On the face of it, GDS surcharges is a trade story and a global systems outage on one of the biggest holiday weekends of the year is a consumer story so they are not connected. Except that each is rooted in the challenges of evolving traditional systems to meet today's — and tomorrow's — needs.
Like most of the travel industry BA is working with both legacy and cutting-edge technology in all its distribution, back end and front end applications. And therein lies a challenge not just for BA but for all buyers, sellers and intermediaries.
Like relegation day for a football team that has struggled at the bottom of the league all season, IAG's decision to impose surcharges for traditional (non NDC) bookings had been long anticipated but still met with apparent shock when it was announced.
IAG was following the lead set by Lufthansa two years ago in charging users for what it calculates to be the extra cost involved in using the GDS, the traditional agency channel which contains content from many sources and enables comparative shopping before booking.
There is an important difference, however, between IAG and LH and that is NDC — IATA's New Distribution Capability.
British Airways and Iberia will be applying a Distribution Technology Charge on bookings "which are not booked through an NDC-based connection, or other low-cost channels." Lufthansa's DCC — Distribution Cost Charge — does not include NDC in its exemptions.
NDC gets a lot of publicity but the number of carriers involved is relatively small. IATA has 265 airlines as members; only 20-30 have achieved, or begun the process of gaining, NDC certification.
That 10% or so of IATA members (NB: this excludes most of the world's low cost carriers) have a link between the traditional GDS content of fares for specific carriers for specific sectors and the NDC option which acts as a bridge with the airline's own site. It therefore allows access to so-called "rich" content which gives more detail on product and, crucially, the ability to book ancillaries such as seat selection and checked baggage, as well as the trip itself.
There is no longer a clear distinction of intermediaries on one side — HRG and Concur have both signed deals with BA to allow their customers to access the NDC connection — and airlines' own sites on the other. However, that is not to say that there isn't a huge problem.
Although BA says that any booking done via an intermediary (TMC) or online booking tool which is on an NDC-enabled connection will avoid the charge, that is by no means all its current large customers and it has been busy trying to soothe feathers of many of its partners.
It also is having to soothe many of its customers who found themselves stranded last weekend because of "a major IT systems failure". Airlines' IT systems today have not only all the passenger and booking data but also all the data necessary for back office operations such as having crews and aircraft in the right place at the right time.
Whatever the cause of the failure the larger issue is that just as with NDC, both customers and internal operations are demanding more sophisticated processes and solutions. We are increasingly adding more sophisticated and automated systems to legacy systems and hope that the patchwork resulting will deal with ever more complex requirements.
Airline operations and booking need new systems but the transition from old to new is not always consistently smooth.
But industries are resourceful and resilient. Two decades ago airlines' deciding to stop paying commissions was met with howls of anguish from the industry. The rationale, however, was clear — those who receive the value should pay for it and intermediaries should not be incentivised to sell more expensive options. The transition was not pain-free but everyone soon agreed that they had moved to a better place.
Technology and market needs change. Sometimes it hurts but businesses have a way of finding models that work for their customers, present and future.