Travelport Update – NDC Is Starting To Change The Way The Travel Industry Is Thinking

Transcript

Ian Heywood:NDC is starting to change the world, and it is starting to happen. I think before last year we were questioning, will NDC happen? I think we're beyond that now. The train has left the station, and so it's now what's happening. And people are starting to focus on 2020. So you've got the IATA Leaderboard where 21 airlines have signed up to say that by the end of 2020, they will put 20% of their transactions, third-party transactions, through IATA NDC by the 31st of December 2020. And so what we're concentrating on now is how will that happen and what are the effects that will happen in the industry. So in very simple terms, it's a different distribution pipe. That gives the airlines different capabilities. So currently the industry works on what's called ATPCO technology, and that technology is distributed via ourselves, GDSs, and the booking is made in our system. With NDC, it's distributed via an API and the booking is made in the airline system. What that means is that the airline will know who is making the booking at the time of the booking. At the moment, an airline manages their inventory, manages their bookings by these 26 big booking classes. They use the letters of the alphabet. In the future, they will use either a lot more booking classes, or most airlines now are talking about not even using booking classes. They have infinite number of fare points. You're also talking about offers and not fares. So in the current technology, you're selling a fare, so just that fare for that seat. In the future, you're talking about an offer, so a package that can be made personal for an individual traveler, such as a seat, and then it will include Wi-Fi or lounge access or fast-track security. It can be built around the customer's needs. Now, there's going to be a long time till we get to that point. But that's the main difference, is an improvement in the way that the airlines can sell and distribute their products. And the customers are used to that. When you're buying through Amazon or Google or things, you're going through that more personalized experience, and that's what's going to happen more in the airline industry now. How is it going to affect the other players in the industry is a big question mark at the moment. And it also depends how the airlines intend to get the customers to use the API technology. And, you know, in simple terms, are they going to use carrots or sticks? And in Europe at the moment, you're seeing a lot more sticks being used by the airlines, where they're using price and surcharges. In Asia, the airlines are talking a lot more about carrots and working more constructively across the whole industry to move the industry forward. To start with, the agents are going to go through quite a period of change, and some of that will be quite painful, I think, because they like to be very effective and efficient in the way that they work. And when you're bringing in new technology, and I think to start with, the booking flows won't be as effective and efficient as they are today. That means that, you know, they're going to be slowing down, and so that can add cost to them. Also, they've got to work out how can they benefit from this new technology. So if they know what their customers want, they can go to the airlines and say, give us these packages for our particular customers. But I think that's all got to be worked through. And then you've got, which I can't talk a lot about, but there's going to be you know, different commercials at play as well, and the airlines are looking at using NDC as a way of trying to save some distribution money. At the end of the day, if you're taking money out of the system from one player, someone else has to make that up, and that's likely to be the end consumer. So we, from the very start, took a very proactive role in NDC. We said we understand why the airlines want to make this change, We believe that it's going to be more beneficial for the industry for us to be proactive and help make the changes and deliver those for our agency customers. So where we sit in the middle, we need to be able to bring the airlines' content on board, so connect those APIs. So we're working very much with the airlines on that at the moment. And then we need through our points of sale to get that new content out. In an aggregated way eventually, which is what we're again doing, and trying to make that process as effective and as efficient for the agents and their end customers with all of the information that they need. The other thing that we're playing a very active role in is trying to get everyone in the industry talking, and so that you can then say, how do we move this forward? Because we understand the desire from the airline's point of view of why they're trying to move down the NDC route, But if it's going to be successful, it needs to work for the whole industry. And so we need to bring in all of the players in the industry to make sure that that's working together. The good news in this part of the world is that Qantas is being very effective and efficient in that. They are working with the agents, they are having meetings with ourselves and our agency customers on how can we, you know, how can we deliver this together. I always In my presentation, you always see this graph where we're starting, and we are there today still, where we're right on the far left-hand side where the vast majority of content is being distributed via ATP code. And the airlines are looking at moving at some point to the right-hand side where, you know, the endpoint on the right-hand side is 100% of their content is being distributed via an API. We are at the very beginning of that journey. The IATA leaderboard, which everyone is saying, wow, what a dramatic change in the industry, that just gets you to 20% along that graph. It's just saying 20% will be transacted. I think what you can say is if you can transact 20%, then there's no reason you couldn't transact 50% or 60% or 70%. There may be some reasons why you can't get to 100%, but you could transact a lot more. So we're putting the plumbing in place today, and everyone needs to do that. The airlines need to do it, ourselves as the intermediaries in the middle need to do that, and again the agents. Because you've got 2 types of travel agents. You've got an agent who will take our end solution, which is our SmartPoint solution, our desktop solution, but you've also got people that will take our API solution and then they're building you know, particularly the online travel agents, they then build their own front ends on that as well. And so all of that has got to change. So we're going through a considerable period, which I think will last at least a couple of years, of changing just the underlying technology, and then it will continue to be refined beyond that.

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