“Today’s world of distribution is based on technology that is 30 – 40 years old, with a very small number of dominant players. In tomorrow’s world, the barriers to entry will be much lower, so people will be able to come in to innovate and drive up the competition.”
– Yanik Hoyles, Director of New Distribution Capability (NDC), IATA –
Following the successful Aviation Festival Asia 2018, we’re launching an eBook featuring some of the industry’s most forward-thinking digital innovators to talk about their digital innovation journey and where they think we are headed. Download our ebook here for full interviews. Below is an excerpt of our chat with Yanik.
Where are we right now with the NDC and One Order in terms of industry response and uptake? What are the main objections?
Yanik: Momentum is very good. Last year we did a survey with 190 IATA carriers, out of which 113 said they are have plans to deploy NDC in the next 2 – 3 years. Of these 113, 53 have already deployed NDC, some of which are huge airlines which have not only deployed the standards but also adapted their commercial policies and strategies around these standards Also, in the last 2 – 3 months, all three GDSs — Sabre, Travelport, Amadeus — have completely endorsed NDC. We also see many positive signs from a number of TMCs.
We have two advisory groups of corporate buyers in Europe and North America respectively, in total about 20 buyers who weigh 2.5 billion US dollar spend and they see value in NDC too. We did a brainstorming session with them last year, and they came up with 60 ideas of new products and services that airlines can offer them in a new world powered by NDC.
Between APAC and other regions, has the reception been different?
Yanik: The take up in APAC has been slower than in Europe and North America. The US market is pretty mature because they already started this connectivity in the early-2000s. Europe started practically from scratch, but they moved very fast. In Asia, first, there’s a lot more LCCs in the market, and a lot of the short-medium haul routes are being fulfilled by LCCs, so there was less of a threat or opportunity for some of these big airlines running the short-medium haul networks to take up NDC. The other thing is back to the contracts. Maybe there are some contractual reasons that are prolonging their uptake. Or maybe it’s just a matter of them not wanting to be early adopters but wanting to see how things progress before making their moves, which is very respectable. But I believe the take-up rate will move pretty fast once they do move. Cathay Pacific has been certified very recently, and there are a couple of big airlines in the region who will be live very soon.
What we see now is that airlines who embark on NDC do a lot of background work before they make any public announcements. Large carriers think it through, end to end, and they think about distribution and payment as well, and they tend to speak out only after they got a robust strategy in place, which is good because this shows that the airlines think things through properly in a sound manner.
In your opinion, is there an “ideal distribution strategy” for airlines in this day and age?
Yanik: No. Each airline will have their own strategy, market, culture, the type of contracts they are bound to. Also, their internal structure or their IT infrastructure are components that vary from airline to airline.
I feel that we are at a position now where an airline that does not go down the road of API distribution risks being in a very non-competitive position very soon, because their competitors will be much more agile, will be able to serve customers and differentiate themselves better.
One thing I’d like to make clear is that not everyone has to do NDC. It’s not mandatory. What I would say to any airline is, make sure you understand the changes happening today, make sure you understand NDC, so you can make your own informed judgement on whether you want to go down this road or not. There’s no such thing as a single NDC strategy, as there are different components to it.
Generically, NDC is a revenue opportunity. There are some costs benefits as well depending on how you play. On the revenue side, it’s about…
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