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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:
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 “
In the next section we will take a closer look at NDC and discuss why it is needed in online air travel shopping.
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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.
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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.
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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.
Traditionally EDIFACT delivers information in the form of a static display, showing prices and flight times with limited product information for comparison. Today, airlines are keen to adopt modern e-tailing practices in what invariably has come to be known as merchandising, retailing, unbundling, a la carte pricing or simply charging for things that used to be part of the fare. XML which airlines already use for selling fares and ancillaries through their own websites is the enabling technology that will bridge this gap.
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Oct 2013 XML is very flexible and powerful, allowing airlines to display content rich details about their services. NDC is really about extending this flexibility across the airline distribution value chain. NDC is based on the Open AXIS XML (Extensible Mark-up Language) schema which is an open data standard and available for use by the entire industry to set the parameters for transmitting data between partners. Open AXIS XML ensures that NDC is an open, robust and transparent internet-based data exchange standard – just what the airline industry needs in its quest to embrace e-retailing.
The essential difference between the two can be summed up by imagining a small window next to a larger door. Smaller chunks of uncomplicated bits of data go back and forth from requester to supplier through the window. That’s EDIFACT. The door, on the other hand, represents a bigger opening that allows more complex content to flow back and forth, which is XML. We’ll touch more on the differences between EDIFACT and XML messaging in another article.
Travel industry adoption
Online travel companies, especially the intermediaries connecting with multiple suppliers, have been heavily using XML APIs for sharing data among various system. Search requests get wrapped up in XML documents –and responded to similarly with content rich offers, confirmations and bookings across the supply chain.
XML technology is the facilitator for seamless connectivity and syncing between different systems in real-time. As the ‘information exchange standard’ between disparate channels, it plays a critical role in strengthening the systems of travel suppliers and connect data held in different silos.
For hotels, XML technology has played a crucial back-end role to facilitate the move to a new-generation approach to revenue management and real time updates across all channels and platforms. For other suppliers, like car rental companies, XML is playing its part improving reservations and rentals for customers. Mass adoption of XML among airlines promises similar efficiencies.
Travel companies have embraced XML standards because of some of its very practical attributes:
• Simplicity – XML is easy to understand, doesn’t require great programming knowledge. You create the Tags and overall structure of documents is controlled by the user reflecting the organisation’s needs. • Organisation – XML makes sure data stays well organised and is segmented from the formatting rules. • Accessibility – XML helps compartmentalise data which makes it easily accessible coding when changes or updates are needed which helps save time (and probably money). • Standardisation – XML is an international standard – hardware and software agnostic, meaning anyone from Amsterdam to Zurich and all places in between can decipher the message and understand its contents.
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Oct 2013 Why does IATA want to create an XML standard?
Essentially for all those reasons listed above. IATA recognises that B2B communication across the online travel supply chain has been transformed by leveraging XML open standards as a web services communication framework enabling the sharing of more complex messages including pictures and videos. So IATA wants to collaborate with the industry to develop a set of open XML standards that will enable airlines to take control over the distribution, pricing and merchandising of their product and services. It sees the need for airlines to embrace this technology, take the bull by the horn, and benefit from it too.
XML can prove to be as transformative for the airline industry as it has proved to be for online travel agencies and their suppliers. Adopting NDC based on XML means airlines could become less reliant on the global distribution systems, because in future they would bring together the fare, schedule and availability within their own systems to create an offer instead of the GDS performing this task. The GDS stranglehold on the airline corporate sales channel would be finally broken. The offer could still be routed through GDSs, but the door of options and opportunities would be wide open. So to sum up, IATA is putting energy and resources into promoting NDC adoption so that airlines can benefit from:
• Common standards shared by all to increase connectivity between partners • Re-using communication APIs across partners and reducing costs • Open, transparent way of selling products across all channels • Ability to innovate products and fares – to differentiate and be competitive • Agility to respond to market conditions with quick introduction of new services or withdrawals of poor performers
“The NDC data transmission standard will open up the airline distribution market to much needed competition and new entry, which could lead to lower distribution costs,” says IATA on its website.
NDC is the genie out of the bottle that one way or another will make this vision a reality.
In the next section we will show some examples of how XML is used elsewhere in the online travel world followed by a closer look at how EDIFACT and XML compare.
