IATA has taken a clear stand on the future of travel retail with its New Distribution Capability, which will result in a more profitable marketplace for everybody, says Aidan Brogan, chief executive of distribution software supplier Datalex
As consumers, we are accustomed to contextual, collaborative and intuitive conversations with retailers feeding our demand for relevance in real time in this well-connected world, where touch points have increased exponentially.
Airlines need to embrace this new world and unlock the opportunity to maximise their revenue per seat. To grasp the market potential, they need the ability to communicate in real time with every customer channel and to present the optimal offer at that moment in time.
Airlines are increasingly focused on transforming their retail strategies, with a view of boosting their bottom line, while delivering improved service and value across the traveller experience. As part of this move, low-margin air revenue is being supplemented with high-margin ancillary sales. A larger product portfolio, offered across an increasing number of channels and touch points, means the number of merchandising decisions to manage has increased exponentially. This changing landscape presents a fundamental shift, and a significant challenge, in how airlines sell merchandise to the traveller.
Many airlines have come a long way in transforming the passenger experience across channels in which they control product, price and position. Many of our airline partners already leverage a unified retail platform to drive value-based commerce across all traveller touch points, whether online, on a smart phone, at a kiosk or in a wi-fi enabled in-flight mode.
For some years, we have partnered with airlines that have led the industry retail transformation. We have abstracted from the legacy constraints and restrictions of industry systems to drive innovation where standards did not yet exist. We have embraced big data only where it can be acted upon as a retail currency, in the pursuit of engagement and transaction. The success of these strategies has fuelled the industry "standards" debate and exposed conflicts in a value chain no longer adequate to the needs of the today's traveller.
We applaud IATA's New Distribution Capability (NDC) initiative as representative of its members, the airline suppliers who have taken a clear position on the future of travel retail. As suppliers, the airlines will decide on channels of value and align merchandising decisions that maximise a profitable engagement with the airline brand. To do so, they require more control and agility of systems and standards.
While there is some reticence and scepticism from industry stakeholders, in the words of Oscar Wilde: "We are all in the gutter but some of us are looking at the stars." Our future is irrefutable, the traveller does not want more aggregated content and choice that adds complexity, has no context to our shopping journey and takes no account of who we are, where we are and what we value. Travellers expect actionable, relevant engagement and listening, for which data is the critical retail currency. NDC permits airlines and channel partners to accelerate new retail innovation, to leverage integrated systems that exist today and to establish a more profitable travel marketplace for all.
However, the airline retail model is still in its infancy and needs time to mature. In the interim, we must take care to ensure standards do not inhibit innovation. Travel merchandising practice for multiple products and services across multiple channels will continue to evolve and be refined through practice, albeit at a greater pace than before. Hence, this is an evolution and not a revolution. We believe that NDC should first focus on defining standards for mature merchandising features such as bags, seats, etc.
We must also be careful with transparency principles that may limit the airline supplier's ability to differentiate, compete and drive value. For example, I do not expect Expedia to share its application programme interface or retail expertise with Priceline any time soon. There must be a middle ground.
As founding members of OpenTravel, Datalex has a long pedigree in contributing to open standards. We were major contributors to the first XML standards for air and in more recent times, we contributed a proven merchandising schema to the Open Travel Alliance. We are supporters of open standards and commit to work with IATA's NDC working group to bring value where we can. Suppliers, distributors and technology providers must unite to plan and evolve a profitable future for travel retail. In the words of another Irish playwright, Samuel Beckett: "Ever tried, ever failed, no matter. Try again, fail again, fail better!"
Datalex is a provider of travel distribution and merchandising software solutions for airlines. For more details on its products and services visit datalex.com