US regulators have tentatively approved Resolution 787, the core principles for the New Distribution Capability (NDC)
This act keeps in motion the airline-championed blueprint for developing a technical standard for data exchange in the air transportation marketplace using Extensible Markup Language (XML)
The International Air Transport Association (IATA), which has shepherded the resolution, welcomed the decision by the US Department of Transportation (DOT).
Henry Harteveldt, who owns consultancy Atmosphere Research, offered this interpretation:
"IATA and NDC just won the proverbial golden ticket. The significance of securing DOT's approval, even a tentative approval, cannot be underestimated.
Had DOT not approved this, NDC as we know it would be dead. DOT's decision legitimizes the NDC concept.
As a result, I expect we'll see more airlines begin to focus on developing NDC-compliant distribution and merchandising applications and tools.
This also means that the technology community supporting airlines needs to elevate their efforts on supporting airlines with NDC-friendly solutions.
This should lead to more business for everyone from smaller companies like Farelogix to larger firms like Amadeus.
Airlines no longer have an excuse to ignore NDC. Now, they must simply determine whether and how NDC will fit their business and distribution strategies."
Standards gain momentum
The decision is a partial victory for the idea of open standards.
IATA has adopted standards from OpenAXIS. Open standards similar in nature are widely used in the car rental and, to a lesser extent, hotel industry, in the US.
Jim Davidson, CEO of travel technology company Farelogix who has blogged frequently about the NDC process, said in an interview:
"I would expect that the open XML-based standards for airline connectivity would gravitate quite closely to the airline connectivity standards to be published shortly by IATA."
At the same time, the official decision that the standards have to be voluntary -- as opposed to the mandatory regulatory requirement that some IATA officials had hoped for at first -- removes any impetus for immediate market adoption.
Davidson nevertheless sees voluntary adoption happening soon.
"The next 24 months will be a footrace on who is going to break the model first and go into travel agencies with a really cool front end that lets agency be productive and let airlines differentiate their product."
He sees only a few companies as being in a position of size, mass, and agility to lead that race, such as the GDSs and some third-parties like his own company.
Travel agencies' partial victory
Travel agency lobbyists appear to have received some partial victories in this decision.
One key point is fees:
The DOT has ruled that the GDSs and other third-parties have to disclose ancillaries and other certain fees -- that is, they have to be viewable in the GDS-style system (like, "first bag $50 for loyalty members"), but they don't have to be bookable.
It's possible that an NDC-style booking tool could make ancillaries bookable, such as if, say, American Airlines came to an agreement with, say, Sabre, about displaying those upcharges. But that will require incremental deal-making.
Agents may be of two views about this. On the one hand, it gives agents more information upfront during the booking process, and it spares agents from having a system thrust upon them.
On the other hand, it affects an agent's productivity because it discourages one-stop shopping systems from quickly appearing. Agents will still have to look at multiple sites if they want to book ancillary products.
You can read the decision DOT in full, here:
Long journeyOne year ago, IATA submitted its blueprint to the DOT for approval. Companies and industry groups submitted nearly 400 complaints critiquing the wording of resolution 787.
A key issue was raised by Open Allies for Airfare Transparency, which, among other groups, wanted to ensure that no traveler is required to provide personal information to receive a fare offer.
In late June, IATA responded to these complaints by proposing the DOT add “conditions” to Resolution 787, acknowledging that a number of parts of the resolution should be removed or changed -- bowing to the idea of “anonymous shopping”.
Open Allies had not been satisfied with the amendments, and wanted DOT to scratch the whole affair. But in January it withdrew its resistance to the resolution, though it remained worried about the NDC.
Now the DOT says it proposed to accept the conditions. Objections must be filed no later than 21 days from today, before the final rulemaking.
Today, Open Allies had this statement (and the European Technology and Travel Services Association (ETTSA) seconded the view of its coalition partner):
"We will review the proposal and submit more specific comments to the docket to make sure the final rule achieves its goal of enhancing airline consumer protection in the most practical and effective way for travelers and other stakeholders in travel distribution."
This language also ensures that the adoption of any new technical standards shall be entirely voluntary, not exclude the use of other standards and have no impact on data ownership in addition to not requiring the disclosure of personal data.
As proposed, DOT also addresses concerns about the new standards being compatible with existing standards."
GDSs
The only global distribution system (GDS) that filed a specific opposition to the Department’s approval of IATA’s resolution 787 was Sabre.
In a statement today, Sabre said:
"Sabre fully supports the U.S. Department of Transportation’s tentative approval, subject to the specified conditions, of IATA's proposal to create a technology standard, and Sabre will continue to be a strategic collaborator with IATA toward our shared goals."
A Travelport official says:
Travelport is pleased that the DOT is requiring airlines to disclose ancillary products and fees and we view this as pro-consumer.
With regard to Travelport specifically, we have been leading this effort through our groundbreaking Travelport Merchandising Platform utilizing Universal API and XML connectivity options to airlines.
The Travelport Merchandising Platform was developed to allow airlines to distribute and differentiate all of their fares and ancillaries via the travel agency channel, connecting to Travelport exactly how they chose to, whilst enabling travel agencies to fully compare the offers from those airlines.
The platform offers three distinct solutions – Travelport Aggregated Shopping, Travelport Ancillary Services and Travelport Rich Content and Branding.
We already have many airlines distributing ancillaries through our systems and this is growing and will continue to grow.
Amadeus liked the conditions the DOT imposed:
“Critically, these conditions would ensure that the new capability would not impose any specific business model to airline distribution; would not compromise customer data security nor specify data ownership; would not impose any particular data standard on IATA members; and would not restrict backward compatibility with existing standards."
The American Society of Travel Agents says:
The DOT has made it clear that anyone shopping for air travel will not be required to disclose personal information, and that airlines and travel agents are obligated to follow their own published privacy policies.
In the coming days, ASTA will be circulating to its members a sample privacy policy, and will communicate the need to have a privacy policy in place and to strictly follow those policies when it comes to collecting, storing and sharing of client information.
The Travel Technology Association (whose members include Amadeus, Sabre Holdings, Travelport, and Expedia, Orbitz Worldwide, Priceline.com, has issued a statement of support:
“Today's Show Cause Order incorporates all of the proposed conditions agreed to by both IATA and travel distribution stakeholders in their joint filing, and goes a long way in putting the consumer in the driver’s seat when it comes to their travel options.
We urge DOT to issue a final decision affirming today's order.”
Business traveler groups
The Global Business Travel Association's was not mentioned bu name in the DOT's document, but it issued a statement today saying:
"While GBTA further analyzes the DOT ruling and decides on further actions, we will be developing a voluntary code of conduct to the airline community to continue to work toward a cooperative industry solution.”
EARLIER:
Regulatory decision close, but other moves in background with IATA NDC
What NDC-style flight booking might look like for agents
JR Technologies sees IATA’s NDC as its path to revenue growth