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Oct 2013 4. XML versus EDIFACT
This section addresses some of the key differences between the two to explain why airlines need to embrace XML if they are to succeed in getting more revenue from innovative ancillary sales. What this article doesn’t do is dismiss EDIFACT altogether, recognising that it has robustly served the airline industry (among others) for 40 years while passenger and flight numbers have grown steadfastly. Any change is likely to be evolutionary not revolutionary.
We’ve mentioned that GDSs and their network of airline suppliers began using the electronic data interchange standard EDIFACT for information exchange early on. It is now regarded as legacy technology, but for many years it has been very stable and robust enough to handle the large transaction volumes of hundreds of thousands of travel agents using it every day to book flights and rooms. In fact at this point it is probably worth emphasising the importance the GDSs currently play in the selling of airline tickets to the most lucrative market (e.g. business travellers). According to Amadeus, 15 -20% of airline tickets sold through travel agents are interline (e.g. complex itineraries served by multiple carriers where the money is split). This is critical for an airline to expand reach and where the GDSs excel.
EDIFACT will continue to prove useful in the sale of tickets for some years to come, since the messages are highly structured and quite small in size. Indeed over the years the airline industry has made a huge investment in EDIFACT so XML should not be regarded just in terms of a competitive alternative (although it may become that), but rather complementary – as the airline ‘merchandising revolution’ evolves. So in the context of ancillary sales it brings that extended functionality. Many GDSs have begun to incorporate XML into their technology – and after the bitter NDC debate in the public square, the GDSs are coming round to the view that XML will be good for the industry as a whole.
These days when airlines talk about “merchandising,” they are referring to three things:
1. Optional services such as bags, speedy boarding, premium seats, meals, etc. 2. Branded fares, which have commercially recognisable names and specific attributes for differentiation and upselling. 3. Desire for customer insight in order to achieve greater personalisation of offers.
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Oct 2013 In this context EDIFACT is a constraining technology when it comes to unbundled fare structures while the more flexible XML offers many more opportunities to support the innovation that is needed (and that NDC is designed to promote). In essence, NDC is all about introducing a common, open XML-based standard that gives travel agents easy and transparent access to the same products, ancillaries and information that is available on airline websites.
So how are the two messaging systems different? Essentially the difference is structural and in the treatment of the data itself.
• EDIFACT has been great for handling high transaction volumes, but this is down to being created when bandwidth cost was a consideration. EDI messages are compact and minimalist and use codes to represent complex values. Since it is legacy technology, there are fewer people and tools to support it, making it an expensive option to maintain. It has its own proprietary language which lends itself to closed communities and requires developers who can code new requirements. This means that adding new products or services can take time and be costly, as many airlines requesting even small changes from GDSs can testify. • XML, on the other hand is rich in meta data making it larger in size, but easier to read and debug. Although a more verbose language it offers the flexibility to include media rich data such as pictures and videos. There are more people who can work with XML, more tools to support it and it doesn’t require specific coding expertise. In general introducing new features between trading partners is quicker, easier and cheaper using XML. The size of XML messages has in the past made it less attractive for very high volume applications – although the popularity of the internet for conducting travel searches is changing this with popular online travel companies and intermediaries dealing in very high search volumes.
So, while EDIFACT is still a popular syntax to use in high volume bi-lateral connections or within closed communities (e.g. GDSs and the airlines) XML is increasingly preferred for reaching a disparate set of customers using different systems via direct APIs (e.g. online travel websites, wholesalers, hotels, etc.). It is XML’s more intuitive format that makes users prefer it over EDIFACT’s more cryptic and simplistic format.
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Oct 2013 Having said all that, there are hundreds of millions of airline transactions and it is recognised that GDSs still account for approximately 60% of that. Entrenched relations between Travel Management Companies (TMCs) and the GDSs mean that percentage is probably not going to dramatically change any time soon. Adoption of XML among the legacy airlines is still new although the Low Cost Carriers (LCCs) use it extensively, but until recently they have avoided going through the GDSs, although Ryanair and EasyJet’s appetite for business passengers has changed that approach.
Where XML will shine is in the selling of all those ancillary services around airline seats. These at least to begin with, will not be as high volume as airline seats, so it makes sense to use XML for those ancillaries because XML makes it easier to add products or change the offering in line with seasons or market drivers So, if an airline wants to offer certain passengers lounge access or on-board Wi-Fi, or airport parking, etc. It’s much easier for the airline and the technology provider to do that with XML. It is quick and inexpensive to make those product innovations and changes.
