to manage and contain these rapidly rising costs, they first have to be identified and ultimately measured and monitored. Whether using third party distribution channels or not, the hotel largely retains the risk and loss of revenue for any room that goes unbooked. The use of the angle brackets to form a start “<tag>” and along with a slash to denote an ending “</tag>” allows us to punctuate (technically we say mark up) our data. Note that we also have a hierarchy so an object can form part of another object so we have list of <people> which includes <person> objects. These punctuating <tags> are effectively the eXtensible Markup Language. Whilst there is, if we were being technical, a little more to it than this it is this simple tagging that forms the bare bones but it doesn’t take a great deal of imagination to see how we can design a complex set of XML tags to punctuate and exchange much more complicated list of objects and even relationships between them. A carefully designed set of tags is referred to as an XML schema and we can design schema’s to transmit (or store) virtually any type of data we want. Note that that even though the XML is designed to exchange data between two applications/ servers/organisations it is inherently human readable too. In the next section we will take a closer look at NDC and discuss why it is needed in online air travel shopping. Page 2 XML, NDC and Airlines 2. What is New Distribution Capability (NDC) and why it is needed? In the previous section we presented a simple description of XML, the language that will become the framework for the New Distribution Capability (NDC). So what is NDC and why it is so desperately needed now? NDC is a collaborative initiative created by the global airline association IATA to bring airline distribution technology up to date and deliver an environment to stimulate airline profitability. Hold on to that word – as it is one of the main thrusts behind NDC, the other being the ability to innovate products and services while understanding customer (e.g. the passengers) needs better. So you could say the objective of NDC is to help airlines get more sophisticated and personal in the way they are able to sell their products and services through intermediary agents such as the GDSs. In other words offer their customers who buy through travel agents and travel management companies (usually via the GDS) the same kind of ancillary choices that they are able to offer and sell through their own brand.com websites. Since corporates still largely go through travel management companies (TMCs) this is where some of the airlines most lucrative customers make their purchases. TMCs serve the useful function of not only managing employee travel bookings, but also provide rate negotiations, expense management and corporate travel policy compliance – and they remain entrenched customers of the GDS. However, legacy technology used by the intermediaries is constraining airlines in achieving this versatile way of selling through them. When you consider that most of IATA’s members still sell 60% of their tickets via intermediaries you can see that this is a bit of a problem. The next section will talk more about the mechanics of NDC and its potential for those airlines embracing it. Here we want to look at why the disruptive influence of NDC is needed, especially now that the bitter controversy around NDC among industry stakeholders has been set aside, following the US Department of Transport’s (DOT’s) final approval of Resolution 787 in August 2014. Page 3 XML, NDC and Airlines Oct 2013 Let’ take a look at the commercial context. Although by no means the only reason the word ‘profitability’ does spring to mind here. IATA, which represents about 240 airlines or 84% of total air traffic, recognizes that selling ancillaries holds the key to its members becoming more profitable. Ancillaries is the revenue that can be made from non-ticket sales such as speedy boarding, baggage items, seating choices and a whole bunch of services that can be delivered to make the flying experience more enticing such as catering choices, Wi-Fi or flight entertainment. So NDC is really IATA’s initiative to set a level playing field across the industry and enable airlines to get better at retailing and to grow their ancillary revenues through third party channels. This is really the crux as to why NDC is needed today. Low Cost Carriers or the LCCs as they have become known, apart from stripping their costs to the bare bones in order to reduce prices, have also been making nice profits out of ancillary sales for years. Indeed it is ancillary revenues that the LCCs have mastered well to boost their profits. NDC based on XML will be the enabling platform to help airlines differentiate and embrace customer personalisation as part of a retail strategy. It’s rising ancillary sales that are making a difference to airline profitability. And although the GDSs objected loudly to NDC, even they are now getting on-board and finding ways to incorporate XML technology into their operations. That is why the recent press announcements of United Airlines adopting Airline Solution’s first NDC version 1.0 - XML connectivity to sell its economy plus seat upgrades through travel agents is so significant and hopefully the first of many similar announcements. NDC represents a shift from the way airlines sell today by loosening the constraints of legacy architecture. NDC is an XML standard that enables airlines to deliver richer and dynamic content where price is ultimately related to a traveller’s value. It shifts control over pricing from a traditional published process to a dynamic response controlled by the airlines. To achieve that in a rich merchandising environment XML is needed. In the next section we will take a closer look at why XML is integral to NDC and their ability to close the capability gap between the direct and indirect channels. Page 4 XML, NDC and Airlines Oct 2013 3. Why XML is integral to NDC? In the first article we looked at what XML is, in the second article, we took a quick look at what NDC is and in this article we will answer why XML is integral to NDC before moving on in the next article to show why it is so popular with online travel companies. In the 70s and 80s airlines were technology pioneers with their creation of Global Distribution Systems (GDS) based on EDIFACT (Electronic Data Interchange For Administration, Commerce and Transport). But today, EDIFACT as the messaging system is constraining the airlines’ merchandising and customer personalisation ambitions to corporate customers who purchase travel using travel management companies and agencies that largely use the GDS. These are precisely the customers most responsive to ancillary upsells or loyalty offers such as the extra legroom, seat choice, on-board Wi-Fi, food and entertainment options, etc. It’s not just about charging passengers for checked bags and other services that used to be included in the fare. It’s also about creating new products and services that passengers will want to purchase and merchandising them effectively. To be fair, the GDSs have been adopting some XML to try satisfy airline demands and there are some examples of good airline / GDS projects using XML, but the pace of change in creating fare structures and ancillary innovation is so great that IATAs NDC initiative is designed to be the industry catalyst for that radical and badly needed overhaul of airline retailing.