Airline leaders debate NDC, digitalization, sustainability

Misunderstandings about NDC, the need to update airport infrastructure to handle a digitized customer experience and thoughtful actions around sustainability were three of the key themes of a panel discussion Wednesday at the IATA Digital, Data and Retailing Symposium in Madrid. 

Panelists for the session were IATA director general Willie Walsh, Lufthansa Group chief commercial officer for passenger airlines, Harry Hohmeister, and Iberia chairman and CEO Javier Sánchez-Prieto.

On the topic of NDC, panelists debated whether the benefits should be framed primarily around costs or customers. 

“My personal view is that 80% of the conversation has been around cost. And I think it’s the wrong debate. The debate is not cost, the debate is about the customer,” Sánchez-Prieto says. And Walsh agrees.

“That’s why some airlines are slow to adopt it, because they don’t see the immediate cost benefit and revenue benefit. And understanding more about the customer, they see it as nice to have but ‘I need something right away,’” Walsh says.

“I think maybe IATA mis-sold NDC at the beginning. I think it may well have been communicated to the industry as a cost initiative, so I don’t think it was properly understood. But once you adopt it and adapt the opportunities it gives you, it is fantastic.” 

But Hohmeister says Lufthansa Group – an early NDC adopter – has seen that customer and cost benefits go hand-in-hand. 

“It has a cost effect... because you have a direct link to the customer. You have more of this marketing aspect in that you design your product in the way a customer wants it, which is also a customer-binding effect.  And with this, the intermediates have a problem to get in between,” he says.

“If you just have a standard, everyone gets in between and is just selling the standard. This what we are doing here, only we can do.  And therefore you have a direct customer link. This is why I’m a little crazy about customer data, but I’m more crazy about this interaction function here, because this also by the end of the day saves on cost.”

As travel volumes pick up, panelists agree efforts need to continue to transform the air travel experience from manual processes to digital ones. Sánchez-Prieto says during the pandemic Iberia has seen customers much more willing to use digital solutions due to a desire to minimize face-to-face interactions, and he expects that to continue.

“I think it’s obvious to all of us that the digitalization of the customer journey will be much higher than before. And out of this crisis I think that’s a good outcome,” he says.

Products such as IATA’s Travel Pass are part of the solution, but Hohmeister says what is not being addressed is the question of how airports – in a global, standardized way – need to change to accommodate a digital passenger experience. 

“We need at the airport, and I don’t really think the airports are thinking about it, different infrastructure design. Why do I have to show my passport, my boarding pass – it has to do with the design of the airports,” he says. 

“Now we have hundreds of different documents around the world to say if you have corona or not, if you are vaccinated or not. Standing at border control you have to fiddle the papers again. And if you say I have it digital, they say I cannot read it. It’s crazy. I think we have to think holistic about it. II think it’s really one of the main tasks IATA will have in the future - to have standardization around that, which means standardization around airport infrastructure.”

Regarding sustainability, Walsh says IATA is looking at developing a tool to enable people to calculate the CO2 of an individual flight.

“We need to provide customers with more information. There are many websites out there that will tell you what the CO2 of a particular flight is – they are all wrong. I can say that with confidence,” he says.

“We have to be more accurate because we risk undermining confidence in the system.” 

In early October at IATA’s annual general meeting, members approved a solution for the global air transport industry to achieve net-zero carbon emissions by 2050. Walsh says the estimated gross cost to achieve that is about $2 trillion.

As decisions are made on how to achieve sustainability goals, Hohmeister says it is critical for the airline industry to be very thoughtful about which solutions it adopts. 

“It has to be designed to this industry,” he says.

“It is one of the few industries producing everywhere globally. It’s one of the few industries which has interlinkages between different companies who are even competitors, so this also has to be sorted through. And therefore a quick shot might be the wrong thing.”