But it is possible to see situations where XML and EDIFACT may co-exist, with the ancillary related message being shipped back to the agent’s desktop, whether it’s a GDS or another provider. Indeed most travel agencies today are not using the typical “green screen”, as Amadeus, Sabre and Travelport, the three major GDSs have all made strides in developing Graphical User Interfaces (GUIs) to increasingly present some of the ancillary options the airlines want to sell. The travel agent is given the option of switching between the two screens as needed. Experienced agents can often perform certain functions, such as intricate itinerary searches, more quickly using cryptic commands.
The GUIs have been designed to look like a green screen. Guiding the mouse over certain items can produce popups containing text or photographs. Some of the GDSs also have direct connects with some of the Low Cost Carriers (LCCs) via XML APIs that allow the GDS access to the airlines’ web-based displays, but each direct interface requires significant resources and can be expensive so not really a solution for connecting with hundreds of airlines. There is also the minor question of who would pay?
NDC is a new beast based on XML. It is needed because Airlines need to be able to become merchandisers, not just people transporters if they are to become more profitable. NDC has been endorsed by the US Department of Transport (DOT) and is getting increasing support from its erstwhile opponents, with Amadeus leading the charge. It remains to be seen how quickly the industry will not only embrace but implement NDC, so in the real world, EDIFACT is likely to co-exist alongside XML in a complementary way within the GDS environment for some time to come.
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Oct 2013 5. Why online travel depends on XML?
This section intends to demonstrate how XML provides the communication framework that makes the competitive world of buying and selling travel products possible across an array of different distribution channels. Something IATA’s New Distribution Initiative (NDC) initiative is designed to do for the airline sector.
How XML is used
The ability (with encouragement from travel product suppliers) to book hotels, flights, cars, etc online heralded the rapid adoption of XML. Online travel websites present product information, options and booking forms in HTML and use XML as the open-ended, extensible markup language that conveys those requests and replies up and down the various systems involved in the underlying supply chain.
Travel is of course not the only industry to undergo an online revolution. Insurance and Financial Services for example have also been busy developing their XML standards (ACORD) that describe what they do in XML format. Each industry standard comes complete with its own schemas, which means that any server in the value chain can validate a document and then parse it using one of the tools available. Of course, consuming and responding to these XML documents is not always simple, since the information they contain can be quite complex. The ability to represent a detailed travel itinerary for example is made possible with XML technology. Open Travel Alliance and Open Axis are the two XML standards groups that emerged for the travel industry with the first developing standards mainly for hospitality and the latter being selected by the airline industry as the basis of IATA’s NDC.
In a short period, the whole travel industry itself has become a complex and fragmented web of distribution channels. Today’s traveller is spoilt for choice for places to go to search and book his travel plans. The booking process, once dominated by traditional travel agencies working through Global Distribution Systems (GDSs) using EDIFACT technology, now includes online travel agencies (OTAs), suppliers directly, metasearch and niche booking engines such as last minute and mobile specialists. In this complex spider’s web of choice, consumers spend a lot of time researching their options before making a booking, which contributes to very high look-to-book rates. Travellers move across numerous web sites and devices searching for that perfect value. This of course has its own impact on computing and network resources and associated costs. The sharing and exchange of products and bookings using a common technology standard (XML) is key.
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Oct 2013 The breadth of choice and players, means the reservations systems for airlines, hotels, and other service such as cars or cruises are integrated in a myriad of ways, and the aggregators or packagers (such as OTAs) and wholesalers contribute to the process of distributing inventory. XML technology plays the role of the important link in the drive towards seamless connectivity and syncing between different systems of the supply chain across different sectors in real-time. It is the plumbing through which the exchange of information takes place between disparate channels. Indeed XML based APIs (Application Programme Interface) play a critical role in strengthening the systems of travel suppliers and helps to connect multiple systems that were previously functioning quite separately.
Layers of Connectivity
Taking the hospitality industry as an example there are three distinct layers of connectivity, where much of the exchange of information is done through XML APIs:
• Firstly, the large hotel chains with their homogeneous reservation systems and IT infrastructure have the capability and resources to indulge in direct connections across multiple channels, such as GDSs, wholesalers or large OTAs. Direct connects are costly and time consuming to establish, but enable standalone contracts between the partners, as well as being good for speed and less points of failure in the supply chain.)
• Secondly, smaller hotel brands however, are more likely to connect with agents via a switch, such as Pegasus, or a GDS to distribute inventory. Switches are essentially the gateways between the hotel reservation systems and larger distribution networks further up the supply chain. A connection to a switch or GDS is generally less onerous to implement and manage.)
