Airline distribution has evolved more in the last three years than perhaps at any time in the previous 20 before it.
But, looking ahead, a new study lays out some of the possible scenarios for the next three to five years.
The paper, from Germany-based Dr. Fried and Partner, gathers views from 19 industry specialists (airlines, executives from Global Distribution Systems, and technology players), to set out “as valid a description as possible” of airline distribution going forward.
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It suggests four potential forms of aggregation going forward involving different elements of the distribution landscape.
GDSs for example will serve to aggregate NDC content and devise different revenue models. This can already be seen in efforts from Amadeus, Sabre and Travelport to become more akin to technology partners for the wider industry than pure distribution platforms.
Travel management companies and online booking engines will go further down the aggregation route and work directly with carriers. Some of the larger TMCs were quick to develop direct-connect solutions with airlines such as Lufthansa such year to avoid the content distribution surcharge.
New entrants to aggregation are also likely as the barriers to entry are driven down by NDC and the increased use of API technology.
In the leisure segment, platforms that can aggregate content from multiple sources will play an important role.
Moves from large online travel players such as Booking Holdings, Expedia and TripAdvisor are already plugging inventory gaps with tuck-in acquisitions around tours & activities and vacation rental.
Third party issues
Not everyone agrees on the role of aggregators going forward, with some experts saying they will have a neutral role in providing access to and enabling the comparison of airline products and services.
Others, however, feel their future will come down to individual customers, strategic partnerships and “purely technical roles”.
The paper also talks about the need for current and newbies to innovate, especially in how they interact with customers.
The consequence if they don’t is the threat of Amazon, Google and Facebook becoming the go-to access point for consumers.
However, as airlines get to grips with data and use it to make products and services personal and relevant to consumers, there is the opportunity to influence purchase behaviour and drive conversion as offers are served up in a dynamic way and in real-time.
In The Big Chair with the GDS bosses
The paper largely confirms some of the elements the industry is already famililar with - airlines are looking to serve up products and services directly to customers and gain a closer relationship through personalization, similar to how they have used loyalty schemes in the past.
It suggests, as the direct distribution drive gains momentum, the reliance on “intermediaries and technical distributors” will decrease.
Costs associated with distribution will also be reduced as more bookings go direct and the move away from the old incentivisation model should also boost airline coffers.
But, the issue of who will pay is raised with the ball landing with end consumers,
The report also suggests airlines might be able to increase prices as the move to retailing systems, enabled by the New Distribution Capability technology standard, should allow them to differentiate, target segments of customers and drive up loyalty.
Distribution won’t be the same in all territories, with a nod from experts on how it’s easier to increase direct sales in home markets than non-home markets where distribution partners will likely continue to play a significant role.
There’s probably a reason the report doesn’t go further into the future than three to five years with so much up in the air currently regarding airline retailing.
The GDS companies are talking about “industrialization” of NDC next year.
And, the latest from IATA is an airline leader board of between 15 and 25 carriers committed to having 20% of indirect inventory booked via an NDC-driven API by the end of 2020.
Setting the goals is about encouraging mass adoption although the vision for mass adoption itself is not until 2025.