Progress in the adoption of the NDC airline distribution standard is driving the International Air Transport Association to lay out next steps.
The organization says the NDC journey accelerated last year, despite the pandemic, with the 20% target for NDC bookings in the indirect channel hit around June, albeit for mostly domestic leisure bookings.
Yanik Hoyles, director of distribution programs for IATA, says airlines developed new connectivity, GDSs made good progress and some “very big commercial agreements” were signed over the course of 2020.
He’s referring to the Air France/KLM deal with Amadeus, Lufthansa and Sabre finally coming to terms after months of negotiations and the Lufthansa agreement with American Express Global Business Travel.
While, as Hoyles acknowledges, the commercial model often remains the “elephant in the room,” the organization does need to understand what’s going on in this area as it drives adoption forward.
“The good news here is that what I call the tectonic plates, we’ve got massive shifts," Hoyles says. "There’s a lot at stake, things are evolving, things are starting to unlock themselves and ultimately this will mean that for the followers, the dust will settle, and they will be able to engage a lot easier and faster.”
Hoyles claims that airlines told IATA last April that the organization must continue work on the NDC standard and engagement with it because it has become a “channel that is strategic.”
Travel management companies and corporate buyers, he adds, have also asked the organization to focus on retailing.
Hoyles says there’s a consensus among airlines and distribution partners on the “need and the opportunity to accelerate the retailing transition.”
With that in mind, IATA has identified three areas of work for 2021 to bring the vision of airline retailing a few steps closer.
Hoyles says: “More and more you’re going to hear us refer to airline retailing. The industry and value chain see the end vision as a world of offers and orders. In other words, no more legacy. If you bring together all the programs IATA is doing, this is what will help us move to a world that is much more customer centric. You can’t do retailing with e-tickets, EMDs [electronic miscellaneous documents] and PNRs [passenger name records].”
The first part of the work is to find how to go beyond transaction volumes to derive value from the technology standard. As part of that work, IATA is looking at whether a new leaderboard and certification process is needed.
Hoyles says, by the end of 2021, the organization wants a new certification program in place which he dubs an "airline retail maturity program."
The maturity program is likely to cover three facets: technical certification, partnerships putting the technology into action, leading to the third component, value creation.
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More work is also being carried out on the technical standard, and IATA is also considering a new “golden standard or master version,” according to Hoyles.
“It’s what the industry is wanting so people know where to converge if they choose to do so, in areas where there will be more commonalities. It has been a request from some of the technology companies and even some of the TMCs.”
Speeding up onboarding
The second area of work includes bringing in other airlines that are not far along in their NDC journey or that need help.
“We want to cast our net on all other airlines to see where they fit on the journey. They might have no plan, have [a plan] but need help to move forward, are starting to get value or are role models. For each, we want to understand what they need to move to the next step.”
Not every airline will be onboard or even in a financial position to progress any NDC ambition it harbors.
Delta Air Lines, for example, said in September that it was pausing its NDC development and working with its existing distribution ecosystem.
Some predict other carriers, particularly second-tier airlines, are likely to follow.
Hoyles says, in the current circumstances, it’s up to each airline to make its own strategic decision.
The industry and value chain see the end vision as a world of offers and orders. In other words, no more legacy.
Yanik Hoyles - IATA
“On the second tier, it’s true that one of the challenges, understandably, is going to be the financial situation all the airline community is in. We just need to do everything we can to help them. There’s a limit to what we can do but we can share best practice, new ideas, better connect them to people and help with work on the standard.”
IATA also wants to further its work with travel agents and TMCs to “finish work on blockers to the adoption of NDC for business travel."
Many believe the TMC community will become a lot smaller because of the pandemic, with consolidation already happening, but Hoyles says it’s difficult to know where it will end.
“All I’ll say is that one thing that has become clear is the importance in the pace of technology is increasing, and whether you’re big or small, it’s really important to embrace it because this world is going to be more and more digital.”
The third area of work is around agility and product design, with IATA assessing whether it can play a role in network planning management.
The organization also hopes to see “concrete examples of dynamic offer creation in the market” with this phase of work.
According to Hoyles, “Everyone sees the end goal now.”
IATA is hoping that the combination of its work to develop the standard, the commercial discussions going on, technical readiness of the GDSs and the work IATA is doing with the business travel community will all contribute to accelerating the move to airline retailing.