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Everybody in the airline industry knows that the Airline Tariff Publishing Company, or ATPCO, is important. But, let’s face it, not many people know precisely what it does.
At least, not many know outside of the airlines which own it and the 437 employees who work for it — most of whom are at its headquarters at Washington Dulles International Airport.
The organization is an industry clearinghouse for airfare data. And many of the insiders who understand it well think that it needs to evolve more quickly than it has for what seems like eons.
Brett Snyder of the airline industry blog Cranky Flier and a former pricing analyst for America West, said: “It sounds like a place that is searching for a way to remain relevant in a world where fare distribution won’t be as tightly controlled as in the past.”
Founded in the late 1960s, ATPCO focuses on serving as a database for airfares, including all the rules surrounding them. The rise of the Internet led to a proliferation of fares.
Today, ATPCO distributes up to 3.9 million fare changes a day, on average. It has 111 airline customers in Asia-Pacific, 119 in the Americas, and 206 in Europe. It takes their data, standardizes it, and distributes it on to other businesses that help with distribution, such as Amadeus, Sabre, and Travelport, online travel agencies, and metasearch companies.
But airlines will soon be creating products at a seemingly exponential rate.
That’s because airlines are rolling out branded fares; new ancillaries, such as fees for stowing a bag in an overhead bin; and pricing that caters to groups of travelers with similar tastes or behaviors.
Over time, airlines may not pass all that data through ATPCO.
Snyder said: “[The organization] needs to change, and it knows that. The problem is finding out exactly where it belongs in the new world.”
Until now, ATPCO has benefited from industry conventions that encourage a centralized process for data flows.
One supporting factor has been the full-content agreements demanded by the three largest airline distribution middlemen, known as the global distribution systems. (See Skift’s report: Channel Shock: The Future of Travel Distribution.)
Contracts have required, in essence, that airlines must provide the same fare to travel agencies as they provide through other channels.
But these contracts have been watered down over the years.
Robert W. Mann Jr., an aviation analyst in Port Washington, New York, said, “APTCO risks becoming less relevant as airlines break full-content agreements with global distribution systems and distribute some products digitally off of the ATPCO menu.”
Already, some airlines do not file all of their content with ATPCO, and a few smaller ones don’t participate at all.
New technologies are emerging, too. More sophisticated practices for sharing information are being agreed on among airlines as part of a so-called New Distribution Capability being championed by the International Air Transport Association.
Hovering in the shadows is the promise of blockchain, or distributed ledger technology, which could, in principle, offer a more flexible alternative to ATPCO’s paths.
“I don’t necessarily think that the incumbents have to go away, absolutely not,” said Maksim Izmaylov, founder of Winding Tree. “They will have to change their business models drastically, though.”
A Pricing-Based Pivot
On Tuesday, ATPCO opens its annual conference for industry executives.
The event is something of a coming out party for new CEO Rolf Purzer, who became the top boss in February, succeeding Bill Andres, who had run the show for about a decade.
Purzer’s big effort is to position ATPCO as a resource for airlines attempting to do more with dynamic pricing and merchandising, such as by establishing industry definitions and frameworks so that everyone is in sync with best practices.
Purzer has taken several steps to lift the metabolism of the business-to-business data organization.
On Tuesday, the company will debut a whitepaper based on findings from PODS Research, an airline revenue management research outfit at the Massachusetts Institute of Technology.
On Tuesday ATPCO will debut a newly formalized way for startups and travel technology companies to use its data and tools to create new business products and processes.
On Tuesday ATPCO will also debut its participation in a platform that supports airline adoption of IATA’s New Distribution Capability for airfares and ancillary sales. It is finally catching up to an initiative that has had its own life for a few years now. It’s working with SITA on the effort. (See Skift’s SITA profile, here.)
This year, ATPCO has picked up the pace when it comes to testing, planning, and unveiling solutions to create feasible solutions for dynamic pricing and the abilities to adjust promotions by passengers.
Purzer intends to hire about 20 more software developers soon. He has introduced some of Silicon Valley’s practices for agile development to the existing team. He’s hired marketing and educational talent, too, including Kevin Fliess, formerly of Cvent, the events management company, and Room 77, a hotel metasearch startup.
These efforts, along with new branding, may energize ATPCO.
As the airlines want to move to new models of distributing and pricing their airfares and ancillary services, they need to decide exactly what it is that ATPCO should do.
Can it become a kind of pontoon that helps the industry move to a new era and then vanishes after it outlasts its usefulness?
Purzer has made the plausible claim that it would take at least a decade for digital transformation to bubble up through the airlines, leaving the organization with a lot of development work ahead.
“Most airlines have given us every indication that they’ll want a hybrid model for many, many years to come,” he said.