As the New Distribution Capability is becoming a reality with the recent announcement at the IATA AGM, it is time to reflect on our journey over the past three years since we first discussed the concept of NDC in 2012.
It appears that three key factors contributed to what appears to be a major change: vision, commitment and hard work. Without all three of these one it is unlikely we would be where we are today.
Vision: The importance of communicating the vision adequately to all stakeholders from the beginning has been a learning experience. The vision needs to be clear, articulated and shared. In the case of NDC, it is clear that it is nothing less than the modernization of the distribution of air travel. It has been articulated through workshops, conferences, videos and in numerous one-to-one meetings. The slogan "Let’s build air retailing together" speaks to the cooperation among all participants in the travel value chain to realize NDC.
Commitment: Change is difficult and the level of difficulty increases with the scale of change. In the case of NDC, commitment and enthusiasm were vital to overcome the inevitable resistance to change. Determination applies when dealing with misconceptions, vested interests and complacency. Misconceptions take place anytime and more particularly when a major disruption occurs, when a paradigm changes, when old habits and ways of operating are challenged.
Hard Work: The amount of hard work that is necessary is often under-estimated. Every detail counts. Every effort matters. Every achievement makes a difference. The hard work is a matter of passion, engagement and teamwork. Change requires individuals with passion. Change requires a high-level of engagement. Change is the result of the hard work of teams who achieve miracles when complementing each other.
NDC is a change. It offers a capability to distribute air travel that did not exist before. Developers and intermediaries will realize it as soon as they connect to XML APIs like BA's. It is disruptive in the sense that it started with a vision of what makes sense for customers and the market, not what the next incremental change can offer.
After NDC what is the next disruptive change? Indeed it will be what developers will create using airline APIs. There is no limit to the creativity of developers accessing airline content through modern technology.
This blog post is dedicated to those who shape visions, who show commitment and who deliver the hard work. It is targeted to customers, airlines and intermediaries who will create more value thanks to a new distribution standard. I look forward to reading your comments on what the next disruptive change may be and on how to drive further industry transformation.
If your airline is preparing to adopt the NDC standard, there are many questions you may be asking:
- Are there NDC-related educational videos that can help me understand the full implications of NDC on my existing processes?
- To what extent will the NDC standard enable me to distribute my product the way I wish to distribute it today, and in the future?
- How much do I need to rethink my system architecture and which modules should I consider in order to be able to fully benefit from NDC?
- How do I establish the financials of my NDC project and estimate the costs and return on my investment?
- What are the main steps for managing my NDC project, and how long could such a project take to implement?
With this in mind, IATA has put together a microsite
that delivers the first answers to these questions, while providing easy access to the documentation that is required to successfully kick-start your journey towards NDC. We hope you will find it useful.
"Airline distribution is evolving, there’s no revolution going on here…it’s not like it’s happening overnight is it…” Technology and Innovation in Airline Distribution and Merchandising Conference 2015
Agree or not, these were the words which greeted us from the stage at a recent conference in London. The speaker was referring directly to the remarks made by IATA at the 2014 San Diego WPS about “The Distribution Revolution” in the business travel airline sector.
Well, I’m afraid, I don’t agree. You see, revolutions don’t happen overnight and I can demonstrate. One of the most famous revolutions is of course the French Revolution of 1789, a revolution which itself is defined as having taken 10 years to completion in 1799. But if you look back further and consider the seeds of that revolution and the impact it’s surprising just how many parallels we may draw against the “Distribution Revolution” IATA defined in San Diego.
The seeds of revolutionary change in France were sewn in the midst of the 1772 financial crisis, almost twenty seven years prior to the defined end. This crisis prompted significant discontent and exacerbated social inequalities. Fuelled by this crisis and the influence of the American Revolution of 1775-1783, the French masses rose up and the rest, they say, is history. But it’s important to note that in the aftermath there were three defining aspects of the post-revolution. 1.) relative chaos 2.) an emerging middle class and 3.) an authority vacuum which allowed Napoleon Bonaparte to take power.
Now I don’t know about you, but I love lessons from history and I can certainly see parallels in today’s airline distribution revolution.
As far as the build-up is concerned, the financial crisis of the last six years has played its part in the revolutionary phase we are entering, and inequalities in distribution capabilities have been exacerbated by the internet revolution of Web 2.0. The net result is that we are building towards an airline distribution revolution which could also mirror those post-revolution results in France over two hundred years ago. And with NDC now entering its phase of deployment the climax is not far away.
