Ai Editorial: Extending your PSS Box - a likely scenario for NDC?

Ai Editorial: The onus is on airline IT companies to deliver as airlines say PSS providers are too slow in “reinventing” their PSS systems. So how to go about NDC? Ritesh Gupta finds out 

The discussion around how airlines are going about embracing the new NDC standard and what’s the sort of change that is resulting in their internal system architecture is an interesting one.

Before I delve deeper into the issue of NDC implementation, it is clear that for airlines the limitations of legacy systems is turning out to be an investment decision. And it’s just not about distribution of content. For instance, airlines are being recommended to look at the entire payment chain, from gateway to risk, to acquiring, and identify areas in which they can prioritize improvements. But dealing with legacy systems isn’t easy as they have largely been designed to handle credit card transactions only.

So the going hasn’t been smooth for airline IT or e-commerce executives, especially those who are a part of FSCs, in general. There is a need to grow capabilities beyond traditional commerce management.

“The most exciting aspect about my role is to leverage changes in technology available for airline commercial activity. However, the challenge is to integrate it effectively with legacy systems such as reservation where there is no much progress in technology. Unfortunately, it is somehow still the same engine behind the scene like decades ago!” says an airline executive. A candid admission indeed.

PSS and complication interfacing

A pivotal figure when it comes to NDC is the airline PSS system. As proposed, integration of NDC specifics can be done at different levels. The possibilities are – “extend your PSS Box” or “Do it outside your PSS Box”.

An overhaul to core services (reservations, schedule and inventory, ticketing, departure control etc.) and streamlining associated functions (loyalty, revenue management, and business intelligence and revenue integrity) is a humungous task.

So how are airline commercial systems evolving?

“It seems that airline commercial systems are developing in the same direction as in the retail industry; however airline industry is few years behind retail because of the complexity of its business,” says  Radoslaw Dutkowski, Director eCommerce and Ancillary Services, LOT Polish Airlines

Dutkowski believes that airlines are becoming more customer focused and are trying to effectively use the customer data which are they already have, but the processing of the data and on-request real time usage is definitely a challenge.

It is especially a problem of data integration from different systems based on completely different philosophy and aggregation methods. “I would find legacy PSS systems as a major obstacle in getting quick and well aggregated customer view as it requires complicated interfacing which may impact data accuracy and reliability,” says Dutkowski.

Fine tuning of PSS just not enough

As it is being pointed out, the fine tuning of legacy PSS wouldn’t be effective as the core of the system still lays in 70’s of the XX century.

“Legacy PSS systems should be actually redeveloped almost from scratch if it brings any major improvement, what is not going to happen in a very near future. That’s why I would rather focus on real time PSS data reliable interfacing to the external contemporary system where the proper data aggregation could be maintained. What (it) means (is) building a mirror of PSS database outside of PSS, which could be used for generation of the accurate offer for individual passengers,” explained an airline executive.

Investment decision

Airlines have invested considerably in several assets and want to protect these or ensure they can be easily integrated in an NDC world. ​Airlines are likely to have some rich content or CMS systems; however, it is likely these will have to be extended as they likely only cover the direct channel so may need to account for indirect channels also. Pricing and revenue management expertise already exist today and these systems will need to be integrated. Offer management or merchandising will likely need new investment, as the area of retailing will be a new skillset for airlines and new technologies will be required. Similarly, order management requires new investment, in order to support the lifecycle of the order across all channels used by the airline customer. Airline profile will require airlines to file their NDC capabilities so NDC actors can use this information to send NDC traffic to the airline for the end user shopping request; this will also require some investment.

A likely scenario

To mitigate the limitations of PSS systems, full service carriers or FSCs started to implement separate engines and modules such as availability and pricing, customer database, merchandising, NDC interfaces etc. outside of PSS as legacy systems are not effective enough to be used for sharpening their retailing strategy.

“Effectively it means that in the near future PSS may only be used for routine operation such us PNR creation, however the content will be fed from the different modern retailing systems,” explained a source. “ The current PSS providers are too slow in redeveloping/ reinventing their PSS system as it is capital-intensive process, so I wouldn’t expect that the major improvement in this matter in a short term. The only solution is to build the independent modularized system which will help to compete on the market, especially with LCCs as they don’t usually have such problem.”

It could be argued that a PSS vendor who is also a distributor has a conflict of interest when it comes to enabling more direct distribution, thereby putting distribution revenue (GDS segment fees) at risk. That said, NDC is a new technology and that development has to be funded, so additional fee is reasonable.

Points of contention other than technology

There are few other crucial points, as Paul Byrne, SVP Development, OpenJaw Technologies, and Member Board of Directors, Open Travel Alliance points out, that are impeding the adoption:

  • Firstly, there is no public proven business case as ​ yet. The IATA pilot projects are providing technical validation that the schemas meet the business needs; however, the commercial details of these pilots are sensitive in nature.
  • Secondly, the commercial model between airlines and business partner is what will drive adoption. Although this is outside the scope of NDC, it will have a large influence in how quickly the airlines will move.
  • Thirdly, airlines tend to be conservative in adopting new technology.
  • Lastly, without understanding how NDC solves the full end-to-end process, some airlines will probably not commence even with the straightforward pieces that are currently possible.