ANALYSIS: New Distribution Capability to drive product innovation, says ANZ chief

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Air New Zealand chief executive Christopher Luxon is no computer geek, but he is excited about what a change in a computer standards will mean for his airline and the industry in general.

IATA members voted at the recent annual general meeting in Cape Town to move forward with the adoption of the New Distribution Capability, which Luxon says will allow his airline to better promote some of its more innovative products.

At its core, the NDC is not a product, but a standard for how computer reservations and travel systems can talk to each other using globally-accepted XML markup language. Practically speaking, IATA says that in future, this can give travel agents and customers a much richer experience when booking air travel.

At the AGM, a mockup was on display that showed how a software company may develop an application that would allow a customer to compare airlines on a particular route by the type of seat or a number of other criteria.

The key from an IATA perspective is to have transparency and clarity about the various options available, rather than having to conduct searches using the basic criteria or fares and timetables that most global distribution systems remain bound by.

IATA director general and chief executive Tony Tyler says that the NDC is about bringing more choice to the process of purchasing air tickets.

"Consumers want to be able to buy air travel products in the same way that they purchase other goods, with full access to product information, the ability to comparison-shop and to see the full value of the offer, And we want our travel agent partners to be able to offer it. NDC will enable this to happen," he says.

Luxon told reporters on the sidelines of the AGM that the NDC is particularly important for his airline given some of the innovations that it has introduced in recent years.

One example is Skycouch, which is available on its Boeing 777-300ERs. The product is essentially an extension of the leg rest on a row of three economy-class seats which allows them to be converted into a "couch" where passengers can lie flat next to their partner, as the airline has promoted.

Introduced in 2010, Luxon says that it is a "fantastic" product, but admits that in the current GDS environment, it has been difficult to sell through travel agents.

"We are continuing to work on how to get the business model right in terms of how we sell it," he says. "We've got ways to get around it, but it's not the most logical."

However, the airline believes that the additional content made available through the NDC will enable the airline to better promote and sell the product to potential customers, especially through travel agents.

Similarly, Air New Zealand's "Seats to Suit" initiative on its trans-Tasman services is also likely to benefit from the introduction of the NDC.

Luxon says that the programme, which offers a range of fares with different levels of ancillaries, has been "transformative" for the airline.

Anecdotally though, travel agents that Flightglobal spoke to say that booking the appropriate fares on Air New Zealand's trans-Tasman services through GDSs has proven difficult, as fare codes and special service request codes have to be used, and there are sometimes inconsistencies with what is actually being offered to the customer.

For Luxon, who previously worked for Unilever, the NDC will be a great enabler not only for Skycouch and Seats to Suit, but for many other innovations in customer products that the airline industry has not yet launched because of the difficulty of distribution.

"[It's an issue that] you can innovate, but you can't sell it. That's why the NDC initiative is so important," says Luxon.