Successfully Delivering IATA’s NDC 2020

Transcript

Ian Heywood:Good morning, everybody, or nearly good afternoon, I believe. We're moving the story along. So what I want to talk about now is not is this happening, but successfully delivering it. And IATA have come out with their 2020 Vision, which I think everyone knows about these days, where 21 airlines have committed to transact 20% of their third-party sales via an IATA NDC API by the end of 2020. Now what's interesting is there's 53 airlines that are certified at the highest level, at Level 3, certification. So there's still 30 there that could join that leaderboard. So that's perhaps an interesting comment for some of the airlines that are in the room that are not on that leaderboard. There's a whole load of IT providers out there that are now working in this NDC world. And those 53 airlines, they account for 59% of all the IATA passengers boarded. So that doesn't take into account the low-cost carriers, but the IATA passenger boarded. So it's a significant volume that could be distributing their content in a completely different way over the next few years. Interestingly, from the industry point of view, the agents are now on board. And I spend as much of my time talking to agents as I do talking and working with the airlines and trying to bring everyone together as well. And a subject that we always put there because we don't want to turn a blind eye to it but can't talk about it in a public stage, which is the commercial models. And you hear things and you see things in the newspapers and the media about commercial models changing. If you're not sure who those 21 airlines are, that's them. You'll see that there are 4 in this region. You've got Singapore Airlines, you've got Qantas, you've got Cathay, and you've got China Southern. So Asia is represented. There's a lot more airlines that are in Asia that have signed up. So whether they will join the leaderboard before the end of 2020, we will, we will see. But if you're not sure who they are, that's them. So what's happening now in the industry? It's very simple. Well, I'm a simple person, so I like to break things down. And it's all about getting the content in The airlines distributing their content via the API, and people like ourselves and the travel agents getting that out to the customers. So, you know, you've got the airlines, they're building it, you've got this re-engineering of human processes, re-engineering of technical processes. Does the theory work? Everyone's saying this is going to make more money at the end of the day, but no one's proven that yet because no one's doing it at scale. You've got people like ourselves and our competitors who are working like mad at the moment to get this complex of getting a different channel of content coming in and then distributing it out to all of our agents with the existing content as, as well. And then you've got the agents that are starting to get involved in this process. And for them, there's re-engineering and a lot of additional work on their side. But also thinking about how can they make the different capabilities that the API distribution that the airlines are able to do, how can they make that work for them? I'm very pleased to say, I tried to keep this industry-wide, but we're the only ones that are distributing at the moment. And I can really only talk about because I get insight into our own. So I'm very pleased to say that Travelport, we went live with the first GDS that's gone live. It's our first pilot. We're in alpha. But, and it's only gone live a couple of weeks ago, but I thought, you know, this is a great opportunity to tell people, you know, how's it going? Well, you know, to the surprise of some, it's actually working. As in the speed that the content's coming back from the airlines is not too bad. It's only at alpha. We're not really testing the system at the moment. It's not being pressure tested, but it's working. The agents are starting their bookings with the client profiles and that's feeding through. Now, that the airline that we're working with doesn't have the capability then of personalizing that content, so they're not returning something and they're not using that information. But at the moment, that information is being fed through the system. You've got various payment offers options and and the agents are mainly using BSP. at the moment. And again, there's a passive PNR being created that's feeding into the agent's back office. So the whole process is, is working. It is at early stages, there's a lot of refinements that have got to go on, but it is working. One of the things that I think is really interesting and is something I think is going to be a topic for the industry to talk about for quite a while is, although we expected it, The sheer— because we see it with the low-cost carriers as well— is the sheer number of offers that are coming back. Now these are not offers at the moment. We call them offers because they come back through an API, but they're actually just fares at the moment. So it's going to get even more complicated when the airline learns to distribute their ancillaries associated with their fares. But at the moment the sheer number that comes back, and it's like how do you now get all of that content out to the agent and to their end customer so they can then choose what they want. And at the same time, you've got this evolution of the booking processes moving more away from a desktop to moving more to a phone. So