After 3 years of hard work and tough discussions, the IATA NDC (New Distribution Capability) program is now proposing actual tools for implementation. As early participant to the NDC workshops, Conztanz proposes you a serie of questions that an airline should ask (internally or to its providers) before moving forward.
It is time for an airline to consider how to take advantage of this initiative. Where to start?
Want to achieve a better distribution of your products? This is THE goal of NDC. Implementing NDC XML standards is the way to go. Basically, an IT issue, isn’t it? At first sight, no need to change anything else than technical dialog between systems.
Of course, this simple way of seeing things is not sufficient.
The whole purpose of NDC is to enable you, as an airline, to directly build your offers. Many processes will have to be reconsidered so that you can use this new power at its best, and you will have to take the most impacted departments on board from the start.
Mainly the ones that are deeply linked with the customer offer: Revenue management and Pricing (1).
And the ones selling and servicing it:
Other departments, such as Operations (for delivery at the airport and on board) and Accounting, will definitely need consideration but more as a direct consequence of ancillaries development.
Ancillaries need to be priced. In addition, some of them (seats, meals, lounge access) might be of limited number to be sold at best (one can talk about “ancillary inventory”). Your branded fares need to be priced and “allocated”.
In practice: A business man, travelling with no bag and taking no additional meal, might bring less revenue than honeymooners with huge luggage and a special Caviar-champagne treat. This is obviously an additional parameter for revenue optimization. Thinking “global” while building the offer is mandatory.
Starting point: have a clear view of the current calculation behind revenue optimization (plain tickets and services).
Internet has changed pricing for airlines: fares have to be understood by end users (rather than by trained travel agents). Airlines’ offers needed to be simplified and rules explained (eliminating difficult rules on the way) : classic fares and buckets changed into fare families, shopping basket, bundle fares…
In practice: this new approach sometimes coexists with the traditional booking class management, still it needs to be consistent with it. The current web approach becomes widespread when enlarging distribution.
Starting point: review presentation of fares/alternatives on your website, and check where the information comes from. Work with Pricing towards more and more simplicity.
Some ancillaries are directly linked to RMP outcomes: option to be upgraded, option to “save” a seat on the web without immediate payment, to get the right to change the ticket, whereas the initial fare rule does not allow it.
Those options tend to blur traditional fare rules (Pricing needs to be involved). They might depend on last minute availability (RM can not be avoided!)
Somehow over the past years, they have proved to be a real push for sales. NDC will ease their distribution across channels.
In practice: Those options can be real revenue boosters : RMP needs be entirely in charge of defining the context, with as simple a process as can be.
Starting point: check your RMP position on those options.
Whatever your position on NDC is, your product and your rules will drastically change. The standard steps for sales chat will have to be adapted. For instance, knowing the customer might lead to a more accurate offer for him : it will be important to quickly get this information in the conversation, whereas it was only required at time of sales, to fill PNR information.
In addition, as rules might change from one customer to the other, aftersales process will have to be adjusted too, without losing the automation level reached today.
This new complexity might not be consistent with the operational optimization of contact length (well adopted KPI in call center management, if any!), and create increase of costs or poor service for those channels.
In practice: direct sales and services agents (call centers, ATO/CTO) are the first on line: they will need to be trained on your NDC “philosophy” and learn the new steps of the exchange with the customer. Simple ways will need to be organized to ensure that they get the most updated information the airline has on the customer, when identified. Aftersales policy will need to be reviewed and adapted, and KPI adjusted.
Starting point: Check the information/training flow for direct sales and services agents, identify the current pain points.
Managing the offer may lead to entirely new ways of handling price and availability: we can think of “dynamic” pricing or, after O&D or POS availability, a one-to-one availability depending on the requester.
One of the NDC key concepts is “let the airline manage the offer”. If pushed, it would lead to a real merge of Pricing and Revenue Management. Do not define price on the one hand and availability on the other, but set the whole couple (price, availability) at the same time, to ensure consistency.
As defined by the NDC workshops, the idea of ticketing time limit, as used by revenue integrity today, becomes multiple: payment time limit, hold inventory time limit, offer time limit… All those limits have to be studied and set by the RMP, as ticketing time limit today. It will involve deep transformation in revenue integrity.
Those changes could also involve suppression of booking classes, review of filing (both schedule and pricing), forecasting (demand and revenue),… and could be the start of a brand new way of managing journeys, flights and services for an airline.
Your call is now to decide where you are up to!
Hence, product and processes have to be closely considered in order to have a better overview of the path to go through.
It is now time to go to the heart of the matter and wonder about the “IT situation” of your airline. Our focus in our next article.
Related Article : NDC 5 Questions an Airline should ask : Chapter One : the Offer
About the Author :
At that time, she had gained 20 years’ experience in the airline business in the AFKL Group, mainly in RM, Sales and Distribution departments.
She has participated to NDC DDX, since the start in June 2012, first as AFKL’s representative and then as Conztanz’.
Please do not hesitate to contact us if any question or comment
(1) Revenue Management and Pricing: Those two departments, sometimes merged into one (with the generic “RMP” title) or separated and historically opposed, are key for the offer building. They are in charge of the two strategic components remaining at the airline’s hands today: price of products (Pricing) and availability. (Revenue Management)