Timothy O’Neil-Dunne

There is a lot of confusion and commotion concerning the IATA initiative on new distribution capability, formally known as NDC and its legal structure Resolution 787. Rather than try to explain it all, let me cut to the chase on the important parts of the debate. I regret that this is necessarily rather long.

In Part 1 of this piece, I will discuss the facts of NDC. What it does and how it was derived. In part two I will look at the protagonists and why there is a fight at all and the likely outcome.

So put your feet up, grab a drink (glass of wine is suggested) and let’s chat.

Let’s be clear what it is about and why it’s important to the world of travel. NDC addresses a long-held problem that the messaging protocols are out of date with the forms of electronic commerce that power our lives today.

Almost everything we do has an electronic component in it, most of which we never see because it occurs in the supply chain systems in the business infrastructure. How we get our food fresh in the supermarket, how our iPhones are delivered, how our express packages arrive – all of this is managed electronically. Resolution 787 has been the change in our world that most never see. Do we care? No, we just want fresh food, an iPhone from the Apple store and Fedex to show up on time.

In the 1950s and 1960s, the world was a much simpler place. There was no ecommerce. It just did not exist. The standard form of business to business data transmissions occurred with Telex. Telex content (purely human readable text) was as simple as the character set on an old typewriter. No pictures, no funky characters such as @ signs, no complex data messages for example!

This was a somewhat secure one-way messaging system. It ensured that a message went from A to B. That’s it. Everything we did then was driven by paper. The airlines needed to communicate internally and externally with one another and other stakeholders in the chain such as airports. Over time the same messaging systems were expanded so that messages could pass to external partners – caterers, ground handling companies etc. The messages became more complex as the information needs grew. Structures of the passenger information necessarily also grew.

In the 1970s and 1980s, the need to connect travel agents independent of the airlines meant that the closed world of the airlines opened up to third parties. These networks and data systems expanded enormously with the advent of the PC. Along came the internet in the 1990s and the opportunities for expanded business relationships grew and grew. However the messaging protocols did not expand. They evolved into the systems that exist today which are still largely unchanged from the 1950s.

IATA publishes a book every year called the AIRIMP manual. This book lays out the standards.The procedures and rules for making a reservation are contained in another book from IATA called the Reservations Services Manual. Both will put you to sleep.  Essentially what these books do is to describe the ways in which the airlines can communicate with one another and with third parties in the making and processing of a passenger reservation.

Sadly the structure has resulted in a rigid set of methodologies. Airlines through separate pathways send fares usually via ATPCO to one place for filing, schedules via OAG and Innovata. Availability is sent to the GDS amongst other places. Any airline has the somewhat ludicrous problem that they have certified MULTIPLE companies to determine a guaranteed price. Except they use different mechanisms.

Thus the price on the web, the price of online and offline agencies, and the price from the call centre can be different 100% of the time. Mix in the problems of latency and differing capabilities and voila you have clearly different prices for what seems to be a standard product. Is the consumer confused and full of mistrust? Yup you bet.

Clearly in today’s world, many things have changed from the way business was conducted in the 1960s. Electronic commerce is vastly different. The written page is no longer the medium for communication of information. Personalisation and choice drive an enhanced consumer experience as it should do. The airlines on their own websites have managed to build new systems that enable advanced capability and a far greater degree of choice than you can get from an online travel site.

Amazon et al have created new ways to do business. Walmart et al, UPS and FEDEX have revolutionised the supply chain of physical things. Complex logistics today are a marvel – getting an iPhone 5 from a factory run by Foxcomm in China to your door engraved with your name in just a few days after logging into the Apple.com website is amazing. We take all of that for granted. The concept of the electronic shopping cart has changed how we buy our “things” online. Mobile shopping is even more wondrous.

Finally the frustration of the supply side of the airline product (yes that means the airlines) have had enough. They need to better communicate their differentiated products and services to a far more sophisticated and personalized world. Consumers believe that the airline product is simple. It’s a seat, it comes with a price. SURELY SOMEONE KNOWS THE LOWEST PRICE I CAN BUY THE TICKET FOR THAT SEAT? Actually it’s not that simple. And the airlines don’t want it to be simple.

The mission of an airline is to get the maximum value for that seat before the perishable inventory disappears. Filling the airplane and getting the highest amount of money for the seats on it is obviously very complex. Not only this ,but the nature of the relationship between the brand of the airline and the consumer enables the interaction of the two for all sorts of commercial and non-commercial dialogue.

For example, selling more products not just from the airline but also from business partners and doing things like building loyalty to that brand. Necessarily there is a lot of complexity in that. Today’s current systems as defined by the AIRIMP manual are inadequate for selling unbundled, rebounded and ancillary airline and non- airline products. The PNR (Passenger Name Record) is entirely an inadequate way to express the value of a customer to the airline.

NDC is designed to change that. The first part of the change is the IATA resolution 787 which seeks to change the infrastructure of the communications protocols from the old Telex way to the more standard (not just airlines) and sophisticated data communication structures of XML. And yes, it’s not difficult to read the resolution and you can find it here (http://www.iata.org/whatwedo/stb/Documents/resolution-787.pdf). This is relatively short at 11 pages.

NDC is happening now. Around the world there are many teams working on pilot programmes to launch NDC to the consumer. The standard for NDC was an open competition and eventually a data scheme, developed originally for the Open Axis Group byFarelogix, was adopted by the airlines. The competition pitted The Open Travel Alliance new schema (OTA 2.0) against the successful team. Both are relevant. In my view they will co-exist and find a way for harmonization.

What should you do? 

Every developer needs to know this is going on. They should keep abreast of the evolving nature of the standards are they move forward. I would also suggest contacting your airline business partner and seeing how you can get involved in some of the pilot projects that are going in different parts of the world.

Two of our VaultPAD companies are actively involved in this. LUTE Technologies provides Direct Connect solutions for airlines and large scale intermediaries, and Air Black Box Company connects full service and low cost carriers for airports and other communities worldwide.

Every commercial organisation in travel needs to keep an eye on this because even if you are not involved in the selling of airline products – if you are in travel – airlines drive behavior. Whether you are a supplier such as an airline – Full Service or Low Cost – you should be involved. Intermediaries need to get on board because this is going to change your world.

In the second part (next week), I will attempt to sift through the issues surrounding the politics, and why this is such a hot topic.