Ai Editorial: Interest in NDC not withering, but still there is little to “see”
First Published on 13th May 2016
Ai Editorial: NDC has been around for a while. But one can’t ignore the slow adoption of IATA’s NDC modern messaging language, writes Ai’s Ritesh Gupta
The buzz around NDC data transmission standard has settled down.
So where do we stand today?
If respecting a traveller’s choice of who they fly with, the channel they choose to book their seats and being aware of what all airlines have to offer are major areas, then there are signs that NDC is proving to be fruitful. British Airways says this is what NDC is enabling them to do.
But at the same time one can’t ignore the slow adoption of this modern messaging language among the airline community.
A major reason is the way the business process change is being handled.
While some airlines have worked their way out, there are others that tend to struggle owing to innate problems - be it for existing processes and technologies or being traditionalist when it comes to embracing the requisite pace of change. Also, the industry hasn’t been too sure, with certain stakeholders building their own XML schemes, which also adds complexity related to interfacing and data flow.
“The challenge is that there is little to “see”,” says Ann Cederhall, PSS Consulting at Lufthansa, Hewlett-Packard.
Ann, who is currently associated with HPE Travel and Transportation as a business consultant and since 2014 being outsourced by HPE to Lufthansa, added, “To look at a response being returned with ancillaries and told that this is all XML – it is not super exciting, is it? If we were to see something new and different like e.g. airlines selling ancillaries on other airlines or interlining based on NDC then I think it would become interesting and tangible.”
Ann explained issues in detail and gave recommendations regarding what needs to be done:
· Overcoming limitations of the community model: The challenge for business process change is the historical reasoning why airlines are the way they are. Back in the day technology was astronomically expensive and airlines moved to community models for reservations, inventory and distribution to leverage cost. “A community model works fine but you cannot expect it to enable you to differentiate and to be agile,” asserted Ann. She says having multiple components makes it easier to exchange systems for better technology. For example, PSS for reservations and inventory but different system for e-commerce, shopping, merchandizing, loyalty, a rules engine, feeds from analytics (powered by big data/ advanced analytics of unstructured and structured data to drive personalisation). “Airlines expect their PSS to deliver all as it historically did. And it astonishes me that community meetings still work in the same way they did 20 years ago, they discuss availability, fares, messaging as isolated silos,” pointed out Ann. “Typically airlines document thousands of requirements for RFPs just because you are used to documenting thousands of requirements anticipating that change will take years. The challenge is that retailing evolves and it is not possible to think up what the requirements will look like in 5 years from now. The business evolves.”
· Investment decision: Also, it’s difficult to see any direct return on investment from adoption of NDC, says Ann. “It is not like travel agents (or OTAs) are lining up to implement any airline direct NDC API, and unless there is a demand, it is difficult to convince airline management to prioritise the investment needed. For NDC to provide any sensible value to the users (or intermediaries), the content needs to be there, both in value and in logical comparability,” she said. “Only larger travel agents will be able to take on the effort to integrate NDC APIs from different airlines, and to add the “aggregator functionality”, meaning to send requests to multiple parties, receive the responses, then interpret them and make them comparable.”
· Nothing is ever removed: Ann says we just build layers on top of other layers and keep the complexity. “When we say that fares need to change – do we mean the transmission and updates of fares or do we mean the structure? To be quite honest – fare rules are just old revenue management fencing rules. I would like fares to be fares and the rules to become ancillaries, to buy changes, if you revenue manage your fares why do you need advance purchase, minimum stay etc. Are these not just antiquated rules? Taking out the rules and transform those into services would make it more consumer friendly. Remove complexity from name change and monetize. Same goes for availability, if legacy systems only allow us 24 booking classes perhaps we can rethink.”
· You can’t ignore retailing has out-paced aviation: Airlines are still to a large extent looking for industry specific vendors and solutions, and – in many occasions – still looking for a silver bullet to give them a 10 years leap forward. Ann agrees and says, “This is truly strange; when realizing that retailing has out-paced aviation, why don’t airlines look to major retailers for learning and to vendors/ systems in the retailing space, even without any airline special requirements?” She further added, “Personally I have started asking myself if there is a need for a merchandizing engine, wouldn’t just any powerful rules engine sitting in ecommerce suffice? To find best of breed is challenging and is time consuming. I actually see a need for more advisors in the industry helping airlines to assess in different areas what is best for them and how to move forward.”
· Demand a major change: So what areas of a PSS - reservations, departure control, fare quote and ticketing – are demanding a major change? All of it, says Ann. She says these systems are designed by engineers. They need to be redesigned from the bottom up to support customer shopping habits and aspirations. “In my view this is what Google has done, and will continue to do. If airlines want to avoid being a commodity product they either need to demand that their PSS technology is customer focused or start using tech outside the PSS to do this kind of work.”
Ann says in order to drive personalisation, airlines need to move towards a true super PNR environment/ strong relationship database. If it is not possible to drive change in the PSS enable systems on top. Should the super PNR environment drive personalization and loyalty? “Some industry vendors are working on this concept already such as the Amadeus TTR – Total Travel Record. However, this is a good example of why I think it makes perfect sense for airlines to start taking their data back home. A good start is to start building a local repository keeping a copy of all PNRs, tickets (e.g. a copy of the ETKT database not as in Revenue Accounting) and other related data. This would enable the super PNR for operational purposes, and also the continuous analytics (which should also be seen as an operational tool, and not as a “reporting tool” such as the old fashioned data warehouses).”
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