• The third type of connectivity for a hotel, is operating as part of a franchise (eg. Best Western) where the Representation Company (RepCo) manages the distribution channels and partnerships as part of a full service package including the all-important central reservation system. Integration and connectivity costs to channels are therefore lower as they are handled via connections to the single RepCo.
As much as travel product suppliers such as hotels and airlines want to encourage direct sales via their own websites, a large proportion of business is still conducted through intermediaries and this is not about to change. This is especially true for the hospitality sector, where OTAs have excelled at commanding the sale of accommodation with their ability to offer information, prices and availability not just for one property but several at the same time and often for less than available from the hotel directly. Recognising their dependency on intermediaries, hotel chains tend to have a number of direct connections with these intermediaries such as OTAs or bedbanks.
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Oct 2013 How APIs simplify the complexities of the travel industry
Travel websites have become a fusion of mashups that access data from various sources, update in real time and provide an easy-to-use interface for booking and ticketing purposes. Hotels, airlines, cruise liners, and other suppliers enable travel sites to access reservation data through APIs. In simple terms an API is a way for one company to legitimately access (versus scraping) the products of another. APIs are basically the web services that connect and bridge the information flow across the connected supply chain – ultimately enabling the variety of options to be put before the consumer.
When suppliers implement the right XML APIs, they grant access to data and services without relinquishing control. The suppliers decide who has access to their data and what they can do with it. Partners or affiliates in the supply chain such as transfer specialists or car rentals can also be given access to provide additional services, all designed to contribute to the final customer experience and to make it easier to secure the booking. This is an example where suppliers can enable strategic partners to help drive ancillary sales.
Through direct connect APIs based on XML, hotels for example, make their proprietary information available to aggregators who in turn make it available to the array of online travel providers such as OTAs. These web services XMLs help travel companies and agents to connect to end servers and check hotel room availability, pricing, and amenities. Most of the travel agencies use multiple hotel APIs to have the best in class inventory from multiple hotel XML suppliers. These are then aggregated and presented into a common user interface. This lets the traveller search and book the hotels worldwide under a single hotel reservation system. Web services XMLs are used to communicate between the booking system and hotel aggregators online and buyers are able to get seamless results from all the hotel API providers.
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Oct 2013 Speed – the name of the game
With so many players and so much information flowing, the travel market is particularly competitive with 3 key factors driving the decision to book with one or other provider:
• Website functionality (can they find what they are looking for easily)
• Availability of the chosen travel package, flight or hotel)
• Price (obviously)
This means that the ability of supplier systems to respond quickly and accurately to search requests is critical in getting the deals. Most online travel websites use the latest “filter techniques” across a number of supplier feeds in real-time. Meaning that they can always deliver the latest availability information and most importantly the best available rate to the consumer. To be successful, travel sites need to be robust to handle business demand and responsive to market drivers.
Online travel transformed with XML
Travel is a dynamic industry in all possible ways, since prices and availability never stands still and travel companies are continuously growing their supplier base by regularly adding new ones such as market or destination specialists. XML communication networks likewise continues to spread. Managing this growth of suppliers and APIs has its own connectivity challenges, due to high integration costs and a lack of quality standards. Each partner in the supply chain needs to implement and manage those connections that are best meet the demands of the business and are affordable. A well-managed XML strategy enables travel brands to connect with all of the appropriate players in the ecosystem, while retaining control over the data they are sharing with partners and affiliates. This helps companies reach as many customers as possible.
In short, sharing data using XML is not just a technology or a standard but delivers the ability to transform the way businesses is done in every part of travel.
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Oct 2013 6. From Disruption to Future Vision
In the previous 5 sections, we provided the framework for understanding XML, online travel’s adoption of XML and why it is the foundation for IATA’s NDC. To wrap up this series, we will take a quick glance at the future vision that IATA is pushing the industry towards. The NDC initiative has had more than a fair share of suspicion and opposition, and its path towards US Department of Transport (DOT) adoption in May 2014 was painstaking and slow. We believe that the NDC initiative is the disruptive technology that the airline industry desperately needs to be able to step into a more sustainable and profitable future. How? By having the technology pieces in place to think and act like an online retailer. The seat is no longer just a seat but has the potential to become part of a total travel experience. The opportunity to own the travel experience and the customer is there to grasp, NDC is the enabling technology to make it a reality.