The “relative chaos” post-revolution in France is mirrored by the confusion and frustration commonly being experienced now by the supply chain and corporate travel buyer community, and I imagine the many questions they have about what distribution will look like will not be solved overnight. The “emerging middle class” is illustrated by the arrival of a plethora of new entrant distribution technologies and portals which will initially add to that confusion before order is resumed.
As for the power vacuum created and the arrival of a dominant ruling force….Well, could that be represented by the announcement of the world’s biggest online retailer now selling destinations or the world’s biggest search engine sourcing travel?
On the walls of IATA’s offices in Geneva sits its second mantra…it refers to the need to understand “The Global Big Picture.” With that spirit in mind, I invite you to consider our approach to a revolution - a business travel distribution revolution spurred on by the impact of the leisure traveller’s experience, mobile, demographic changes, data and technology.
You’ll find me on the barricade walls - Vive La Revolution!
Paul Tilstone is Founder and CEO of Festive Road and undertakes the role of NDC Corporate Envoy for IATA.
Further to the release of a first set of videos introducing NDC in March, we are pleased to announce that the second module is now available for your review.
Presented by Bryan Wilson, IATA Director, Industry Architecture, these new educational videos provide a step-by-step explanation of how an airline can use NDC to manage key processes in relation to their distribution, ground handling and other airline partners (i.e. interline partners).
If you're keen to understand NDC, we encourage you to check the following videos:
The next and final module is planned for release in August and will explain how to get started with NDC.
A recent trip to IATA’s Geneva HQ provided me with a real insight into the building blocks of IATA’s future. To be honest, I expected to find a traditionally structured, slightly boring office of be-suited middle aged men for some reason, but instead I walked into the cool, cultural vibes of what felt like a tech company. A tech company with a youthful, seemingly vibrant workforce gathering in open groups to debate and update. On the wall was a newly framed set of statements designed to illustrate the focus of the association, the first of which I noticed was “Building Standards Through Expertise.”
This mantra runs through the very veins of IATA as an airline association and manifests itself publicly in the poster-child of standards, the New Distribution Capability (NDC). And unless you’ve had your head in the sand in the last two years you’ll know that this particular standard has courted controversy, and I have been no stranger to that. I personally think this isn’t because of what it will do, we all know it will provide a platform for richer content and more personalised offers, but rather because its impact on the corporate airline market is yet to be quantified. It’s the unknown that worries people.
The importance of standards to set the scene for the future should not be underestimated. I often use a story in my public presentations about the role a Roman horse’s ass played two thousand years ago in ultimately contributing to the size of the fuel capabilities of the US space shuttle to illustrate how standards create legacies. The story was written by the incoming president of the UK’s procurement association a few years ago, and it’s an interesting and humorous tale, but when she presented it, she meant it to illustrate how standards can restrict and the importance of challenging the way things have always been done. This is an important lesson and continued innovation is key to a successful industry, but I see the story slightly differently. For me the story illustrates the importance of standards to create platforms to facilitate growth and innovation. Without the creation of a standard railroad gauge, the first mass transit systems of our age, the railroads, could not have advanced at the speed it did and have facilitated the cultural and economic growth of the 19th century. The creation of a standard railroad gauge was the catalyst for a transport revolution and it allowed for joined up thinking and collaboration to facilitate the mass movement of people and cargo. Sure, the standard gauge then meant there were restrictions many years later, and standards need to be challenged and re-thought on an ongoing basis, but their initial creation can invigorate an industry and change lives. Standards beget innovation and innovation creates the need for standards. The two are inextricably linked.
My big hope for our future is that NDC will do for the corporate travel market what the railroad gauge did for rail, that it will invigorate the airlines and all those in the supply chain to provide a better service to airline customers. If in two thousand years the NDC standard restricts airline delivery just like the story of the horse’s ass it won’t be the standards fault, just our ability to innovate.
Paul Tilstone is Founder and CEO of Festive Road and undertakes the role of “NDC Corporate Envoy” for IATA.
Next week on Tuesday, 24 February, at 13:00 GMT, Airlines International will host a free webinar where:
IATA will discuss the latest developments in the NDC program, as it moves into its deployment phase
SWISS and their technology partner Datalex will share their findings from their NDC pilot project
If you wish to attend this free webinar, please register online.