your actual screen that you can see this content on is getting smaller and smaller. And then you're going to say, who's deciding what's shown to that customer? Who is going to choose You know, what do they want to see? Because at the end of the day, you can only most probably put 4 or 5 options in front of them, but the airline might be returning a few hundred. And then you've got more than one airline in that booking flow as well. So that is something. So as we move forward, I will bring you screens. We can show you some of these things. But it's an interesting discussion on who's going to make those choices. And then when you can combine that with the existing ATP code data, then it just gets even more Confusing. There is a huge amount of work, and all of us in the industry now are talking about the plumbing that needs to go on. It was really talking about the plumbing in 2018. I think everyone that's now started to look what's got to be done, you're talking about 2018, 2019. And these are just some of the things that you're— we're working on, some of the capabilities, some of the functionalities that we're working on. With the airlines, with the agents to make sure that the new system can be as effective and as efficient as the system that it's working alongside and starting to replace. Anyone that's seen me present before knows this is my favourite slide because it is just so simple. But anyone that's confused what's happening in the industry, what are the airlines trying to do, then this just depicts it. And all we're saying is that on the far left-hand side is where the industry is at the moment. There is, you know, not much content going down an API. And for traditional airlines, the vast majority, 99.99% of the content is going through the traditional methods. The airlines want to move that. But if you talk about the, you know, the IATA 2020 vision that everyone's kind of like, are we gonna be able to deliver that? That only gets you a couple of bars along that graph. And the airlines are trying to get to quite a way along that. How far along that? You have to ask the airlines they're aiming to get to. But that's what they're aiming to do. There is an argument though that if you can get to 20%, then there's nothing to stop you. That means everything really is in place. All of that plumbing that we're talking about is in place that will enable the industry to then go 20, 30, 50, 60. You may struggle to get the last 10 or 20% because of functionalities, capabilities, but there is nothing that's really going to stop you doing that. Except you need to— the airline needs to work out how they're going to persuade the industry, how they're going to persuade the agents to book API content as opposed to ATP code content. Some of that will be for genuine reasons that the agents will be resistant. Some of it will be because it's just change and no one really likes change. What we're seeing in Europe at the moment is more on the right-hand side. Great big sticks being used, particularly by British Airways and Lufthansa, where they've introduced surcharges. KLM have introduced surcharges. Lufthansa has started withdrawing content from the traditional ATPCO as well. So you can only book the lowest fare classes in business and economy via the API. And British Airways have gone through another round of increasing the surcharge. So the difference in price between what you can buy through an API, what you can buy through ATPCO, is growing all the time. And they're also having interesting discussions with some of the agency community about how much they need to book down the different channels. Interestingly, in this market you've got— by this market I mean Asia— the airlines are talking about more carrots than sticks. Now whether that would be as effective, whether that will be, you know, drive that content to achieve that 20% goal, I don't know. That's something we need to talk to the airlines about. But, you know, if it doesn't, then I expect that they will move to use a combination of a stick and a carrot to move the industry along. One of the things that we're always talking about is that the airlines introduced this change through IATA. But for it to be successful, then everyone needs to be aiming to achieve this goal. Of this 20% at the end of 2020. And that's all of the different players in the marketplace, and everyone needs to be talking together, and they need to be talking about how they can make it work for everyone. Particularly the travel agents, understanding who their customers are, what those customers want. Because one of the things that the API does is it gives the airlines the ability to differentiate their content. It gives them the ability to make personalized offers to a particular customer, or more realistically to a particular group of customers such as a corporate. But for that to work and for it to drive business, the corporate needs to understand what is it that they need. What do they want? They're moving out of an era where they can just negotiate on price. They're now talking about negotiating on an offer. something incorporates the whole journey. So there's got to be a lot of discussions going on in the industry about what can you do, how do you make this work, how do you make it work for all of the different players in the industry. If that happens, then we will successfully deliver that goal of 20% transactions by the end of 2020. Thank you. Travelport.

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