The Internet and smart mobile phones, have ‘revolutionised’ the travel industry. Innovation and the spirit of entrepreneurialism thrives in the online travel world, turning start-ups very quickly into giants. Expedia, Booking.com, Kayak, Trivago, Skyscanner, HotelTonight were all start-ups not so long ago that have quickly become household names or even first point of call for accommodation and flight comparison and bookings. Airbnb and Uber are the new kids on the block disrupting the accommodation and taxi scene, albeit with strong resentment and regulatory challenges. Easyjet and Ryanair have similarly disrupted air travel with their low cost models, while turning in respectable profits – at a time when traditional airlines were struggling to survive, never mind about being profitable. These are all examples of powerful innovation that disrupts thinking, behaviour and markets. And yes, it’s the ability to book online that lies at the heart of their success. All these examples are using integrated platforms to connect people with the information they need to search and book their travel plans – often fuelled by XML APIs.
This disruptive innovation is what IATA wants to engender in the airline industry today. To unshackle the constraints of technology and unleash the opportunities to sell innovative ancillary products across direct and indirect distribution channels. It could be argued that the air travel market is particularly suited to a dose of disruption because the status quo is no longer meeting the needs of airlines, passengers or even the aggregators themselves in this internet self-service age.
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Oct 2013 Soaring Revenue from Ancillaries
Product innovation and differentiation expressed through ancillary sales accessible by all travellers via all channels is key to future airline profitability and the very reason why the NDC initiative came into being. For some years now IdeaWorks Company has been charting the growth of airline ancillary sales for those 50 or so airlines that report such sales separately. To truly understand the potential of ancillaries and the contribution to the bottom line they can make, we should recognise the growth trajectory, which is steady and significant. But in reality we are only seeing the tip of the iceberg of what is possible.
Source: IdeaWorks Annual Ancillaries Report sponsored by CarTrawler.
Seats are no longer just seats but should become part of a broader customer travel experience starting before the journey, throughout the journey and while at the destination. The experience can be packaged in a range of optional choices to unlock the latent value that ancillary sales can bring. If Airlines grasp the power of NDC they have the potential to become a one stop shop for the traveller. Technology combined with the NDC makes it possible for airlines to evolve from mere flight suppliers to being the manager of the entire travel experience, with hotels, cars, restaurants and entertainment – all thrown in for good measure, supported by partnerships across the supply chain all talking to each other in XML.
Travellers, many of them the digitally connected ‘Millennials’ are also driving change in distribution as they demand a shopping experience similar to what other online retail sectors already offer, across all devices. These future passengers will expect more personalisation and the ability to make comparisons of offers. This means airlines will need to learn how to better shape the travel experience by offering products or services in line with customer needs or desires, based on what is known.
It is worth pointing out that customer anonymity where desired is safeguarded under, DOT 727 Resolution. This goes some way to pacifying some of NDC’s staunchest objectors, by confirming that no traveller is required to supply personal information in order to receive an airfare offer. Ultimately many travel agencies operating through the GDSs have a keen sense of customer ownership. The adoption of the standard remains voluntary and each airline is free to choose its own data exchange methodologies. Ultimately market drivers, competition and maybe even a compelling need to go where the peers go, will fuel NDC adoption.
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Oct 2013 Integrated Shopping
When customers book tickets online, there is an opportunity to help them customise their entire travel plans. Personalised services can shape the future of the industry. Customers will be able to pick and choose the airlines own ancillary products and services as well as allied services based on their convenience and price. ‘Dynamic Packaging’ is a new technology which is now being used by a host of major airline operators to boost their ancillary revenues. Using dynamic packaging, airline operators can tap into a full ecosystem of suppliers (hotels, car, and entertainment) and build a full itinerary into a single reservation. If a customer travels from New York to Paris, and books a hotel and a car through the airline portal, the airline earns commissions from the hotel and the car agent. This gives the airline the opportunity to generate additional revenue from building that total travel experience.
To be able to do this successfully, the airline portal has to dynamically tap into separate inventory management systems, such those belonging to the selected hotel and car rental company. This offers a benefit to the customer who doesn’t have to trawl multiple websites or re-enter all his details to complete his trip plans and he maintains control of his customised plans from a single point of entry.
For the airline operator, it is an opportunity to broaden their choice of offering to their customer while tapping into an additional source of revenue, without incurring additional costs.
