Travel Analytics Blog
NDC isn’t just about direct or indirect channels, it’s about being in control
Posted by Ritesh Gupta on Tuesday, March 15, 2016
(Written by Airline Information Correspondent Ritesh Gupta on invitation from Triometric)
Matching a specific product to the profile of a passenger is a fascinating exercise and increasingly necessary to drive profit. It’s exciting to know how the world of IT solutions, data, analytics, and even schemas all can come together to make a flyer feel special.
Of course, if an airline knows what my intent is it would delight me no end.
But considering the fact that airlines’ basket of products is expanding, and attaining a view into a passenger’s profile is still a work in progress, serving what a flyer is likely to consider or eventually buy is a challenging task. It calls for perseverance, investment, constant testing and a lot more to get closer to cracking the same. Also, as airlines get deeper into the game of differentiation, it is clear that a lot of hopes are hinging on New Distribution Capability or NDC to be in control of what can be offered via the indirect channel.
NDC and indirect channel
Let’s understand the significance of NDC. It aspires to take distribution to a new level, drifting away from the practice of filing of fares the way it has been done over the years. A major shift in the NDC era would be airlines crafting an offer, rather than a third party doing it in case of the indirect channel.
Let me cite an example.
You are an avid traveller, and tend to book via an indirect channel. You travel for business often and sometimes for pleasure with friends or family. You are also a keen skier taking regular trips to the snow, usually with your own gear.
Now imagine there is one airline that routinely flies to some of those airports among the snow-capped mountains where you like to hone your skills. But you seldom fly with this airline. In the world of XML messages exchanged via an API, when an airline receives a request based on everything you are looking for, it would seem likely that the airline would entice you with an offer that includes free or reduced ski carriage. It would indeed be fantastic if your request via an indirect channel includes information about transporting oversized luggage like skis. Also, a lot would depend how the airline is going about its customer data strategy i.e. gathering data from public social networks about your preferences and using them in the offer process.
So as airlines gear up for data-driven merchandising plans as well as the ability to push an offer via XML API, NDC is increasingly gaining prominence. It’s the communication language already heavily in use in other travel sectors (and industries) that offers the flexibility to include more descriptive and media rich elements. But the new standard is not just about doing away with EDIFACT messages in favour of XML, it’s about enriching the whole travel purchasing experience, especially for the agents.
Capitalising on opportunities via XML
There are multiple benefits for airlines in making this transition.
Crucially, the adoption of the XML standard would not only let airlines generate the order, but it would also, as IATA envisions, eradicate the need for the advanced filing of fares to support intermediaries to make offers and orders as an agent for an airline.
Also, the adoption of XML based search and booking services, either as part of an IATA NDC program or simply the introduction of B2B services as part of a merchandising/ ancillary revenue strategy opens up the prospect of tapping to readily available search and booking traffic.
So if the emphasis is on identifying the customer using factors of probability on the one hand or segmenting them into “look-alike” clusters on the other, then there is a great opportunity to make the most of search behaviour and match it with buying intent. This is where being able to capture and analyse the detail in the data stream between requests and offers comes in. Analysis to determine customer insights then becomes an ongoing exercise – learning about the behaviour and relating it to the merchandising strategy, paves the way for constant refining of what to offer each time a consumer searches for his next trip.
Making the right moves
Airlines need to move away from an inventory-centric to a passenger-centric merchandising and distribution environment using the XML open standards laid out by IATA.
One such company that is ready to help airlines is Farelogix with its NDC-Xpress which is designed to deliver airline- controlled merchandising, pricing, and API distribution in a SaaS model. Farelogix’s data centre is equipped with provision for XML analytics that are tied in to the NDC API. For this analytics layer the company has collaborated with Triometric, who have garnered a lot of expertise in search data analysis in recent years.
The objective is to gain an insight into operational performance of web services and XML APIs coupled with real time intelligence that the XML message flow contains.
As a specialist, Triometric translates raw XML request and reply messages into meaningful insights that airlines can use to make data-driven decisions to optimise their merchandising and distribution operations.
Gaining insights in a near real time basis provides companies an option to take actions and drive or save otherwise lost revenue. This is very different from the historical reporting offered by most business intelligence systems. Most XML search requests contain the number of adults, children and infants along with number of seats, departure dates/day, duration of stay and other information. Using a customised heuristic, searches can be predictively allocated to market segments for use as part of an analysis process.
What lies ahead?
As much as airlines need to revisit their infrastructure, especially the legacy systems that most Full Service Carriers (FSCs) have to contend with, there is also a need to ensure a solid foundation is laid for XML messaging at this juncture. Right from the choice of merchandising platform to real-time data feeds (such as those to the PSS), airlines need to prepare for the new retailing era diligently and with the right interfaces in place to all those connecting systems to ensure proper data aggregation can take place. This is a critical part of an API strategy designed to harness the intelligence embedded in the rich NDC-schema compliant XML message streams. The key to success is to regard NDC as an evolutionary channel that will grow over time to replace the EDIFACT-based channels, rather than working towards a big bang overhaul approach which is neither desirable not practical.
Just doing a random investment won’t result in optimisation of expenditure and effort.
By focusing on all critical aspects, an airline would definitely get closer to the objective of being able to differentiate its competitive offerings and deliver these with greater personalisation not only through its own channels but crucially via the high value indirect channels.
XML is the pathway enabling airlines to take control over the distribution, pricing and merchandising of their product and services and in doing so re-gaining an element of control over their customers, the passengers they fly around the world. To succeed airlines know they need to take the bull by the horn and embrace the new technology before they can begin to reap the promised benefits.
Going forward, airlines want to be able to deliver richer and dynamic content where price is ultimately related to a traveller’s value. NDC shifts control over pricing from a traditional published process to a more dynamic response controlled by the airlines. To achieve that in a rich merchandising environment XML is needed. Ultimately, XML can prove to be as transformative for the airline industry as it has proved to be for online travel agencies and inventory intermediaries. Add a layer of XML analytics to the searches and bookings message flow and the benefits of better understanding customers and markets become crystal clear.