In the current distribution environment, when a travel agent sells a flight and issues a ticket through a GDS, that GDS needs to know that the agent has been accredited by the airline as a selling agent in order to accept a ticket proposal. In an NDC world, there is still a necessity for airlines to identify the agents and aggregators with whom they wish to work.
So how will the system adapt to the NDC environment? Today, IATA sends a file called ‘ticketing authorities’ to every GDS 12 times a day. This ensures that their systems are aware of new agents chosen by airlines as well as have information on any suspensions or defaults. In the NDC environment, airlines will receive shopping requests from travel agents and can decide whether or not to respond with offers. At the more advanced stage of deciding whether to issue a ticket against the agent’s declared passenger’s form of payment, the airline decides whether to accept the card or cash proposed. For cash payments the airline will need to be confident that the agent is a BSP participant. Hence, IATA will be making a version of the ‘ticketing authorities’ file available to NDC-supporting airlines. Do ask for this file if you are an airline about to use the end-to-end schemas.
Under NDC, the BSP remains highly relevant. Selling through BSP accredited agents gives a 99.9% certainty of receiving cash payments with an average cost of $0.15 per ticket after the NDC-supporting airline submits the sales data to the BSP, while if the passenger chooses to pay by credit card the BSP continues to play its traditional role in ensuring that the airline will receive payment for the ticket – although incurring the merchant fee from 1% to over 3%.
Until airlines have fully adopted NDC, the BSP will continue to hold the selection of agents chosen by each airline in that country as ‘ticketing authorities’ – and will advise airlines when any of their agents cease to be BSP members. So eventually the concept of ‘ticketing authority’ will drop from the airline distribution vocabulary, but the setup between suppliers and distributors will remain important.
Well, here we are at the start of a new year. And 2015 will be an important year for the NDC program as it is now moving into deployment phase. In the video below, Yanik Hoyles, NDC Program Director, will share his perspectives on program achievements in 2014, and what 2105 will hold for NDC.
We hope you will enjoy this video, and on behalf of IATA, we wish all of you a very happy and successful 2015!
On 15 October, IATA announced the creation of the NDC Innovation Fund in partnership with Travel Capitalist Ventures (TCV), a private equity and venture capital firm specializing in travel industry investments. The announcement, which occurred during the recent World Passenger Symposium 2014 in San Diego, generated quite a bit of interest, as was made clear by the number of tweets and re-tweets immediately following the news.
Because the NDC Innovation Fund will become an essential pillar of the NDC program moving forward, we asked Abrar Ahmad, Partner at Travel Capitalist Ventures (TCV), to tell us a bit more about this new fund.
What motivated you to create an NDC-related fund together with IATA?
As a travel-focused investment firm, it is pretty clear to us that the NDC standard will have a positive and wide-ranging impact on how (air) travel will be distributed in the future, and with countless possibilities for new entrants to leverage. With this in mind, we at TCV were convinced that investments in NDC-based solutions providers will translate into strong returns, hence our interest from day one in partnering with IATA for the launch and management of the NDC Innovation Fund.
How big is the NDC Innovation Fund?
The Fund has US$5 million in capital to invest in small- and medium-size companies. We will be looking at pre- and post-seed stage investments between US$500,000 to US$1 million, in exchange for equity.
We believe such ticket size is large enough for these companies to comfortably develop minimum viable products, especially as the partnership with IATA will enable the startup to get easy access to airlines and validate business models with them, and therefore not spend valuable investment money on this key aspect of their ventures.
To what extent do you think this fund will foster innovation in travel? And more specifically, in which areas?
Our primary goal with the Fund is to promote innovation in any technology developments that will enhance the distribution capabilities of airlines, travel agents and other content aggregators, using the NDC standard. Having said this, the Fund will invest in both consumer- and business-facing products
Have you identified possible start-up candidates for the fund? And when do you expect to be able to announce your first investment?
Within days of announcing the Fund launch we had received more than ten applications via the Fund’s website. In parallel, we reached out to four startups we identified prior to the announcement, and which exceed our innovation criteria, so I am confident that together with IATA we will be able to announce a first investment soon.
How will the fund be run?
TCV and IATA will run the Fund together, jointly deciding which ventures and projects to invest in, based on our respective areas of expertise: technical and industry for IATA, while for TCV it is experience in travel and financial management.