IATA Ready to Ride on NDC Momentum

IATA's Yanik Hoyles talks:

• The recent acceleration of NDC adoption
• Building NDC acceptance among travel buyers
• Moving beyond NDC to One Order

After years of explanation and debate as a part of the education blitz to build acceptance of its New Distribution Capability standards, the International Air Transport Association views 2018 as the year when it finally begins to focus on pushing transaction volumes in the standard. IATA NDC program director Yanik Hoyles spokes with Business Travel News transportation editor Michael B. Baker at the association's Aviation Day in New York about the trajectory and future of NDC now that it has three of the major global distribution systems and most of its airline members on board, along with growing acceptance among corporate travel buyers. 

BTN: Where are you today with NDC adoption?

Hoyles: There been a huge acceleration in the last six months. It's been very significant. There are 53 airlines today that are certified to at least a minimum of NDC capability. We did a survey last year in April, with about 190 IATA airlines in scope, and 113 said they have plans in the next two to three years to do NDC. That was 30 percent growth from the year before. That’s a great sign for the industry. No one has to do NDC, so for all these airlines to invest is exciting. The IT providers, those who help the airlines expose NDC content, providing the APIs for example—Farelogix, Datalex, OpenJaw—if you count all the technology companies, there are 50 now who are certified as well. The big piece of news we've been hearing is the GDSs. For NDC to be successful, the GDSs need to be a part of it, simply because they have a huge reach to travel agents. It started toward the end of last year, when [president and CEO] Sean Menke from Sabre announced publically 2018 is the year Sabre is going to take the reins. Then, at a passenger symposium in October, all three GDSs stood up and said, "Yes, we will become aggregators and be certified at the highest level, Level 3, in 2018." Travelport was certified Level 3 in December, so they're the first to be true aggregators. They made a big announcement that they have customers lined up and are really working on the plumbing to make this happen very soon, which is great news. Amadeus confirmed they are selling up this NDC X unit, a huge commitment in terms of its strategic positioning, the resource commitment, that they definitely believe in this. We're looking forward to the first volumes coming from GDSs as aggregators.

BTN: What about corporate travel buyers?

Hoyles: There were a couple of surveys from the Business Travel Show, and they surveyed 250 buyers last week and asking them whether they were for, against or didn't know about NDC. The portion of those who were for NDC shot from 11 to 30 percent, which is great. There's still a lot who are skeptical. What that demonstrates to us, the strategy we stated two years ago, to engage with the travel buyer community, makes sense. We have two advisory groups of buyers, one in Europe and one in the U.S. Altogether, they weigh more than $2.5 billion of [travel] spend. What we found is that these buyers, when you take the time to educate and engage them, they get it as much as they need to get. Based on that, the buyers asked us to do an exercise last year, to do a prop-a-thon. It's a brainstorming session, a proposal marathon. They asked us—rather than us ask airlines what they're going to do for us in a world of NDC—why can't we think what we'd like? They came up with 60-plus ideas, possible ideas of a new relationship between airlines and buyers. We're going to spend quality time educating the corporate buyer community. We're not telling people what to think, but the more informed people are, the more they can make their own decisions. If you zoom back in to the TMC side, there's been some movement. HRG was the first to be very supportive of NDC and engage with BA and Lufthansa building connectivity, and we see more and more small TMCs starting to do that.

BTN: Do you expect that to continue following HRG's acquisition by Amex GBT?

Hoyles: I can't comment on what their strategy is going to be. Consolidation happens everywhere. We'll see what happens, but business just carries on, and if you take a step aside and look at the inertia of NDC today, there's so much inertia, it will be there tomorrow. How it will be executed will be up to them.

BTN: We saw some new strategies emerge on the airline side last year, such as American incentivizing NDC bookings. Do you expect more of that?

Hoyles: We look after NDC's technical standards. How it comes to be applied commercially, that's nothing we get involved in. You have carrot approach and stick approach. Each individual airline has its application of a commercial strategy. If you look today, there are 53 certified airlines for NDC and about a dozen that have applied a commercial strategy. A lot haven’t done any yet. 

BTN: With this acceleration underway, what's next for NDC?

Hoyles: The next step on NDC is helping drive critical mass. Until 2017, our objective was to drive capability. We're moving to a phase where it's about getting the transaction volume critical mass, so we'll be working across the value chain with the GDSs, helping them get to their Level 3 with the travel agents, the buyers and the airlines. Another is One Order. NDC is about moving to a world using modern technology to power the standard: XML, JSON, the Facebook language—we're going to make it technology-agnostic. That helps the airlines move into the world of retailing. Retailing means you won't just be selling flights. You might be selling flights with a seat, lounge or fast track, and it will be orders in the NDC ecosystem. The actual message exchanges between airlines and agents or airlines and the aggregators that constitute NDC are built on the fact that travel agents send shopping requests to an aggregator or to an airline, or the aggregator will send these shopping request to airlines, and they will collect the offers from the airlines and pass them on to the travel agent. If the travel agent says they want that one, it shoots back and become an order. We're talking the jargon of the retail language, but the way the architecture or schema works, you will use reference IDs. It will be offer 1, 2, or 3, or order 1, 2, or 3 because from a technical point of view, it's much easier to exchange messages than having the bits of a PNR. When you're in a world of NDC, from a technical point of view, you're exchanging offers and orders, but when it comes to fulfillment, if you have a shopping request and a lot of offers, then when you need to fulfill it, it goes back to PNR and ticket. If you don't split it back into PNRs and tickets, the departure control system at the airport will never work, and your revenue accounting will never work, unless it's designed to do that. You have this huge amount of resources and complex processes to reconcile. So, one day, in our think tank, someone said what if this notion of an order, why can't we carry it all the way through and instead of splitting it into PNRs and tickets, let's expand the NDC process instead of splitting back to PNR and ticket, have one single order that will go all the way through. What that means is that from a customer point of view: When you have an e-ticket, you have an e-ticket number, you've got a GDS reference number and an airline reference number, and you go to an airline ticket desk, they can't access the system. One Order is one single order that becomes customer-centric, which makes servicing much simpler. It also means that instead of trying to insert this notion of retailing into the PNR format and ticket format, if you just have One Order, it will open a lot more flexibility as to what offers and products you can do. If you have single order, you don’t need all this complexity of revenue accounting, because the order flows through. There are significant benefits on the customer side and back office side. Also, if the airlines who today have tickets and PNRs are to be ticketless and have one single order, it would make interoperability, such as interlining with low-cost carriers, a lot easier as well. 

BTN: How far along is that?

Hoyles: It's a couple of years behind NDC. We expect four or five pilots in 2018. We expect it will start to become much more—"mainstream" might be a big word, but not before 2020. More what needs to be done across the industry is people working together. The end vision is you have a real retail model for the airline industry based on offers and orders that go all the way through to fulfillment.