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One Order: The proof of the pudding is in the eating

NDC has transformed airline distribution. Well, while that particular statement can be debated for many hours, one thing that can be said is that it has changed the vocabulary of airline distribution. The mindset of airline distribution has genuinely been transformed to think in terms of “offers” and “orders”, about APIs and dynamic bundles and so on. Indeed, many airlines are implementing these concepts in their distribution landscape.

But what has really changed, beyond some terminology? Well, for certain, airlines are thinking much more like retailers. They are thinking about the customer (purchasing) experience, products, bundles, segmentation, and they are thinking about how to get these into their distribution channels as offers – through NDC and their digital direct channels. The transformation of an offer into a sale of products is resulting in the creation of orders. However, most orders still rely on a system which also uses legacy artefacts such as PNRs, tickets and EMDs.

As airlines become more retail-focussed, more confident in their capabilities as retailers and more well-equipped with tools to enable this, the more creative and ambitious airlines will become. More products in bundles, different products in different markets, integrations with providers of travel-related services that see the market developing as the technical obstacles of legacy artefacts are steadily removed from the equation. This gentle transformation is also driving changes elsewhere throughout airline organisations, as the knock-on effects of these begin to be noticed. Orders created within an order management system provide a vehicle for simplified settlement processes between sales channels (retailers) and the airlines as sellers. While the full complexity of airline revenue accounting, proration, BSP and other settlement flows cannot be eliminated overnight, the ONE Order accounting standards are enabling change. As the maturity of NDC distribution increases and orders become more prevalent, airline IT providers are presented with opportunities to bring further simplification, leveraging NDC and ONE Order. Providers of Order Management Systems (OMS) are now able to integrate directly with airline accounting systems in real-time, bypassing much of the legacy complexity associated with PNRs, tickets and EMDs.

However, there is more to being a successful airline retailer than creating offers, converting them into orders and feeding the fruits of these sales into the airline’s financial systems. At some point in time, there will be a customer who has expectations based on their wider retail experiences. The retail possibilities that airlines are now becoming exposed to go far beyond their own domain. While the additional bag will (hopefully) be visible at the time of check-in, and the lounge may be run by the airline, what about the pre-booked parking, fast-track security or the express train to the airport? The airline is unlikely to be the entity responsible for delivering the service in these cases, but the expectations of the customer are the same as when they present at the desk to drop off their bag – it should just work. However, interacting with all these new parties to ensure “it just works” is unchartered territory for many airlines. More and more, this involves pushing an order notification to the external service provider via the OMS to fulfil a service. Interactive two-way messaging related to order fulfilment is new. And, in the envisaged world where the PNR and ticket are superfluous, even the interactions with the check-in providers need to be brought into the era of APIs and open integration standards.

In conjunction with airlines, vendors and other industry stakeholders, IATA has anticipated this and has developed a set of standards within the ONE Order framework to enable the delivery of services using orders. These messages can be used by an OMS to trigger the delivery by pushing information to the responsible party or can be used by delivery providers to pull the necessary information proactively. They can track consumption of services as well, which is key to triggering accounting and settlement processes. However, certification for ONE Order capabilities is still very light compared to NDC. While the certifications only may only be taken as a loose measure of maturity, it would appear that there may be a vast gap between what airlines can now sell and what (or rather how) they can deliver.

The reasons for this apparent mismatch are manifold and varied in their nature (technical, process-related, commercial), and some may be easier to resolve than others. What is more concerning though is the apparent lack of awareness of this mismatch among the broader industry. Great focus has been placed on promoting the need for modernisation in how airlines define and sell their products and services. However, there is still one key component that will become a challenge sooner rather than later – where the customer gets to seamlessly experience all those products and services that the airline invested so much effort in to get the customer to purchase.

The collaboration between airlines and their OMS partners is, generally speaking, mature, collaborative and based on a common understanding of business value and goals. The relationship between airlines and their ground handling partners is of a very different, operational nature and is often very cost-driven to extract the maximum value at the lowest cost. On the other hand, the relationship between OMS providers and ground handlers is non-existent in most cases.

Planning and executing the smooth delivery of products is key to being a successful retailer. Achieving this requires close alignment between all stakeholders: airlines, their OMS providers and crucially, the ground handlers and other partners, in and around the airport, in the air or wherever else they may be. So far, the focus has been on the selling aspect of retailing and increasing revenue and airline wallet share. However, if airlines are really to succeed as retailers, customer satisfaction will be determined by what, and how, they deliver. The proof of the pudding is in the eating.

This post has been published in collaboration with Terrapinn.

(Nick Stott, 7. June 2022)

If you are interested in a deeper discussion about this topic: Listen to our latest TiMCAST 15 on 15 where Jost Daft of LH Group shares his views on the subject.

 

Putting the (NDC) cart before the (distribution) horse

Even though NDC has been around for several years, there are still many airlines either planning an implementation, just starting an implementation, or expanding a basic implementation to a higher level of functional maturity. NDC can change an airline’s distribution opportunities considerably and is much more than a technology project around API integration. It is very much about the opportunity to make relevant offers to the customers, sell more and better-suited ancillaries, potentially implement new pricing concepts in the indirect channel and controlling the offer and the order.