E-Commerce Gateways
In such a new distribution environment, airlines need to become more customer centric. Instead of focusing simply on transactions, airlines must focus instead on interpreting data to better understand how, when, where and why travellers shop and book the way they do. To do this airlines will need a new breed of ecommerce platforms that can support:
• Extensive fare and product transparency
• Dynamic pricing to meet market needs
• Rich ancillary merchandising and retailing
• The ability to process massive volume of shopping sessions (look-to-book)
• The building of loyalty schemes that incentivise customers
• Secure and compliant financial processing
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Oct 2013 Atmosphere, an air travel consultancy led by industry guru Henry Harteveldt, coined the apt term “Value Creation Hub” (VCH) for such a Gateway in a report sponsored by IATA in 2012. The report “The Future of Airline Distribution - A Look Ahead To 2017” goes on to describe the VCH as the “new-generation airline commerce technology infrastructure used to power airline CRS/PSS host systems, e-commerce solutions, and more, thus reducing the need for lengthy, costly disruption in a conversion. Like GDSs, VCHs will be designed to support high frequency, high- volume shopping”. A new breed of players such as Farelogix a leading provider of high value distribution and merchandising technology to the global travel industry has already developed air merchandising platforms that are ready to help airlines meet the challenges and opportunities of an NDC enabled world.
Open Booking
Disruption, or perhaps more aptly evolution, is also taking place in the business travel world with the concept of ‘Open Booking’, a traveller-centric solution designed to open up the myriad of travel booking opportunities for the business travel. It’s a given today that travellers want to manage business bookings in the same way they do their leisure trips. The challenge for organisations is to combine control of their travel programme with the choices end-users expect.”
Again it’s the new millennial breed of traveller, now part of the workforce, that is challenging the status quo with his dislike of being told what to buy and where to buy it. They also point to the online apps, websites and promotions that are available that current corporate travel policy often does not let the traveller tap into. On the other hand, allowing corporate travellers loose to make their own arrangements is perceived by the travel managers of such policy to bring its own oversight management nightmares. When Open Booking is allowed, the traveller is free to make his own arrangement choosing whatever direct online channel or third party is preferred. This is clearly where the distribution system for corporate travel programs is fragmenting.
Getting there, but not yet
Even though the airline industry is fast paced, the market disruption unfolding in airline distribution is not likely to take place overnight. The IT infrastructure and investment needed and the time it takes to change processes that have been in place for decades, means that altering the current distribution model one way or another is a considerable effort that will take some time. Just planning and thinking about it and getting the potential catalyst of DOT acceptance has already taken several years. But as TNOOZ writer Sean O’Neil so elegantly suggested back in January 2013 when he ‘decoded the planned revolution in airline distribution’: “NDC is much bigger than the usual re-thinking of how information flows. If the NDC project succeeds, it will signal a multi-billion-dollar shift in the distribution balance of power from intermediaries to suppliers”.
NDC has an unmistakeable industry buzz, and as IATA gathers for its 2014 World Passenger Symposium (WPS), there will be many distribution experts interested to hear and share their perspectives on existing NDC pilots and future ambitions. There is evidence to suggest that the timetable is already accelerating, with some US airlines partially coming onstream by as early as 2015, rather than the 2017 originally envisaged. Perhaps it is time to “just do it“.
Page 18 XML, NDC and Airlines
Oct 2013
About Triometric
Triometric is a specialist provider of XML-based business intelligence and operational analytics designed to help online travel companies meet the challenges and opportunities of today’s fragmented distribution landscape.
Triometric technology helps customers manage complex distribution dynamics by giving them deep insight into their search and booking traffic. This actionable intelligence enables them to improve their business performance by reducing costs and increasing revenue.
Triometric Web Services Analyzer is a powerful end-to-end web services monitoring and analytics platform delivering actionable intelligence and operational management from raw XML feeds. We help meet the diverse insights needed by travel companies including travel distributers such as hotel wholesalers, online travel agencies, meta search engines as well as travel suppliers including hotels and airlines.
The solution’s origins lie in enterprise application monitoring, but today any industry using XML technology can take advantage of the Web Services Analyzer to unlock the value contained in XML data. The Triometric Team comprises of some of the most skilled computer scientists and analytic experts dedicated to making a difference for our customers.
Triometric is a privately held company based in Surrey, United Kingdom. Customers in the travel sector include S7 Airlines, sGTA, Hotelbeds, JacTravel, SERHS Tourism, Miki Travel and Bonotel.
For more information visit www.triometric.net or email [email protected].
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