Ai Editorial: “Are a set of standard messages sufficient?” questions Amadeus
First published on 3rd October, 2016
Ai Editorial: Is airline IT and distribution status quo really evolving with NDC? Ai’s Ritesh Gupta interacts with Amadeus’ Hazem Hussein about NDC, and whether a set of standard messages is enough to bring about the change.
IATA’s NDC initiative is about to get into the last 12 months of the original 5-year timeline marked for this standard’s mass implementation.
But there is one pertinent question that continues to get raised. Why would travel B2B conglomerates, mainly Sabre and Amadeus, alter their synergistic and profitable distribution and IT businesses? Yes, NDC’s key objective is to improve upon selling via indirect channels, but why would these organizations alter their established volume-based, transaction-based business model?
So it all boils to assessing whether NDC can shape up change – right from inventory over distribution to sales.
If we look at the way the likes of Amadeus and Sabre are associated with airlines, how airlines are picking and choosing the available options available in the wake of direct connect strategy? For instance, in case of Lufthansa and Siemens, the new arrangement uses Amadeus Altea and Amadeus- owned Cytric OBT, and GDS being bypassed.
Considering that Amadeus and Sabre are deeply entrenched in the overall IT, distribution and sales, a couple of carriers challenging the status quo doesn’t seem enough. So if we talk of airlines being in control and what has changed (say the way fare filing, scheduling, availability etc. are accessed), then there is a mixed response as of today.
“With the exception of a few airlines, most of them are at the mercy of their PSS or CRS provider,” this is what a senior industry executive told me when I asked him about where do airlines, cumulatively as an industry, stand today in their quest of being in control of their inventory, distribution and sales.
GDS companies aren’t perturbed at this juncture. “The GDS gives airlines a geographical and industry reach that would be very hard for them (airlines) to replicate. 64% of all bookings outside home market come through the indirect channel,” said Hazem Hussein, Executive Vice President, Airline Group, Amadeus Asia Pacific, Turkey and Eastern Europe.
In order to get Amadeus’ perspective on NDC, Ai’s Ritesh Gupta interacted with Hussein.
“Everyone is working out how to optimise NDC implementation project timelines,” says Hussein. He pointed out that cost and difficulty of integration remain quite high and may be difficult for some parties to address. However, with experience, overall project lengths should be reduced. “The fastest way to bring a product to the market remains the traditional approach relying on ATPCo filing. On our part we aim to launch soon on the market our NDC-dedicated solution Amadeus Altéa NDC that will benefit from our level 3 NDC-capable certification granted by IATA,” shared Hussein.
NDC
· “NDC is not only an airline topic”: The core mission of aggregators like Amadeus is to acquire content in many different ways. GDSs have been using EDIFACT and teletype messaging for many years, but Amadeus has also been distributing LCC carriers with XML connectivity since 2008. “Working with some key LCC customers, we found some specific ways to handle dual connectivity,” said Hussein. He says with the surge of interest in NDC, the industry has to think about the transition period. “We believe that airlines should be free to choose which connectivity makes the most sense to their business, constantly re-evaluating the cost-benefit ratio of changing connectivity. At Amadeus, we work hard not only to secure content acquisition the way airlines want but at the same time ensure that we minimise the impact to our subscribers. Travel agents obviously prefer to consume content that does not disrupt their processes, in particular when it comes to comparative shopping, mid- and back-office integration and customer servicing and this has a major impact on the success factor of any strategy involving the channel.” He added, “Amadeus recognises NDC is not only an airline topic but affects the travel industry across the board. We have the ambition to make it profitable for all parties.”
· “A set of standard messages is necessary but not sufficient”: All stakeholders, including airlines, are coming to grips with the fact that having a set of standard messages is necessary but not sufficient, said Hussein. He said connecting systems with these standardised messages isn’t tough, but it requires certain expertise to turn them into successful distribution tools. “Most vendors underestimate the complexity of the integration part,” he said.
· NDC and standarisation: It is highlighted that not all airlines choose to participate in and utilize the same standards. Sabre and Amadeus need to support standards for all suppliers of content – including hotel, car, rail and cruise content for example. While a base level of standardization is valuable, there is always going to need to be some level of customization. Amadeus has managed several NDC-XML implementations. Airlines have different objectives and there are different versions of schema. NDC is still in its early stages and it will take time to reach full maturity, says Hussein. “There are concerns around the cost to support implementation, employee training to use NDC-enabled processes and ongoing product and technology support,” he said. There is a need to bring the economies of scale in the value chain. “So, yes, it is costly now but we expect easier integration in the future as all stakeholders’ needs are taken into account,” said Hussein.
· NDC and merchandising: The ability to offer bundles has existed in the GDS. The only new element here is that this initiative is using NDC messaging to distribute these offers. NDC XML can bring advantages and efficiencies, acknowledged Hussein. One such efficiency is that it can allow for better automation in the distribution of airline products. Other types of connectivity deliver the same end result, but the process can be more efficient with NDC XML that also introduces the offer and order notions. As NDC XML is only a messaging protocol, it needs to be powered by advanced merchandising solutions that can serve traveller needs across their whole journey, and support travel agency requirements. This is where Amadeus has been investing to enable airlines and travel agents meet their travellers’ needs with the right offer, at the right time, at the right touchpoint.
Amadeus is also allowing carriers (for example, Etihad) to display images of its product and ancillary services, such as exit row seating.
Hussein said as an IT provider to airlines, Amadeus has been delivering NDC XML-specific enhancements to its leading product suite, and is already using NDC XML in its solutions, such as:
· Amadeus Flexpricer uses the NDC XML AirShopping verb.
· Amadeus Ancillary Services Catalogue uses the NDC XML FlightPrice/ServiceList verbs.
· Amadeus Rich Content uses the NDC XML FileRetrieve verb
As for supporting ATPCo Branded Fares, Amadeus offers airlines the choice to file their branded fares centrally or directly in the Amadeus system. “And uniquely, Amadeus Fare Families includes a proactive up-sell prompt boosting the revenue potential for each seat sold,” said Hussein. “For travel agencies, the full mid and back office integration means no disruption to normal workflows.”
Catching up
As also Hussein acknowledges, having a standard for XML connectivity such as NDC XML will help standardise future such integrations, delivering greater efficiency across the industry.
The industry is witnessing GDSs consuming airline APIs but how much penetration of the same as of today? Or how much of it is part of point of sale agency volume?
Also, are PSS/ GDS specialists deliberately slowing down the movement till they are ready with their respective merchandising systems that will enable airlines to create their offering dynamically, refining of their retailing and distribution systems to enable the efficient and effective delivery of enhanced airline content at the point of sale, and complete integration of their merchandising, and retailing and distribution systems with their respective PSS suites?
A lot to look up to when NDC’s 5-year timeline gets over in the next 12 months.
So is such disruption deep-rooted or will GDS/ IT conglomerates find their way out? Hear from senior industry executives at the upcoming 7th Mega Event Worldwide 2016, The Event for Loyalty, Ancillary & Merchandising & Co-Brands, to be held in Toronto, Canada. (25 -26 October, 2016).
Twitter hashtag: #MegaEvent16
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