2013: A Year of Discord Over Distribution

The hot travel distribution topic of 2013 without doubt has been IATA’s New Distribution Capability, which has been interpreted as everything from a renaissance for airline-agency relations to a sinister plot to undo the existing GDS business model.

It’s been a year of discussion and debate – and more than a few reassurances and mea culpas from IATA regarding the way NDC was introduced. Yet if you ask a roomful of travel agents who among them understands what NDC is all about, very few hands go up.

That is in part because NDC is exactly what IATA says it is – an XML messaging standard. It’s not a system. It’s akin to a common language, designed to enable trading partners’ systems to communicate with each other more easily.

Obstacles to distribution
In the current distribution system, the lack of such standards has made it difficult for airlines to distribute their new products and services through GDSs.

It took more than two years to enable the sale of US Airways’ Choice Seats in the Sabre GDS. Delta announced it would sell Economy Comfort seating through Travelport in June 2012. It happened in April 2013.

United distributed its Economy Plus seats through Sabre and Travelport until it migrated to Continental’s SHARES passenger services system in March 2012. Without a common messaging standard, new connections had to be built.

Nearly two years later, they are still being built, although Sabre says the first phase of the project is complete and the second is going well.

Merchandising issues
At the PhoCusWright Conference last month, Kurt Ekert, executive vice president and chief commercial officer at Travelport, said older messaging standards have worked well for fares and availability, but merchandising “ought to be done through XML and APIs.”

“We’re doing that today,” he said. “But every time we code to an airline API, it’s different.”

So a standardized means of connecting would be a good thing for everybody, right?

The answer is yes, of course . . . well, maybe.

What’s at stake
During the PhoCusWright Conference, Ekert and fellow panelist Bob Kupbens, vice president of marketing and digital commerce at Delta Air Lines, had an exchange that expressed the core of the debate over NDC:

Kupbens: “NDC feels like we’ve got the kernel and the concept. How do we narrow the aperture to get to that standard?”

Ekert: “NDC is about more than an industry standard. It is seeking unilaterally to change current business models.”

Kupbens: “I agree.”

GDS bypass?
And therein lies the rub. NDC is, as IATA maintains, a technical standard. But it could be used to facilitate other types of connections, such as direct connections between airlines and travel management companies, airlines and large corporations, or airlines and alternative intermediaries such as Farelogix.

In other words, NDC could facilitate GDS bypass. And there is little doubt that some airlines would like that.

That’s why Sabre is adamantly opposed to NDC.

It’s also why Amadeus and Travelport are a bit schizophrenic in their attitudes toward NDC. They want a standard way of connecting with airlines, but they don’t want airlines to use it to upend the current business model.

Sound familiar?
We’ve seen this movie before. It was called “The Direct Connect War.”

Cory Garner, American Airlines’ managing director of sales operations and distribution, was once the standard bearer for direct connections. He now seems quite content with the agreements American has to connect with Travelport and Amadeus via the carrier’s API.

Jim Davidson, chief executive officer of Farelogix, the company that developed that API, said at the APG World Connect conference in October, “It’s time to bury the hatchet.”

He noted that GDS companies are taking steps to update their technology, and he acknowledged that they have a key role to play in the development of airline merchandising.

“I tried to get around them for seven years,” he said. “It didn’t work.”