Business Travel Show Europe Kick Off, 23 February,
Global Travel Risk Summit Europe, May 2023,
3rd Annual Sustainable Business Travel Summit
IATA’s Aleks Popovich urges the whole business travel sector to work together if they are to fly into the future
2012 IS SHAPING UP to be a very important year for the relationship between the International Air Transport Association (IATA) and the business travel community. The second World Passenger Symposium, in Abu Dhabi on October 16-18, is a focal point for the announcements and activities that IATA has prioritised, which we believe will be of benefit to business travellers, and those who buy and sell business travel – as well as to the aviation industry as a whole.
There has understandably been a great deal of interest in a key IATA project, the New Distribution Capability (NDC), and I want to lay to rest some myths that have grown up around this. Airline distribution is a subject in which the association takes a close interest – and has experienced a fair amount of frustration over.
When they were developed, beginning in the 1960s, the computer reservations systems – forerunners of today’s global distribution systems (GDSs) – represented a step change in airline efficiency and customer convenience, making possible a sales system that puts airlines decades ahead of other consumer-facing industries.
Today, GDSs help airlines sell 60 per cent of their tickets. They are among the most important partners for airlines in the distribution value chain, and they will continue to be so for the foreseeable future. But we want to widen participation. Our strategy is to foster collaboration involving airlines, GDSs, travel management companies and other partners, including new entrants.
The airline industry of today is very different from the industry of the 1970s. The technological ability to display all airlines’ fares and schedules was a remarkable achievement in those days, but that is no longer the case. The product offering is much wider, with growing options through unbundling. The key issue is that airlines are not easily able to show travel agents the full value of their offerings, and it is very hard to show the variety of airline products or to customise them for the passenger through an agent. Airlines need a cost-effective means to present the same product offering that they can provide through their website, so when the traveller asks for a flat-bed, or an upgrade to a lounge, or a hire car, the agent can assist with those choices.
New models, more retail-based, are facilitating customer-friendly interactions in almost every other consumer online activity. So the need now is to create platforms flexible enough to adapt easily to the emergence of trends, such as fare unbundling and merchandising.
So IATA, with the full support of our board of governors, is working on a new distribution standard that could revolutionise distribution capabilities by bringing us up to date with online retailers. We will lay the foundations for developing the NDC standard later this year. Broad adoption of the NDC, which will be an open standard that can be used by any party, including GDSs, removes some of the risk of innovation. The intent is to enable product differentiation through all distribution channels.
Beyond setting the standards, IATA will support implementation, in collaboration with the entire value chain, through a roadmap. An industry business case will be developed to demonstrate the advantages to all participants. And IATA will also provide the infrastructure, in terms of data models and messaging format, enabling the adoption of the standards in the industry.
There is also a second objective, which is to lower the cost of distribution. The open standard we want to create will improve the opportunity for new entrants – and that will bring the cost down. The GDSs have an important role to play in working with us to optimise the NDC and take advantage of the opportunities it will offer them. But I also foresee new entrants working with these standards to provide new tools for travel agents and airlines. In this world we want to create, the airline owns the product and chooses the channel through which it distributes, and the growth in ancillary revenues becomes a boon not just for airlines but for the travel management community, too. There are many business opportunities that the entire value chain could be tapping into. It should not be just the same names again.
IATA has taken a conscious decision to have a collaborative approach with the value chain, so we hope that the industry will respond. There is tremendous opportunity and value to be generated by everyone with a stake in this business getting involved with our work. And ultimately, we will all gain if we join together to generate new revenue, and deliver the customer buying experience of the future.
• ALEKS POPOVICH is senior vice-president, industry distribution and financial services, at IATA. Following a career at British Airways, including the role of general manager revenue management, Popovich joined IATA in 2005. Here he worked on the organisation’s approach to cargo, as well as guiding new projects, such as streamlining the supply chain with the paperless e-Air Waybill, and creating global security standards for freight. In 2009, he was promoted to his current IATA position. In this role he oversees all IATA’s passenger and cargo activities. This includes responsibility for IATA’s financial systems, which combined handle US$370 billion in annual settlements. He is married with three children, and based in Geneva.