In The Hot Seat
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IATA’s New Distribution Capability is a technology standard whose polarizing effect on the travel community has radiated out to the world at large.
The New York Times said in an editorial that NDC “could significantly compromise the privacy of customers and allow carriers to charge travelers different prices for the same trip.”
NDC’s proponents say that NDC is a communications standard that will enable a brave new world of airline pricing that will enable airlines to differentiate themselves with unique product while facilitating third parties’ ability to sell that product.
Its critics contend that it is an airline effort to do an end run around the GDSs and suppress the robust comparison shopping that the GDSs facilitate.
The Times editorial noted that while airlines already charge different prices based on when a passenger books, the NDC would usher in a system whereby prices would vary depending on the consumer’s personal characteristics.
It said the Transportation Department should “demand safeguards, like limiting the amount of personal information airlines can require.”
Jim Davidson, president and CEO of Farelogix, whose technology platform is designed to work with NDC, downplayed those concerns, saying NDC is optional and won’t require anyone to provide personal information if they choose not to.
He noted that when e-ticketing was first proposed, some saw it as an invasion of privacy because passenger information would be sent electronically rather than being printed in a travel agency.
But airlines do want to know to whom they’re selling, so they can tailor product to the customer, said Henry Harteveldt, travel industry analyst at Hudson Crossing.
“So, for example, an elite-status frequent flyer might be reminded of the perks she or he is entitled to, and a non-elite might be extended a promotion if the airline wants to compete for the sale,” he said.
He disagreed with the Times’ contention that NDC might be used to present a higher fare to a business traveler the airlines believe might pay more for a flight once they know that traveler flies that route frequently.
“NDC can’t facilitate discriminatory pricing, because it has nothing to do with airline pricing or revenue management systems,” he said. And he said that the aviation industry is well aware of the dangers of even the appearance of collusion.
Still, some industry observers see NDC as a standard that will change the business model in ways that will put travel agencies and consumers at a disadvantage by giving airlines more control over how data are presented on the screen at the point of sale.
“NDC seems designed to defeat comparison shopping,” said Paul Ruden, senior vice president of industry and consumer affairs for ASTA.
He said that airlines could adopt NDC and start offering bundled fares and curtail or eliminate putting fare information through the Airline Tariff Publishing Co, or ATPCO. That would limit agents’ ability to look behind the bundles to see what the airfares are.
IATA has been fighting this perception. In a presentation last month, Doug Lavin, regional vice president of IATA, said that NDC as a standard would enable third-party distributors to present a full range of airline product choices to consumers.
But Ruden disputed that, pointing to airline and IATA statements about how the transparency of pricing in the airline industry is greater than that of other industries and has led to the commoditization of air travel and a preoccupation with finding the lowest fare.
Rather than emphasizing low-fare searches, NDC could make it easier for airlines and their intermediaries to “sell up,” Ruden said.