The Future of Airline Retailing Depends on Industry Collaboration

Existing airline distribution systems are in the midst of a transformation –– one that will provide airline industry stakeholders with more flexibility to sell a diverse range of products, and achieve greater customer satisfaction through richer content and personalization on every front. Legacy distribution systems hinder an airline’s ability to disburse ancillaries, content, and other offerings through travel agencies, reducing potential revenue for airline companies and the travel agencies. As the aviation sector strives to modernize its distribution systems, travel technology and connectivity providers such as Travelport are leading these transformative efforts.

These modernization efforts are further supported by IATA’s New Distribution Capability (NDC) program, which is playing a critical role in ensuring that airlines and agency systems can seamlessly interface. NDC standards will give airlines more control over their offer and order management, increasing upsell and cross-sell opportunities while providing greater insight into customer behavior. For travel agencies, the implementation of NDC standards means easier access to a broader airline inventory, including seats, ancillaries, varied rate tiers, and packages.

In order to accelerate the adoption of NDC, IATA has set an industry goal of powering 20 percent of sales via NDC Application Programming Interface (API) by 2020. The first significant dent in that goal was made in October when Travelport became the first global distribution system (GDS) operator to manage a live, NDC content enabled flight booking. This new capability allowed bookings to be made for any service on the airline without incurring a surcharge. According to Ian Heywood, Travelport’s global head of new distribution, “We are at the very beginning of this new evolution.”

Being the first facilitator of a booking that complies with NDC standards provides Travelport with first-hand knowledge about what it takes to get the wireframe right and what the key challenges are. Few organizations have this level of expertise in how to implement NDC standards for the fast-paced world of today’s airline e-commerce ecosystem, making Travelport an essential player in the future of ancillary distribution and merchandising. “NDC needs to perform as well, if not better, than the current technology. This means that a significant amount of work is being carried out across the industry to ensure that NDC APIs are robust, effective, and efficient for all parties within the industry,” said Heywood.

Personalization is becoming increasingly crucial to ensuring customer loyalty and satisfaction. As a result, airlines now want to provide more personalized offers –– including those sold through third-parties –– to all customers. This means that a connectivity provider –– which facilitates between agencies and airlines –– must take on the role of initiating and driving these collaborations in a way that benefits all stakeholders. In highlighting how Travelport approached this challenge, Heywood said, “We are closely collaborating with all players across the industry. We’re hosting tripartite meetings with airlines and their technology providers. We’re hosting and attending agency forums. We’re also hosting product pilot agency sessions to truly understand the requirements of our travel agency customers.”

Heywood also recognizes that full implementation of NDC standards will take time, and technology providers such as Travelport will play an essential role in helping to seamlessly integrate modern and legacy systems. Travel commerce platforms must scale up to handle multiple airline NDC API connections and combine these offers with traditional technology. Addressing this need for smoother integrations, Heywood said, “This is why we talk multi-source content. We have to take both the airline’s API and the Airline Tariff Publishing Company (ATPCO) content, and deliver it to our agency customers.”

As the various players in the airline distribution chain find ways to adapt to this new era of airline retailing, agencies (even the small ones) must find a way to stay on top of these technological changes without having to make prohibitive investments. Now, more than ever, there’s a greater need for distribution partners to provide products and platforms with built-in modules and capabilities that make sales easier. Speaking about some of the work Travelport is putting into building those capabilities for its internal products, Heywood said, “We are continuing to build out our points of sale with product enhancements, Smartpoint for desktop agency customers, and Trip Services for our online agency customers.”

Standardizing airline distribution is going to be a complex multi-year effort. It will require airlines, their technology providers, travel agencies, and travel technology providers to work together. Successful implementation of NDC standards will positively impact the bottom line of both travel agencies and airlines. Travel technology and connectivity providers are evolving as the primary cheerleaders and facilitators of these technology transformations, placing them in a vantage position to shape the future of airline distribution.

This article was created collaboratively by Travelport and Skift’s branded content studio, SkiftX.