The Transportation Department’s (DOT) tentative approval of IATA’s Resolution 787, which would lay the foundation for new XML messaging standards for third-party sales channels, means that the industry might finally be able to focus on getting airline ancillary services in front of agents, industry officials said last week.
“There’s a black cloud that has been lifted so this industry can move on,” said Jim Davidson, CEO of Farelogix, which uses XML messaging to work with airlines seeking to merchandise their products to third-party distributors.
The DOT’s tentative approval of the resolution is subject to conditions and to a final exchange of public comments. However, it takes the risk out of using IATA’s XML standards in an inherently risk-averse industry, Davidson said.
Industry analyst Henry Harteveldt agreed, saying that many airlines have been sitting on the sidelines when it comes to what IATA calls the new Distribution Capability (NDC).
“With today’s announcement, NDC became more real,” Harteveldt said. He added that agents could begin seeing the first NDC applications in 18 months or less.
There has long been general industry agreement on a need for an XML standard for the distribution of airlines’ increasingly varied products. The carriers are using a multitude of ways to differentiate their brands, including a focus on ancillary services such as seats with more legroom, checked bags, overhead bags in some cases, WiFi, early boarding and similar amenities.
But airlines are also bundling a variety of services into fare families, which can be static — i.e. always available — or dynamic offers packaged for a specific time period or for specific markets.
Delta experimented with this last year with its Smart Travel Pack, a bundle of ancillary services that was available through Jan. 5 to SkyMiles members and on Delta.com. And in the future, airlines envision dynamically tailoring personalized offers for individuals.
The problem, however, was making this efficient by introducing connectivity standards that would eliminate the need for airlines, GDSs and other technology providers to reinvent the wheel each time they merchandised a new product.
Resolution 787 was designed to create such standards, and airlines and many third-party technology providers supported it.
However, the resolution also generated bitter opposition, mainly from GDSs, travel agencies, online travel agencies (OTAs) and trade associations. Among their concerns: 787 would create a new airline distribution model, threaten consumer privacy and undermine anonymous shopping, enabling an airline to price a ticket based on what it knows about a traveler. Many of these stakeholders complained publicly that they felt excluded from the development of NDC.
In response, IATA did considerable outreach, first with a resolution addressing many of these concerns at its June 2013 Annual Meeting and in a subsequent reply to the DOT.
NDC project director Yanik Hoyles attended the ASTA Global Convention in September and invited more agent participation. And in January, IATA and Open Allies for Airfare Transparency, a coalition of travel sellers and distributors that had opposed Resolution 787, filed mutually agreed-upon conditions with the DOT in a joint motion.
In last week’s show-cause order, the DOT said that it generally agreed with IATA that its new messaging standards could facilitate innovation in air travel marketing and enhance the shopping experience for consumers by enabling “improved comparison shopping” of ancillary services as well as fares.
It also generally agreed with IATA that adopting the resolution would facilitate the presentation of customized offers to agency clients or OTA users, based on information the traveler agreed to share, such as a basic profile, frequent-flyer status and buying history.
The conditions imposed by the DOT are based on the conditions proposed in the joint filings by IATA and Open Allies. Among other things, they stipulate that:
• Approval of Resolution 787 does not constitute DOT approval of any single distribution “method or business model.”
• IATA airlines are not required to use any particular data transmission standard.
• Nothing in the agreement inhibits distributors of air transportation from using other data standards in combination with any standards developed under Resolution 787.
• The agreement does not require the disclosure by any passenger of personal information of any kind.
The DOT added its own language that any exchange of passengers’ personal information must comply with the privacy policy of the airline or ticket agent receiving the information.
GDSs and other stakeholders praised the DOT’s tentative approval.
In a blog post, Svend Leirvaag, vice president of industry affairs for the Amadeus IT group and a frequent commentator on 787, called it “another milestone” for improved distribution that would benefit everyone: passengers, airlines and technology providers. He wrote that the cooperation between IATA and Open Allies “cleared the path for the industry to work together.”
Andrew Weinstein, director of Open Allies, said the group was pleased with the DOT’s tentative approval.
ASTA termed the DOT announcement a “testament to the success” of collaborative efforts of IATA, ASTA, Open Allies and other stakeholders.
Sabre said that it “fully supports” the DOT’s tentative approval, with the conditions. Travelport said it was “pleased” with the DOT’s decision.
OpenTravel, a communication standards group that works with the entire travel industry, said that the DOT announcement would bring “better transparency and consumer choice” to the marketplace.
The Global Business Travel Association said it valued a modern standard but still was concerned about the unintended consequences of 787 on managed travel.
The DOT’s comment period on the resolution ends June 11.