The transformation of airline retailing
In our modern economy experiences create more value than goods and services, making experience a key competitive differentiator, especially in the $8+ trillion global travel industry. It’s a chief motivator of the airlines who have invested billions in cabin, airport, lounge and digital upgrades to improve the traveler experience.
Yet, while at the forefront for many years, the legacy indirect distribution technology and standards have not allowed airlines the flexibility to differentiate products and experiences the same way they can via their websites, direct to customer. This created an imbalanced traveler experience.
To address this, the airlines embarked on an ambitious journey to transform airline retailing and modernize the now outdated technology and standards that served the industry well over the years, into a true digital retailing experience.
The enhancements promise to deliver richer, more relevant content through value-based pricing, convenience, and choice for travelers, across all distribution channels. There are three key components that are required to make this rich content come to life – distribution, content and display.
Our approach
CWT has been an early adopter, advocate and influencer in the New Distribution Capability (NDC) journey to today. We are on the threshold of transformational change in the industry, and we have a clear vision for the future.
Our approach
Delivering a truly digital retailing experience begins with NDC as the foundation. But while NDC is simply a standard for exchange of data between airlines and indirect distribution partners, it is not simply a technology upgrade with relevance only to the IT department.
NDC enabled content will fundamentally change air distribution. It requires transformational change to deliver its promise of richer content, convenience, and choice. At CWT we are delivering against this challenge through our people, processes and technology, and supporting industry momentum through leadership, advocacy and influence.
We are focused on advocating for and building a multi-channel solution that makes it easier to understand and purchase rich content across all airlines. Our platform strategy allows us to remove air content distribution barriers for clients and suppliers, and by supporting collaboration across the industry we are helping drive new innovative approaches and evolve the NDC offering. We have a clear vision and use our influence to advocate for the unique needs of business travelers.
Understanding the future of distribution - NDC
NDC itself is simply a standard for exchange of data between airlines and indirect distribution partners based on modern technology, giving the airlines the capability to provide richer content, ancillaries, personalization and dynamic offers through an NDC-enabled channel. Effectively, gaining better control over their product in indirect channels such as Travel Management Companies (TMCs), Global Distribution Systems (GDSs), Aggregators and Online Travel Agents (OTAs), improving merchandising capabilities and lowering distribution costs.
It provides indirect distribution channels the building blocks to match the capabilities of an airline’s website and allows them to improve the experience for both travel buyers and sellers.
Current state of play
The most recent shift in the foundational planning of NDC has been IATA’s announcement that it has remodeled and broadened the current NDC and One-Order certification programs which they are calling the Airline Retailing Maturity (ARM) index. This all-in-one index encompasses:
1. Airline Retailing using Offers and Orders
2. Settlement with Orders
3. Dynamic Offer Creation
4. Future of interline.
The ARM index is measured across three categories:
- Capabilities verification - measures capabilities in simple business terms instead of technical terms, using language such as ‘shop for flights’, ‘shop for ancillaries’ and ‘seat map and availability’.
- Partnerships Deployment – reviews the strength of deployment based on partnerships, volumes and endorsements. Includes measurements such as network reach, customer access to offers and orders, and volumes.
- Value Capture Compass – only for airlines and with outputs for airline internal use only, this category is designed to help airlines accelerate their progress by identifying and prioritizing the most critical gaps to advance their retailing capabilities.
IATA is working to transition entities (Airlines, Sellers, and System Providers) to the new ARM index. As CWT’s strategy remains unchanged, working with our GDS and non-GDS aggregator partners for NDC content and not directly consuming from the airlines, we are not required to attain any certification under the ARM index. Our GDS partners (Sabre and Amadeus) and aggregator partners who are all IATA Level 4 certified will be working with IATA on this transition.
What remains unchanged is the importance of a flexible multi-source air distribution platform to bring NDC enabled content into the counsellor desktop and Online Booking Tool (OBT) to enable a long-term solution for our customers.
In addition, a number of OBTs are beginning to pilot GDS sourced NDC content as a natural progression from the initial access via non-GDS aggregators.
We continue to work closely with our industry partners to influence the direction and success of NDC and bring this content to customers, efficiently and at scale.
Understanding the future of Content
Traveler-driven content is the key to driving NDC adoption.
Early in the NDC journey the content enhancements being considered revolved around access to new bundling opportunities and ancillaries, such as early boarding, preferred seating, special meals, and adding personalized content. This has now evolved, with the airlines beginning to define products and capabilities based on traveler desires.
After all, only the traveler can really certify the value of NDC-enabled content based on its ability to address the cost, convenience, choice, and service objectives that are lacking in the current distribution model. Taking this approach will naturally result in the kind of demand that will lead to the mass adoption necessary to make NDC succeed - not only for the industry, but also (and most importantly), for the benefit of business travelers.
To that end, airlines are focused on three broad categories to improve experience and profitability – merchandising, dynamic bundling and dynamic pricing.
Current state of play
Securing access to relevant air content and capabilities in the most efficient manner requires a multi-sourced approach. By leveraging all available channels and providers (legacy and emerging), travelers and travel programs will have access to relevant content as well as the capabilities to support travelers and travel program needs. CWT is working closely with our technology partners to deliver scalable solutions for NDC content leveraging APIs.
CWT has also delivered thousands of transactions to our early adopters through our non-GDS aggregator partner, Travelfusion and we are continuing to see network and airline expansion by non-GDS aggregators as airlines continue to diversify their pool of distribution partners.
We are beginning to achieve some large milestones for NDC content and distribution, taking us from purely theory to practice however, broader adoption will remain limited until NDC content matures.
IATA’s Capabilities Verification, as part of the Airline Retailing Maturity (ARM) index, will provide clear guidance and simplified definitions across shopping categories such as bundled offers, continuous pricing and personalized offers. In addition, IATA’s Value Capture Compass will support the airlines’ ability to define and release products that fit the unique needs and servicing capabilities of the business traveler, a critical factor in driving NDC adoption.
Understanding the future of display
NDC addresses the airlines' desire to make rich content available via any channel but does not address the challenge of displaying that rich content at the point of sale. A critical enabler of NDC content will be the ability to provide an enhanced display for counselors and travelers.
For business travelers, the ability to manage complex requirements, such as voluntary and involuntary flight changes, ancillary add-ons and complex fare options, through a user-friendly display will be critical to building confidence in NDC and enabling informed purchasing decisions.
Current state of play
From one of our first blogs (Display and going the last mile) on NDC to one of our latest blogs (Tipping the scale of NDC adoption), CWT has been passionate about the need for a redesigned display in order to truly realise the benefits of NDC. We have been a leading voice in including the development of enhanced display interfaces as a key dependency of NDC enabled content, and partnering with various industry stakeholders to influence the prioritization and development of new display mechanisms. While these initiatives are still ongoing, we are pleased with the rise of importance and increased industry discussion on the topic.
In July 2021, CWT announced the launch of its global omni-channel customer experience (CX) platform. Providing a consumer-grade service screen and 360° real-time customer view, this omni-channel CX platform is the building block to achieving enhanced display for NDC content in the future.
Within this time frame, CWT also committed a $100M technology investment in our travel management platform and overall innovative product offering. This commitment is further optimizing the traveler experience for our clients and providing truly integrated solutions, which includes specific advancements on simplifying air distribution.
