Iata insists fare revolution is 'not about going direct'

by Ian Taylor
by Ian Taylor
October 31, 2012 11:53 AM GMT

Iata insists its proposed new system is not about cutting out GDSs or going direct to the consumer. Ian Taylor reports from the GTMC conference in London.

Airline association Iata has confirmed plans for a New Distribution Capability that will “revolutionise” the way agents sell airline tickets.

Iata decided a fortnight ago to proceed with a pilot scheme to overturn the current global distribution systems (GDS) model. Aleks Popovich, Iata senior

vice-president for industry distribution and financial services, said: “This will revolutionise the way fares are sold.” Popovich told a Guild of Travel Management Companies (GTMC) conference in London on Monday: “Airlines should not be constrained by backwards compatibility with legacy messages [GDSs].”

He insisted: “This is not about bypassing the GDSs. This is not about going direct to the customer. This is not about simply rolling out the Direct Connect concept as it exists in the US.”

The New Distribution Capability will mean participating airlines no longer file fares with GDSs. Instead, agents will submit a passenger’s details and travel request, and receive customised offers in return via an interface between the GDSs and airlines.

A senior figure at a major carrier said: “This will transform the way we sell.”

Popovich said Iata would develop the standards for the new capability, insisting this would be done in collaboration with GDSs and the trade. He conceded it involved “a top-down approach”, but one “where we will engage all key stakeholders”.

“This is about a collaborative approach,” he said.

However, he admitted there had been no engagement with trade associations prior to September, saying: “I acknowledge we can do a better job. We have not been good at collaboration.”

Popovich will oversee the pilot project. He acknowledged the new capability would exist alongside GDSs – since not all carriers would adopt it – without saying how this would work or how fare searches would operate with many airlines no longer filing fares with GDSs.

He insisted there was a “high level” of support for the move among Iata members, saying: “No one said no.” However, he acknowledged: “There are a lot of business obstacles to overcome.”

Popovich told the GTMC: “This is to fill the gap between direct and indirect sales. Airlines need to connect to customers with an interactive relationship through indirect channels. [They] need the ability to sell what they want to whom they want through more channels.

“The standards [we develop] must facilitate the authentication of customer identities, enabling personalised offers through the whole distribution chain. The model will support a shopping-basket approach, to add and remove product… Airlines will build and own a personalised offer for each consumer.”

Popovich added: “Ways to display product attributes will be standardised to facilitate comparison on price-comparison sites.”

He promised a “fully open and transparent” process, insisting Iata would “engage all players at all levels, including…system providers, GDSs and travel agents”.

HRG industry and fare distribution director Tony Berry suggested: “We need more engagement and less fear. We need more companies involved.”

However, Spence Knudsen, Key Travel chief financial officer, a colleague of Berry’s on the GTMC’s industry affairs working party, expressed concern at the prospect airlines would no longer file fares with GDSs.

Popovich confirmed fare-filing would no longer apply and conceded: “We would need a critical mass of airlines for this to work.”

In a statement, Travelport called on Iata to “demonstrate real collaboration”.

Amadeus published figures suggesting airline ancillary revenue has risen 11% worldwide during 2012 to $36 billion.

But, within Europe, Amadeus said the annual growth in ancillary revenue had slowed from 20% to 12% this year. Popovich said the pilot scheme would be launched next year with a view to adoption by 2016.

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