Technology IATA: New technology would amount to 'GDS on steroids' By Kate Rice / October 29, 2012 Share 1 -- IATA's proposed New Distribution Capability (NDC) has been damned by ASTA as a threat to agents' and consumers' ability to mold the travel experience, but Eric Leopold, IATA's director of passenger services, last week described the new technology as a "GDS on steroids."The NDC, Leopold said, will use an XML open standard that IATA is creating, which will make it easier for smaller airlines to access the distribution system. "Low-cost carriers are using the same API [application programming interface] we are developing," he said. Disputing ASTA's characterization of the NDC as a potential threat to agents and consumers, Leopold said he believes it will enable retailers to offer their clients more airline choices and a richer selection of options because travel sellers will get a more complete and transactable view of ancillary services such as seat and meal selection.For all the hubbub the NDC has provoked in the industry in recent weeks, the underlying technology is not really new (open standards have been around since the mid 1990s) and at any rate, participation won't be mandatory. Leopold said the NDC will present information about airline products in a new way for consumers. It will not focus on offering the lowest price, which Leopold said is the basis for the way GDSs now present airline choices. The cheapest is not necessarily what consumers want, Leopold said. He said that Air Canada has found that when presented with price comparisons, only 35% of consumers opt for the lowest fare. The rest choose a fare that is slightly higher because they see better value in it.Leopold said the NDC will display information that GDSs can't show today, but he also stressed that the NDC would include, not exclude, GDSs. "When people say it's bypassing the GDS, I don't know what they mean," he said, adding that GDSs are already are using application program interfaces (API) to access airline content. "Travelport is in the middle of it," he said, referring to Travelport's ability to feature Air Canada's fare families in the Canadian market. "Amadeus is doing it with EasyJet and other airlines." Moreover, he said, Amadeus' Flight Features functionality enables travel agents to "mouse over" a flight option and a pop-up window shows any content the airline wants to display. Similarly, Sabre also has the capability to display ancillary services and just began a beta test offering US Airways' Choice Seats. Upload, download GDSs now download data from vast databases of fares, routes and schedules maintained by the Airline Tariff Publishing Co. (ATPCo) and OAG.The information in these databases, which is constantly updated by airlines, is supplemented by direct feeds from airlines to the GDSs. What IATA would like to do, instead, is have distribution channels get more — or all — content directly from airlines instead of pulling fares and scheduling from what Leopold called "archaic" filing systems.The NDC would also enable "authenticated shopping"; that is, tailoring an offer to fit what the airline knows about that passenger. Leopold said airlines want to be able to make suggestions to their customers in the same way Amazon does to its customers, based on their past purchasing patterns.However, going beyond using information an airline has about its own frequent flyer members and passing customer information around as it moves through the booking chain means that airlines, GDSs and anyone involved in travel distribution will deal with regulations that cover the use of personal data, and those regulations vary around the world. Monte Brewer, former CEO of Air Canada, said the bottom line is that airlines want to be better retailers, looking for the best channels they can use to deliver customer-driven products to the marketplace. Steven Ratcliffe, product director of merchandising for Travelport, said that a better way to describe the NDC initiative would be "IATA upgrading its standards."Still, the ability of the NDC to bring in more low-cost carriers is unclear because the barrier to participating in GDSs is not just the cost of connection but the capability of airlines' own technology platforms to handle the volume GDSs can produce. Nor will the NDC make it easier for new distribution channels, such as Google and Apple, to enter the game. Existing open standards and the technological firepower of such companies and others like them mean they could enter the market today, several sources said.The reason they have not yet done it is because "this is not an easy market to jump into," said Jim Davidson, president and CEO of Farelogix, an airline distribution company. Why all the ruckus?The biggest concern about NDC technology is that it is widely perceived as a scheme to put airlines in the driver's seat when it comes to determining what products, services and pricing customers are allowed to see. It would give an airline, for example, the power to decide what price options are displayed after it identifies any given customer. That's not exactly a secret plot.According to IATA Resolution 787, which describes the technology, this new distribution model would "allow individual carriers to determine [their] own prices and the nature of those products offered, depending on who the requestor is and what they are requesting. This will require authentication and the provision of historical data based on previous transactions."That changes the shopping process entirely, said Paul Ruden, senior vice president of legal and industry affairs at ASTA. Right now, he said, customers can pick from a variety of flights, choosing what they deem best for them in terms of time of day, price, number of stops and other variables. BMW vs. ChevyUnder the NDC model, however, airlines first identify consumers using all the aggregated information they have about them, which can include where they live and the car they drive as well as their travel habits. The airlines then use this information to fashion a computer-driven offer. For example, airlines will be able to identify a customer as a traveler who is price sensitive or price insensitive. What that means, Ruden said, is that if a customer drives a BMW and lives in an upscale ZIP code, airlines will offer higher-priced tickets with more ancillary services attached to them. Conversely, Ruden said, an airline encountering a customer who drives a 10-year-old Chevy, lives in a low-rent ZIP code and is querying a flight the airline thinks could generate high-yield traffic, might not show this customer a ticket on that flight. "You won't see a vast array of information where you can see a lot of different choices," Ruden said. Instead, he said, consumers will get a customized offer that the airlines have created using algorithms based on the customer's past buying behavior.IATA's proposal comes with a shopping basket that travelers can use to add or remove items, which, according to Resolution 787, could be employed to trigger repricing by the airline.In addition, whether or not an airline provides full content to a distribution channel will be a commercial decision made by each airline, a spokesman for IATA said.IATA continues to work on the NDC. Its board of governors will review progress on the project in December and set new goals for 2013 to 2016.Follow Kate Rice on Twitter @krtravelweekly.