17 Jan COVID Crisis Spurs Airlines to Double-Down on NDC and Other Digital Merchandising Projects
During the closing keynote panel on Day One of the World Aviation Festival, London 2021, a panel of airlines and experts in distribution updated attendees on their progress with NDC programs and answered questions on how the COVID crisis has affected the pace of new programs to improve distribution and merchandising. There was almost unanimous agreement that the crisis had helped accelerate these programs.
The expert panel consisted of Mike Croucher Group CTO The ATCORE Group; Steve Domin, CEO and Co-founder Duffel; Bas Hooft’t, Distribution Director Merchandising, Air France/KLM; Tina Larson, Director Online Travel Agencies and Distribution Hawaiian Airlines; Antii Tolvalnen, Vice President Revenue Management and Pricing, Finnair; and Sebastien Touraine, Head, Dynamic Offers, IATA.
“Back in 2020—the beginning of the crisis—we asked as part of the distribution Advisory Council..what we should be doing..”
As IATA’s Sebastien Touraine explained, “Back in 2020—the beginning of the crisis—we asked as part of the distribution Advisory Council..what we should be doing. They said, please don’t stop NDC. And actually, some of the airlines have been using this crisis to reflect and to use some new capabilities—continuous pricing has been a key investment for some.”
Tina Larson, Director Online Travel Agencies and Distribution Hawaiian Airlines, shared: “Prior to COVID, we just started getting traction on new merchandising initiatives, NDC, and marketing projects. Then COVID struck. I remember the day that our flights went to 13% of our original size, thinking COVID would kill every single one of these projects. But I have to credit our leadership team because they came to us and said, ‘Don’t stop. You guys need to keep moving. Because when we come out of this, we need to be more agile, more nimble, and we’re going to have to fiercely compete in the whatever the new normal is.’ Since then, we have invested heavily in data. Our data was an absolute mess before. We had disparate sources—my data and your data mentality. We worked together as a commercial team to build out this commercial data domain, and from there, we talked about what we wanted to do with this. That led to our revenue management team upgrading our revenue management system, expanding our merchandising capabilities…we took advantage of the downtime to double down on the plumbing. Restructuring is going to be so important when we’re back fiercely competing.”
Antii Tolvalnen, Vice President Revenue Management and Pricing, Finnair, suggested that the momentum to improve distribution will be ongoing, and COVID crisis or not, as part of the airline’s core objective—to reach the end customer and meet their needs.
“What’s behind the transformation that we are doing?”
“What’s behind the transformation that we are doing? It is not a digital transformation or a distribution transformation. It’s a transformation of the business model from B2B to B2C. We must keep in mind that we try to serve our customers. That is the main target. Then, of course, all those customers will not find our content on our direct channels. They’d rather use an agent or an OTA, a Meta channel, or something like that. Then it’s essential for ourselves as a sales channel. Again, we must think about how our products find the customer. I think this will be something that will add value to the whole value chain, but maybe some weights in the value chain will change in future. That might be a painful transformation to get [through], but I think we just have to make sure that everyone understands that we are just talking about the customer in the end.”
Bas Hooft’t, Distribution Director Merchandising, Air France/KLM, suggested, “GDS is morphing towards the aggregator models…we need them to get our reach out there. We’ve never said this is not about the interaction or moving everything direct. We need travel agencies. We are a global company. We are connecting a lot of passengers around the world. We can’t be everywhere, and there’s a role for aggregation in the marketplace. But that model is changing. We announced our Amadeus contracts, and this week we’ll announce another one.” Air France/KLM announced a new NDC Distribution agreement with Travelport. “We are also leaving space for new aggregators.”
Steve Domin, CEO and Co-founder Duffel, said they have also seen a lot of activity on NDC during this downturn. In terms of the company’s role in the new distribution landscape, Domin said: “At the end of the day, the work that we do as intermediaries, or aggregators, in the broadest sense of the term, is understanding the needs of the airlines and the products in a way that it an agent can do individually. I think we’re spending a lot of time and resources on the technology side to make that product available in the best possible way for the travel agent. Since the GDS have done that for a long time, we are trying to do it on new rails.”
“Every airline in the future—as the service tends to get more sophisticated—I expect will have different requirements of what they expect to personalize that offer.”
Domin believes there are opportunities to bundle over types of content. “Products like insurance are very popular. That’s an enormous opportunity for the airlines to push insurance through the NDC channel.” On the complexities of integrations, he said, “I think I kind of look at the problems in two ways. One is the complexity for us understanding the product that the airlines are pushing, then breaking it down to the travel agents in the way that they can display it, [but still] in the way that the airlines envision it. The other side is how can we get the data to the airlines that they need to create these dynamic offers. Every airline in the future—as the service tends to get more sophisticated—I expect will have different requirements of what they expect to personalize that offer.”
In the end, though, airline distribution is always about getting very complex information to be digestible by consumers logically, in a way that is easy to process, shop, compare, and book. That consumer demand for simplicity and ease of shopping is the key differentiating factor, in terms of competitiveness, regardless of the distribution channel. The critical engine of progress in airline distribution is a never-ending quest to simplify flight search.
As Mike Croucher Group CTO The ATCORE Group put it, “We’re nine years into NDC, and it’s coming to fruition, and people integrate in that way…When NDC was first there, they played off on the GDS and put their channels in place. And now they’re doing deals with the GDS to distribute NDC through it. The initial NDC proposition was to avoid aggregators, and now we’re seeing aggregators aggregate NDC content because it’s complex again, and they’re taking the complexity out. So I think there’s always going to be platforms to take the complexity out of distribution.”
By Marisa Garcia