A common criticism, especially from travel agencies, is that NDC provides no added value and differentiation, but rather only leads to higher complexity. This criticism is fair in some cases, as a lot of airlines still barely differentiate the content distributed via NDC, providing largely the same products and services to the same conditions as in traditional GDS distribution. There are basically three reasons why that may be the case; it could be that the airline lacks a clear strategy on how to serve the NDC channel, the airline is constrained in their distribution via NDC by existing distribution contracts, or they may have a strategy, however, do not yet have the necessary systems and business process in place to execute the strategy. In many cases, it is a combination of all of them.

When an airline goes down the NDC route, its GDS contracts are often neglected, as is the overarching distribution strategy. The effects that these both have on an airline’s NDC strategy and the underlying system capabilities to fulfil the strategy is, however, critical. It is strongly recommended to not look at these in isolation, but with a holistic view on distribution, optimally combined with the direct distribution strategy as well. Often, NDC is implemented without much thought of the GDS contracts and the airline’s ecommerce strategy. This will typically not lead to a satisfying level of NDC adoption nor to happy agencies, as the content or functionality will not meet their expectations.

The challenge with all of this is that the GDS contracts are often dated, complex and difficult to understand. They are managed in a different department or have been recently renewed in a disconnect from the NDC team and cannot be changed in the short term. Often however, the GDS distribution contracts are simply not considered when creating an NDC strategy. In fact, airlines have in some cases implemented NDC with no holistic strategy at all, focusing on an initial technical implementation first with the idea to align it to distribution at a later stage.

Based on our experience working with airlines on distribution strategy and negotiation, as well as the NDC adoption engagements, we believe that it is key to view distribution as the combination of all channels, considering the constraints, opportunities, strengths, and weaknesses of each one of these channels. As a first step, the overall distribution strategy must be reviewed and potentially adapted to the new situation and capabilities that NDC has to offer. Then, it is key that the existing distribution contracts (primarily including the airline’s GDS contracts) be taken into consideration. The key elements in the contracts to be reviewed in this context are:

  • The definition of content and the differentiation between legacy or traditional content versus NDC technology or NDC content
  • The definition of channels, and potential differentiation of definition of these channels between home markets and other markets
  • The permitted freedom (or lack thereof) to vary content depending on distribution technology, distribution channel – and all of this potentially by market
  • The definition and scope of parity and non-discrimination commitments, and what this means for distribution via NDC based on the topics outlined in the bullets above
  • The contract language related to the provision of technology solutions and who is responsible for these. Additionally, if there are additional costs and responsibilities on the airline to ensure the GDS is technologically capable of a given distribution technology. In this context, it is suggested to also review the lead times for the implementation of new features and functions, and any restrictions related thereto.

In summary, it must be said that an airline’s approach to NDC, be it with a full-blown NDC strategy or merely with a plan to implement basic NDC, should always be planned with full knowledge of the airline’s obligations and freedoms in its GDS contracts, including any required changes for the next round of GDS negotiations. Optimally, the airline will carefully analyse the existing distribution contracts for any restrictions or opportunities to be exploited. For each contract, all key characteristics must be compared to each other to identify the most restrictive paragraphs in each, and the effect these will have on the NDC strategy. Just as important however, when renegotiating GDS contracts, is ensuring that NDC is an integral part of those considerations. Creating a negotiation strategy or approach for the distribution contracts can help, even if these are not yet up for renewal. Defining what the airline should and could do in the future to ensure these two distribution paths share common goals and enable the airline to meet the needs of the agencies as well as the airline’s own distribution needs.

Putting the distribution horse in front of the NDC cart will enable an airline to reach higher levels of NDC adoption, have more distribution freedom and address the travel agency, travel management company and corporate buyer needs better.

This post has been published in collaboration with Terrapinn.

(Daniel Friedli, 5. May 2022 *  Photo by Erik Odiin via Unsplash)

If you are interested in a deeper discussion about this topic: Listen to our latest TiMCAST 15 on 15 further reviewing on how to embed NDC into an overall distribution strategy.

 

See you at the Aviation Festival Asia

Travel in Motion and Oystin are privileged to have strong relationships with Asian airlines. Therefore, we are happy to meet many of our partners and customers at the Aviation Festival Asia, which will take place 14 and 15 June in Singapore. Daniel Friedli and Boris Padovan will be on site and are looking forward to meeting you.

In addition Daniel will moderate the panel “Airlines as a data-driven transportation ecosystem” on 15 June at 11:10 a.m.

We welcome Larissa Höcklin to the team

The Oystin and Travel in Motion team is growing. Our joint knowledge resulting in a broader spectrum of services not only received great feedback from our customers which have benefited from the partnership, but we have also expanded the team.
We are proud to announce that as of April, Larissa Höcklin has joined the Oystin team. Larissa is located in Frankfurt, Germany and has a consulting backgound in Airline Distribution and IT Strategy, Airline Commercial Due Diligence, as well as in Airport Commissioning. We welcome Larissa to the team.

