Transport Airlines

IATA and Travel Agencies To Meet In Miami About A New Way of Doing Business

@denschaal

Jan 23, 2014 7:00 am

Skift Take

After brutal battles between airlines and travel agencies over the last few years, IATA realizes it can’t push through the changes in distribution that it seeks without some buy-in from the other side. New battles may be in the offing so enjoy the peace while she reigns.

— Dennis Schaal

Free Report: The Changing Business of Extended-Stay Hotels

Max Faulkner  / Fort Worth Star-Telegram/MCT

Not all passengers want the same thing in their travels, and airlines want the ability to market different products and services to different passengers based on their preferences. Pictured, passengers line up to get boarding passes in Terminal C at DFW Airport on Tuesday, April 16, 2013. Max Faulkner / Fort Worth Star-Telegram/MCT


Representatives of airline trade group IATA and its usual detractors among travel tech companies and travel agencies plan to meet in Miami on Friday as a fragile and temporary truce has broken out in the dispute over the airlines’ desire to usher in a new era in travel distribution.

The issue revolves around IATA’s so-called New Distribution Capability, which would basically be a means for airlines to accelerate their marketing of ancillary services to passengers in a personalized manner.

Global distribution systems Sabre, Amadeus and Travelport, big travel agencies, and their respective lobbying groups are concerned that NDC would usurp their roles in retailing to travelers, put them at a competitive disadvantage, and be costly.

After what might be called the GDS-airline wars of 2011 and 2012, the two sides started a dialogue last month, and on January 22 they announced that they had jointly filed proposed changes to Resolution 787, which is under consideration by the Department of Transportation as the foundation of the distribution initiative.

As a practical matter, IATA needs DOT approval of its basic plans before the airline group proceeds.

Among the more important of the agreed-upon amendments to the resolution is clarifying language that defines the scope of the resolution as a technology standard, and not the outlines of a new business model.

As part of the truce, IATA and entities such as Open Allies for Airfare Transparency and the American Society of Travel Agents agreed to work together with other travel tech and travel agency groups to create an industry forum “that will support a collaborative approach on distribution standard-setting.”

The meeting in Miami will be attended by representatives of IATA, Open Allies and other travel tech stakeholders to continue the dialogue that was initiated in December.

Charlie Leocha, director of the Consumer Travel Alliance, which generally lines up with the global distribution systems and travel agencies, believes a thaw occurred when IATA “realized they would not be able to bulldoze this through on their own and that they needed industry buy-in and a real change in the technological standards.”

“Once the airlines realized that they didn’t have the horsepower to do this on their own, the began an industry-wide approach,” Leocha says.

Another insider, also on the travel agency and travel tech side of things, put it this way:

“It was driven by the same thing that drives all settlements: Uncertainty on both sides and the desire to reduce or eliminate it. In my mind the agreed conditions make clear IATA cannot dictate a single new way of doing business and any attempt to do so would not have DOT sanction if the conditions are imposed.

“There is, of course, much work still to be done. The development work under Resolution 787 has continued while the battle at the DOT went on.”

Now travel agencies and global distribution systems “will have a seat at the table … In the end the marketplace will decide which business models actually work, and that is how it should be,” the travel industry executive added.

On the airline side, there are those who admit that IATA didn’t exactly win friends in the initial ways it went about communicating its ideas about the new distribution capability.

The IATA World Passenger Symposium in Dublin in October seems to have cleared the air a bit as all parties attended and appeared to discuss the issues with one another rather than talking past each other.

That led to a renewed dialogue between IATA and Open Allies last month, which in turn produced the compromise language for an amended DOT resolution.

Still, there are huge differences among the parties and anything can happen.

As one of the interested parties put it, “There isn’t exactly a marriage here yet.”

Whether this turns out to be the beginnings of a a truly collaborative approach among airlines, global distribution systems and travel agencies or is just a brief interlude before bricks get hurled again remains to be seen.

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