The three biggest tech-led trends for airlines right now

Two weeks ago in Bangkok, IATA’s 2019 Airline Industry Retailing Symposium conference was packed with incredible speakers and breakthrough presentations coming from 12 airlines, 12 suppliers/aggregators and a whole cohort of experts and disruptors.

Too often in the industry, travel retailing is narrowly associated with digital and leisure.

Thankfully, IATA’s retailing conference took a much broader view of retailing, encompassing an omni-channel distribution approach, covering both leisure and corporate travel and involving all distribution and IT partners.

The conference included a number of surprising reveals and tangible demos. For those who missed it, I’ve compiled my list of the three biggest insights of the event.

NDC target volume is on track

The 21 IATA NDC leaderboard airlines have committed to processing 20% of their indirect sales through an NDC-powered API by 2020, aka the 202020 objective. This ambitious and lofty goal is no small feat, but it looks like all are well on track to reach it.

At the conference, the Lufthansa Group stated that “NDC volumes for Swiss [Air Lines] are today over 20%,” while IATA revealed that the interim target of 8% was not only reached, but exceeded. In September 2019, 9% of all indirect consolidated leaderboard bookings were NDC-powered.

Better yet, the key hurdles to this adoption are consistently being lifted. So far, there were three major barriers to NDC adoption: servicing, interlining and the ability to scale. As of September, 60 travel companies (airlines, IT providers and aggregators) are now “Level 4” certified (read: addressing full servicing).

Moreover, strong progress is being made on interlining, as showcased by an end-to-end proof of concept featuring Swiss and Edelweiss Air using settlement with Orders. Finally, six airlines have been certified on the demanding NDC@Scale requirements.

Complementing NDC, One Order is also getting good traction.

United Airlines highlighted that simplification with One Order (de-specializing IT, currently weighed down with legacy tickets, PNRs, EMDs, coupons, SSRs and more) is not only intended to improve travelers’ experience but also to help current and future employees manage standard solutions.

Lufthansa added that, based on their proof of concept completed in April with 200 passengers, customer-focus and revenue potential could potentially become the most important business drivers.

Acceleration is the name of the game

The event featured a number of innovative startups, who marked a stark contrast from traditional global distribution systems through one key metric: delivery time units.

The former used days, while at least one player in the latter group tended to use years. This small difference acted as a larger metaphor: New entrants were omni-present and main drivers in disrupting the industry and accelerating change. In the same vein, this year’s aggregator panel included both GDSs and another aggregator: Travelfusion.

On the corporate travel side, an airline also noticed this market stimulation with an increasing number of potential providers: the traditional players (GDS/travel management companies/online booking tools), the new entrants (NDC-enabled TMCs such as TripActions or AmTrav) or consumer brands (e.g., Google, Booking.com).

The capital available for these players and their interest in entering this market may make the difference in the long run.

Perhaps most interesting is the impact that platforms can have. Speakers such as Facebook, Trip.com Group (Ctrip) and Hopper were quick to point out that retailers need to be where customers are, when they need it.

Natively user-centric and mobile-driven (or mobile-only), they highlighted the importance of a conversational commerce approach on the entire journey and especially the day of travel.

While many airline speakers featured the offer and order creation at shopping time, these native players focused on the end-to-end experience. For example, with 20 billion messages a month, Facebook messaging systems could represent not only as a service channel but also as a companion sales channel.

This reach “platform” could co-create more value for airlines – albeit with less control – an area to keep watching.

Finally, IATA actively contributed to this acceleration with its “Accelerate@IATA.” IATA has already ran over 14 hackathons and delivered 25 minimum viable products as well as five artificial intelligence proofs of concept.

Now, in collaboration with Plug and Play it has launched an accelerator with three batches per year. Without a doubt, IATA remains one of the main drivers pushing this transformation forward.

Gigantic value but lacking simple business cases

Despite the fact that over two-thirds of leaderboard airlines are either in line or exceeding their ROI target with NDC, the concrete business side of NDC and One Order remained a bit blurry during the event.

Most speakers had strong expectations on increasing revenues through a combination of dynamic and continuous pricing and cost/complexity reduction.

However, one thing remained lacking: tangible business cases, which could be copied by other players without disclosing sensitive information. This retailing show focused a bit too much on capabilities and not enough on accountability.

That doesn’t mean, however, that the potential is not there. IATA introduced a report from McKinsey (“Where is the Value in Airline Retailing”) which defined retailing as a combination of NDC, One Order and Dynamic Offers.

Based on the assumption that large airlines need make a one-off investment of up to $15 billion and could emerge into travel platforms, the value created could amount to a gigantic upside of $40 billion annually.

While this should be slightly tempered by the fact that some of the “value capture actions” seemed to overlap with ongoing retailing and ancillary-related strategies already planned by airlines, it is nevertheless an excellent start to assess the true value of NDC and complementary capabilities for the overall industry.

All in all, the conference was very educational, insightful and uplifting as to the future of NDC and its complementary domains (e.g., One Order and payment).

While it may not have prioritized some interesting dimensions such as conversational commerce, tighter collaboration among all corporate travel players, tangible multi-channel business cases and the impact of data and its derived business models, it was a huge step forward compared to last year.

I’ll definitely be at the IATA Retailing event in Vancouver October 27 to 29, 2020, to see how my above wish list gets covered – but most importantly, I hope to be there to celebrate the achievement of the 202020 objective!