Meet Daniel Friedli and Marc Rosenberg at the Aviation Festival Americas, June 7-8

Daniel Friedli and Marc Rosenberg of our strategic partner Oystin Partners will play an active role in the Aviation Festival Americas.

Daniel will host the session “Personalization and Segmentation: How much is too much?” on June 8. Marc will run the panels “Alternative  Ancillaries: How are airlines getting a greater share of travel wallet” and “Modern Distribution: From NDC to GDS and What is the best distribution mix for you and your customers”, both on June 7. So register and participate. We are looking forward to your contribution to the discussions.

 

Airline retailing and airline commercial strategies need to be driven to the next level

GET PRESS RELEASE

No doubt you’ve noticed how airline commerce and distribution is undergoing rapid change? Disintermediation. New ways of content aggregation. Airlines aiming to become retailers. These are all fundamental to the strategic shift in airline distribution. As a result technology and business are more interlocked and interdependent than ever before.

For these reasons Travel in Motion and Oystin Partners have decided to join forces to drive airline retailing and airline commercial strategies to the next level. That means that going forward our two consultancies are now able to work together jointly on projects as one team. This is a natural progression of successful industry collaboration, overlapping clients and mutual respect between the two consultancies. Together our unique partnership combines the two leading IT distribution and distribution business consultancies to leverage best-in-class value for the aviation community. Our combined team now has eleven highly experienced – and culturally and educationally diverse – aviation professionals in North America, Europe and Asia Pacific, thus offering global support. With over 150 years of combined aviation industry experience, we have worked on over 60 distribution assignments and negotiated over 120 GDS agreements, plus multiple large digital transformation and airline retailing projects.

What kind of exciting projects can we now tackle? We can cover a complete range of competencies for a wide range of industry stakeholders – including not just airlines, but also technology vendors and distribution companies – to fulfil your complete range of distribution needs. This could include, but is not limited to, areas such as distribution and commercial IT strategy and implementation with particular focus on commercials, systems and processes; negotiation preparation, at-the-table and behind-the-table negotiation support (commercial models with key distributors); or definition and implementation of walk-away scenarios.

Such support could take many formats, including strategic, organizational, education & training (knowledge building), commercial (negotiation), procurement (run tenders for solutions) and implementation support. Despite growing in stature our core values of rigorous analytics and intellectual honesty, combined with creativity and empathy, will remain unchanged. As will our strict policy of complete independence, integrity and customer focus. All without any hidden interests.

Want to see us in person to discuss your needs? We´ll be at the Rethinking Retail event this Tuesday and then the World Aviation Festival at Excel on Wednesday and Thursday – both taking place in London. If you’re unable to make it, looking into 2022 we’ll be attending many of the major travel and aviation trade shows so no doubt our paths will cross very soon. 

Alternatively, you can email our lead partners Daniel Friedli and Felix Dannegger on: daniel@travelinmotion.ch and felix.dannegger@oystin.com.

We’d love to hear from you.

Meet us at the PROS Outperform Virtual Conference from 16th till 18th November

Meet Travel in Motion at an upcoming industry event that is worthwhile attending: The PROS Outperfom Virtual Conference which will take place from 16th till 18th November. We will be present as sponsors and you can meet us by visiting our sponsor page. Our partner Daniel Friedli will also be on a panel to discuss the shifting airline distribution landscape with Boyan Manev of PROS and Keith Wallis of Air Canada (18th November, 11:00-11:40 Central Time, 18:00-18:40 CET).  This will be a perfect possibility to catch up, discuss and look forward to joint engagements.

 

Long Time No See – Meet us at one of these upcoming industry events!

After a long period of limited personal exchange we are looking forward to the upcoming industry events where Travel in Motion will be present, such as IATA’s Digital, Data and Retailing Symposium in Madrid from 26th till 28th October, PROS Outperfom Virtual Conference which will take place from 16th till 18th November and  the World Aviation Festival on 1st and 2nd December in London. Please reach out to us to personally reconvene. See you soon!

 

Travel in Motion’s Fifth Birthday

The summer is coming to an end in our northern hemisphere and the summer holiday period has confirmed that air travel is on the raise, again. Within Europe, Northern America and China there have been plenty of leisure flights, and although we have not reached pre-COVID numbers, the trend remains positive and promising.

A lot is dependent on potential virus mutations and vaccinations, but also on streamlining the numerous different rules, regulations and processes for air travel. Examples like the IATA Travel Pass Initiative have shown that technology, especially ongoing digitalization of processes, can contribute to the restart of global air travel.

Thus, digitalization has become one of the top priorities for our industry community, and we at Travel in Motion are engaged in helping our partners to reach the next level of digitalized distribution, disruption management and airport operations.

We have helped our partners now for over five years – yes, TiM celebrated its 5th birthday, and we have enjoyed every single day within TiM and within our community.

We are looking forward to continuing our work with you for many more years to come, and perhaps we can meet at one of the upcoming industry events where Travel in Motion will be present, such as IATA’s Digital, Data and Retailing Symposium in Madrid from 26th till 28th October, the PROS Outperfom Virtual Conference which will take place from 16th till 18th November or the World Aviation Festival on 1st and 2nd December in London. See you there!