Standards --world peace! Now what?NewsBy Timothy O'Neil-Dunne | September 14, 2010Share This article was originally published on On Sept. 10, an auspicious day, a conflict that could have split the travel technology establishment was averted when OpenTravel and the Open AXIS Group agreed to collaborate.While there are a lot of details to be worked out, it is clear that differing standards would have hurt the development of next-generation travel products. Now we all have a way forward.The Web and its associated technologies have fundamentally changed the way we all work and indeed live. But, not all travel’s business models have progressed with the development of the core technology.For airline products the advances in providing online access to product information directly and via online travel agencies makes the travel purchase process so much better. Better results, more choice and more passenger empowerment.However there is a fundamental flaw that has been papered over for a very long time. It’s time for that issue to come out of the closet.And, I am outing it today.The personalization that comes with consumer-centric Web technology has essentially been denied to the intermediary channels in travel. So while the Web’s shopping windows for airline products via online travel agencies and direct airline.com look very similar, they don’t have the same personalization capabilities all the way through from the customer’s interaction to the supplier at the back.Think of the number of ways that personalization is offered for so many other products.As a result there is an interesting but little-discussed aspect of customer behavior -- the customer often looks in multiple places and then buys direct. Over time, this has allowed and indeed promoted the unbundling of the airline product.Search in many places -- yet buy in a different funnel.For the OTAs this allowed the emergence of a low- cost competitor, the search/metasearch companies, which don't have to support the same deep and expensive technology platform.These relatively new players can provide similar, and indeed in some cases superior, search results than the OTAs do.For example, Kayak and Skyscanner in Europe can provide low cost carrier results side by side with network carriers, whereas Expedia and other large OTAs can't. And this is BEFORE big bad Google steps in.Sadly for customers, this problem is transparent and their allegiance to the intermediary channel is correspondingly diminished. Pre-Web it used to be strong, but now it’s habit-based rather than value-based loyalty.For the airlines, there is a long-term problem in that they cannot provide personalized service to the customer via the intermediary channel and they cannot move the needle of direct distribution beyond more than about 50%.In simple terms, think the OTAs cannot provide a differentiated service to the airlines’ high-value frequent flyers.In examining the causes for this dissonance, as with the BP oil disaster report, there is blame a plenty to go around.But humour me -- I am going to delve into why the relationship between the intermediary and the airline is constrained and what could be an improvement.Obviously, I cannot speak for all airlines, but I believe that indeed the airlines actually do want to provide differentiated service value via all channels, both direct and indirect. While it’s their product (and their party) and they can choose who they want to do business with -- just like a consumer can -- there are now few reasons not to want to allow access to the product via the intermediary channel versus direct alone.For the consumer, the cost is now the same -- thanks to the OTAs abolishing airline booking fees. However, it still costs the airline more to distribute via the indirect than the in-house channels.But, it is not just a cost issue. This, my friends, is the crux of the problem. The airlines cannot feel happy. They don’t have a way to personalize their mutual customer relationship and it still costs them more to sell the product because of GDS and infrastructure costs.And there is another problem: The GDSs have been very slow to provide ways to let the airlines differentiate their product. Case in point is the refusal by the GDSs to provide access to ancillary services until “standards” were developed by the airlines.And, that's something that at least one airline is on the record as saying it doesn’t actually want.Voila! in a nutshell, the problem is as follows: The traditional GDSs want to continue to commoditize the airline product based on price alone (because that is all they can do) and the airlines want to differentiate on services other than pure ticket price as they can through their own channels. (And, as an aside here, fingering the airlines as culprits is both misguided and inaccurate.)Actually, the travel agent -- both online and offline -- is a pawn in this battle. They depend on, but cannot differentiate via, the GDS because all that comes down that pipe is the same commoditized product where the only differentiator is price. Yet all agencies have the ability to provide superior service to their consumer constituents based on service and not just on price.Thus the two business partners -- the travel agent and the airline -- find their relationship both defined and constrained by the technology and the resulting GDS business model.Is it possible then to attack both these problems at the same time?I fundamentally believe that it can. The emergence of common standards that are neutral and have broad support, as both the OpenTravel and Open AXIS Group standards have, will be very beneficial. These new standards' ability to drive personalized access via a common technology infrastructure is no longer a pipe dream. It’s very real.Let’s make no mistake -- there are going to be some unhappy players in this mix, but in the end they will come around because it is in the consumer’s best interests. And he/she is not stupid. Anyone who becomes an obstruction will find themselves washed away.When Google said that one of its reasons for buying ITA Software was to change the customer paradigm, it wasn't kidding. Just think about that. The $700 million to buy ITA says it is not just about rearranging the deckchairs on the Titanic.We are talking about a fundamental change in the way people search and buy travel.In my view, these standards and their deployment go a long way toward making the playing field a lot more level.NB: Disclosure – O’Neil-Dunne is acting CTO of LUTE Technologies, a company which has joined the Open AXIS Group.