Ai Editorial: Assessing a GDS’ approach towards NDC validation

Ai Editorial: How a group of Amadeus’ stature is looking at NDC-XML oriented standard? Ai’s Ritesh Gupta finds out
First Published 6th February 2016

The quest of being in control of what is being offered has meant that airlines are continuously refining their distribution and IT-related aspects. If on one hand, the industry is finding ways to cope up with technology that is inflexible on the other there is talk of adopting a retailing approach that maximizes value for both the airline and the traveller. Amidst all this, it is interesting to assess the role of a GDS.

Are GDS solutions compatible with what the industry is working at? Would the commercial dealing between carriers and GDSs change as there can be provision for additional content? 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. So how to balance out this conundrum?

Here we assess the current state of affairs, and look at some of the issues from a GDS perspective:

  • Control: Airlines, in general, feel that their current technology does not provide sufficient control over what they sell.  

“Airlines always have control of their offer. They decide what, when and at what price they sell. NDC as an XML messaging protocol, can help airlines transmit rich content more easily, but ultimately, it is the travel agency that decides what is displayed based on the consumer’s needs,” says Gianni Pisanello, Strategic Marketing Director, Airline Distribution, Amadeus.

Pisanello says with NDC-XML, and any other messaging protocol, airlines control the content they send to travel agencies. “Travel agencies on their side optimise the information they display—be it airline information or hotel information—to maximise sales. This benefits both the airline and the travel agency,” says Pisanello. “In that sense, travel agencies play an important role in selecting what information travellers see at which time, leveraging their retail expertise to maximise sales for the airlines. For example, a travel agent may notice that if a certain picture is shown at a later stage of the buying process, rather than at the outset, sales improve. Or they may see that certain types of pictures work better than others, and as a result they will focus on the former to increase conversions.”

  • Strengthening merchandising: NDC-XML is not a constraint in improving merchandising capabilities, and it intends to actually facilitate them. NDC-XML will need time and resources to be invested before it is widespread, efficient and effective.

“In the short term, airlines can already benefit from merchandising capabilities through the existing infrastructure. NDC-XML allows for a lot of flexibility, and this is one of its strengths. In order to deliver the economies of scale that everyone seeks and needs, the industry will need to continue to work closely together to find a balance between that flexibility and effective standardization as NDC-XML gets deployed,” says Pisanello.

  • Consistency: GDSs are already working towards making it possible for airlines to merchandize their products via travel agents in a manner more consistent with airlines’ own websites.

“In the first three quarters of 2015, we saw an 85% increase in the amount of ancillaries being sold via travel agencies. When we look at our data, we see cases in which 15 out of every 100 air bookings by OTAs include an ancillary sale, and that figure rises to 30 or 40 for certain carriers and agencies,” Pisanello says.

In addition, there are three times more OTAs with integrated airline ancillaries in 2015 compared to 2014. 

Talking of OTAs, these intermediaries offer comparative shopping options on multiple airlines, with focus on letting one compare all flights and associated options and services in full transparency. Pisanello refers to ewo examples:

  • Fareportal on their CheapoAir site enable their users to book paid airline seats using seat map displays with prices. Offering a wide range of seat options from a large selection of airlines means a smoother booking flow and the flight experience their customers really want.
  • Expedia and fare families: they make it easy for travellers to see all of the options and to feel empowered to make the right decision for them; so that travellers can see all the new options airline partners are offering, with clear choices around all of the extras they might want or need, helping them to select the ticket that’s right for them for their specific trip.
  • Standardization: We are already seeing that usage of NDC -XML by airlines and GDSs will vary in its shape and form, resulting in a mix of EDIFACT and XML connectivity. 

NDC-XML is in the early phases of its development, stated Pisanello.

He explained: “Work has to be done to make sure that standardization is reached. The industry should not be disheartened however: evolution in technology, in processes, and in behavior takes time and requires a lot of collaboration, and this is normal in large scale projects. The players in the travel industry will have to work together to try many different things, to experiment with different tools, and together we will converge to a formula that delivers value to all participants, especially to the traveller.”

  • Commercial dealing: NDC is an opportunity for airlines to start controlling their own content and how it is presented in GDS and other indirect channels. “The major threat is that the adoption will cost airlines a lot of money, but at the end the additional content will be another opportunity for GDS to charge airline extra. It also seems that they are not clearly adopting the NDC XML standard, but building their own XML schemes, which also add complexity related to interfacing and data flow,” share an airline executive.

Commenting on this, Pisanello pointed out that NDC-XML being just a messaging protocol, “the high level dynamics will remain the same”.

“As the industry works together and creates new services and features, opportunities for all parties should arise,” he added.

Avoiding different versions of XML: It is being pointed out that GDSs have integrated airline content using proprietary airline API interfaces for several years and airlines have in fact been employing the principles of NDC, such as dynamic pricing control. However, this is not scalable as each airline’s proprietary API requires custom development. NDC will standardise this approach for airlines wishing to adopt NDC and benefit from GDS distribution.​

Pisanello clarified and explained: “Dynamic pricing does not depend on API interfaces. Airlines apply dynamic pricing through their own websites and the GDS all the time. However, proprietary APIs are not always scalable for widespread adoption. NDC-XML will help increase this scalability through a level of standardisation. The industry will need to further standardize the data elements and the booking flows to benefit from full economies of scale.” Explaining further, he said let’s focus on the booking flow. Let’s take the example of selling an additional bag. Two airlines may have different ways of selling that extra bag. One airline might include the sale of that extra bag at the same time as the sale of the flight, allowing for both to be purchased at the same time. A different airline might only offer the sale of an extra bag once the flight has already been purchased. Although the outcome is the same, the purchasing flow is different. This kind of difference means each airline will send a different sequence of XML messages, requiring custom integration for each airline. This in turn limits the level of adoption that the industry can deliver. “NDC-XML provides a strong first level of standardization where XML is used, and avoids many inefficiencies that different versions of XML can create. Based on this foundation, the industry will naturally and in practice further standardize how NDC-XML is applied in order to facilitate the widest adoption. This will involve a process of trial and error.

The industry is looking at a single, standardized set of XML messages that can feed all channels. As Gianni says, proprietary APIs are not always scalable for widespread adoption. NDC-XML will help increase this scalability through a level of standardisation.

So is the industry collectively moving towards working out right API strategy that is PSS, channel, and device-agnostic?

“Over time the industry should converge to NDC-XML when XML is used, as this will enable the widest adoption. Some airlines may opt for different approaches depending on their business strategy,” concluded Pisanello.

First Published 6th February 2016