Technology Panel discusses third-party distribution standard for air fees By Kate Rice / December 04, 2013 Share 1 -- Airlines have largely succeeded at decommoditizing themselves by creating highly differentiated products and services, such as lie-flat seats, extra legroom and WiFi. The challenge now is how to get that product in front of consumers, not just on airlines' own websites but through intermediary channels. And that, in turn, means embracing an XML communications standard that enables third-party distribution.Such a standard has been heatedly debated during the past two years, but speakers at last month's PhoCusWright Conference in Hollywood, Fla., steered the conversation beyond the vitriol. They predicted that a standard would evolve in the marketplace and said they were excited about what that would enable: direct conversations with customers through intermediaries and comparison-shopping in a marketplace in which consumers could clearly see how airlines have differentiated themselves."Our objective is to get into all channels," said Bob Kupbens, vice president for marketing and digital commerce at Delta Airlines. Delta's goal, he said, is to be in front of customers in every channel.Moreover, he said, a "direct relationship" with his customer "does not have to be through my channel."Addressing his comments directly to Kurt Ekert, executive vice president and chief commercial officer at Travelport, Kupbens talked about being able to "access 100% of the population who wants to buy my stuff and have a real conversation through your channel."But to do that requires standards, he said — a point on which every member of the panel agreed. The challenge, they also agreed, lay in how to arrive at them."Airlines have done a brilliant job of selling dynamically in the B2C channel," Ekert said. "But what has not been solved is the intermediary channel."He said that so far, GDSs have succeeded in distributing fares and making airline data available through Edifact APIs. Now, he said, the GDSs need to gather airline data — be it fares or ancillaries — through XML APIs. He said GDSs have to get that data from airlines and then normalize it and deliver it to intermediaries. "We are doing that today," he said. The problem, he asserted, is the lack of a standard. Right now, he said, every code Travelport writes to help airlines distribute ancillaries through intermediaries is unique, and that's inefficient. Jim Davidson, president and CEO of Farelogix, which provides air distribution technology to airlines, said essentially the same thing, adding, "We are surprising everyone when we do an integration."But panel moderator Tony D'Astolfo, managing director of PhoCusWright, observed that the standards debate has been "viciously" argued. "Why all the back-and-forth?" he asked the panelists.Ekert said one reason is that a major proposed standard, IATA's New Distribution Capability (NDC), is more than a technology standard; it would, he said, change the rules of airline distribution unilaterally, a task that should be undertaken bilaterally.Delta's Kupbens, while describing NDC as the "kernel" of a standard that the industry could build upon, agreed that it "is about more than a technical standard," adding that in the end, any kind of commercial negotiation or financial interaction had to be negotiated between two companies. Kupbens said the industry has to focus on the technical standard alone. "Let's all align ourselves about moving forward as aggressively as we can and don't get hung up on all the other stuff that causes friction," he said.Davidson predicted that standards will evolve, "whether you call it NDC, ABC or DEF" and that the evolution will unfold as "four, five, six or seven airlines figure out how to do this." Still, he said that the standard will probably look like NDC, and he gave Travelport credit for the way it has worked with airlines to deliver their differentiated products. Davidson said that once several airlines start delivering fully differentiated products through GDSs, the conversation won't be about standards; it will just be about how fast airlines can get their products to intermediaries."That's really what standards are about: scalability and repeatability," he said. Ekert said that Travelport is in "deep discussions" with Delta and is "on the path" with American Airlines in doing what it has done with Air Canada, which is to enable the sale of Air Canada's fare families through the GDS. Travelport's goal, Ekert said, is to enable airlines to "grow their revenue and do so in a fashion that [enables] the travel agent or corporate travel manager to present a compelling offer to the end user." He added later in the discussion: "We want to help Delta sell as much as they can through travel intermediaries, just as they do so brilliantly through the consumer-direct channel." However, being in a GDS means an airline is being comparison-shopped. To that point, Kupbens said he was happy to have Delta in a marketplace in which consumers can compare what it has to offer against other airlines — but with one caveat. "I want you to understand what the components and attributes are of that product you're buying," he said. While price might be paramount for some customers, he said he also wanted the consumer to know what else was available that might be important to a purchasing decision, including such things as ease of upgrade, extra legroom for tall passengers or the cost or availability of WiFi. Airlines have made massive investments in aircraft, in products, in service, in digital offerings and other services and amenities, and Kupbens said that fact has to be clear to consumers."We want to give you the opportunity to demonstrate products in a differentiated fashion," Ekert said. And Travelport, he said, is in the early stages of doing that.Follow Kate Rice on Twitter @krtravelweekly.