Some believe Lufthansa’s position is
purely a negotiating stance to get a better deal from the GDSs. But HRG’s Brindle thinks it is part of a move by airlines to gain “more control over their distribution”, which will play out over the next five to six years – a process which may be helped by the emergence of NDC-powered platforms. “It may be that they reach agreements and this channel surcharge might be lower than Ð16, but I think they will still be fighting for the right to distribute how they wish,” he says. “The buying process will change over time, although GDSs won’t just disappear as they will continue to evolve. It may be that corporates will have to start having more discussions about which channels they use to book.”
AIRLINES vs GDSs The tensions between airlines and GDSs have been growing in recent years as carri- ers have increasingly made more revenue – an estimated US$38.1 billion in 2014 – from unbundling their fares and offering services such as luggage, food and drink, priority boarding and seat selection as add-ons. This move has been hugely profitable for
airlines but selling these services through GDSs is still in its infancy. The solution is supposed to be NDC, which continues to trundle on with more airlines begin- ning pilot schemes in the last few months, including BA (see NDC Update, right). IATA’s CEO, Tony Tyler, says: “Agents
have access to sell only a small portion of the innovations and ancillary products that are being developed. Our global research shows that most of the ancillaries on tickets purchased through agents are actually sold via the airline’s website. NDC is intended to address this by creating the standards that will make it possible to equip agents with more information to better serve clients.” He stresses that NDC is “not something
that’s competing with traditional distribu- tion system providers” and adds that it is a technology “standard”, or code, designed to allow agents to sell a wider range of airline ancillaries. Indeed, GDS owners are working with airlines on some NDC projects. Taking advantage of increased IT and giving travellers more personalisation have also been cited by Lufthansa as reasons for adding the GDS fee. The airline is due to start working on an NDC project by the end of 2015, focusing on the “dynamic bundling of products”.
32 BBT SEPTEMBER/OCTOBER 2015
But Paul Tilstone, who runs business
travel consultancy Festive Road, says the increasing adoption of NDC “will not drive airlines’ distribution strategies”, but will “enhance the distribution channels that airlines will want to go down anyway”.
The tensions between airlines and GDSs have been growing as carriers have increasingly made more revenue from unbundling their fares
NDC UPDATE
WHILE LUFTHANSA has made all the headlines with the introduction of its GDS fee, other airlines have been quietly working away on improving their B2B distribution technology as part of IATA’s New Distribution Capability project.
The list includes British Airways, which has launched a pilot project to allowing mobile and web-based developers to use some of its application programming interface (API) links giving direct access to BA’s flight search, booking and ticketing reservation system. An API allowing access to
seat availability was later added to the trial. Ian Luck, BA’s distribution strategy manager, says: “These APIs encourage new entrants by lowering the barriers to entry and developing new and exciting selling channels.” BA says that NDC will make it “simpler and easier” to view all products and services by combining schedules, availability and fares so they all come from one source. It will also allow the selling of ancillary products through the GDSs. BA plans to introduce the first of these add-ons – paid for
seating and baggage – by the end of this year. Other carriers currently conducting NDC tests include Qantas, which is using it to offer its chauffeur-drive product, while China Southern plans a live deployment covering shopping, booking and ticketing later this year. Avianca, Hong Kong Airlines, Swiss, Lufthansa and Ukraine International Airlines are also planning to work on pilot NDC projects this year. IATA says that a total of 24 airlines are either taking part in NDC projects, or have said they plan to do so.
BUYINGBUSINESSTRAVEL.COM
MARKET FORCES Direct connect, where a dedicated link is created between an airline’s systems and a TMC, has also been mentioned in this debate. But this requires investment by agencies, which may then be passed on to the client. So what would ultimately make the airlines follow Lufthansa and change their own distribution strategies? There’s no doubt they would like to benefit from lower GDS costs, and they will be watch- ing carefully in the next few months to see if Lufthansa’s move pays off or ends up hurting the company financially. The market, it seems, may decide. The industry may get some idea of how
it’s working out for the airline at Novem- ber’s GBTA Conference in Frankfurt, when Lufthansa’s CEO, Carsten Spohr, is due to speak. It will be intriguing to see what sort of reception he gets from buyers.
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