The International Air Transport Association (IATA) is unveiling a vision of how it sees airline retailing developing over the next eight years.
The organization has 2030 in its sights for all of the “capabilities, standards and business processes” needed for offers and orders to be ready for airlines that wish to adopt this way of retailing.
IATA’s Modern Airline Retailing program is built on three pillars:
- Customer identification - building on the One ID standard and digitizing passenger information and using biometric technology so that it can be shared and there is no longer a need to show credentials at multiple stages through the airport.
It also proposes a digital wallet putting customers in control of who has access to their credentials and preferences and providing a “a seamless experience across different channels and touch points.”
In addition, the pillar would allow for easier sharing of passenger information in the B2B world.
Yanik Hoyles, director of distribution for IATA, says: “In a world where you no longer have the GDSs as the central pod, airlines more and more are going to need to be able to recognize the partners they do business with, whether direct connect to a travel agent or aggregator or beyond that to a seller. This is where the B2B angle of identity comes in from a commercial point of view as well as a security point of view. It’s linking the whole customer journey end-to-end.”
- Retailing with offers - viewed as the evolution of IATA’s New Distribution Capability (NDC) technology standard including further development around personalization, dynamic pricing, bundling air and other travel content and payments. NDC was first envisioned a decade ago to revise how airline content is presented to consumers.
- Delivery with orders - building on the One ORDER standard that moves the industry from the current world of passenger name records, e-tickets and electronic miscellaneous documents and improves the experience for passengers when itineraries change or if things go wrong.
Part of IATA’s program is the establishment of a consortium of airlines that so far includes American Airlines, Air France-KLM, British Airways, Emirates, Finnair, Lufthansa Group and Singapore Airlines.
The role of the consortium is to accelerate the transition to the Offer and Order world by working together with the member airlines already seen as “advanced adopters.”
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While Muhammad Albakri, IATA’s senior vice president, financial settlement and distribution services, describes the consortium as the “icebreaker” plotting and speeding up the path for other airlines to follow, Hoyles adds that these carriers are “advanced enough to put time, energy and resources” to the next steps.
Hoyles says: “Lots of airlines are starting to embark on their journey. What we’re saying is 'let’s get those airlines who are eager and advanced to work together under the guidance of IATA to spearhead this advancement and as their findings mature, it will benefit the entire industry.'”
Break from the past
Tamur Goudarzi Pour, chief commercial officer of Swiss International Airlines, says: “It’s about creating momentum, critical mass, speed and workshops that we work together on. You can tackle this topic from various angles. By aligning on it, you create much more synergy for the industry. For example, look at interlining, which is crucial - we need to find common approaches.
“What’s different from the past is that NDC started early in the previous decade, and it has taken a long time to be where we are. Now we see momentum coming, the technology players have now moved also, and we see much more implementation in the next 18 months on this. We want to make it a speedier train, more structured and more considered in terms of what we approach next and that requires more exchange on technical topics than we were used to.”
The consortium’s success will be measured by the delivery of three modules that it will work on.
Now we see momentum coming... We want to make it a speedier train, more structured and more considered in terms of what we approach next and that requires more exchange on technical topics than we were used to.
Tamur Goudarzi Pour - Swiss International Airlines
The first module involves defining the business case to move from the current state of offers to a world where e-tickets, PNRs and EMDs are no longer involved - with a goal of getting there by 2030.
Following that an "end-state reference architecture" is needed - which Hoyles describes as the map and the standards that will enable carriers, and the wider industry, to operate in this modern retailing environment.
The final module is the transition pathways that Hoyles says are the most difficult part of the journey and will require the industry to operate within legacy and new environments simultaneously.
According to Albakri, three existing advisory councils within IATA, centered on distribution, finance and digital transformation, will also have KPIs and targets linked to the retail program to “ensure they are pointing at the same goal.”
Goudarzi Pour says: “We’re happy we can formalize this now and establish this modern airline retailing program, which combines all the other initiatives that have been taken, and form a consortium. This then extends into the wider ecosystem - we want to integrate TMCs of course and the other stakeholders like the technology providers.”
He adds that attempts in the past to establish industry standards and collaborate on paths forward have failed because carriers acted individually, echoing a sentiment he has voiced previously.
Getting over hurdles
Putting a framework in place might help focus the industry on potential ways forward but there are risks and challenges remain.
The now decade-old question of who will pay for the development and integration of technology standards is still up in the air as are other commercial considerations.
The consortium’s plan to engage other stakeholders in the ecosystem might address this, but some might ask why not include those stakeholders in the consortium from the outset.
As laid out, it's a long and costly road and will require the buy-in of airline executive teams at a time when labor and fuel costs are rising and access to capital is difficult.
Data privacy and security issues are increasingly likely to be a challenge especially around customer identification, as is consensus around who owns the customer. The rhetoric might be that the customer owns and controls their own data, but can the stakeholders act in this way?
NDC has failed to make much impact so far with a number of carriers putting their NDC development on hold during the pandemic. An update provided by IATA in the summer put bookings made via NDC in the indirect channel at around 10% with corporate bookings making up about 5% of that.
And, finally can the entire distribution ecosystem avoid making the mistakes of the past? In recent weeks carriers including American Airlines, Qantas, SAS Airlines and Lufthansa have announced their own distribution initiatives all aimed at driving up bookings via NDC channels and all with their own commercial nuances.