IATA NDC – New Airfare Distribution Dynamics
The Issue: In mid-March, the International Air Transport Association (IATA) filed an application with the Department of Transportation (DOT) seeking approval of a new XML-based electronic data interchange standard for airline distribution communications (commonly referred to Resolution 787). The standard will support IATA’s proposed New Distribution Capability (NDC) that IATA believes will benefit travel buyers and standardize distribution practices. IATA states that any additional agreements on standardization of distribution practices would need to be filed with the DOT before becoming effective. Open Allies for Airfare Transparency, a diverse coalition of air travel distributors/sellers, opposes the application and argues that the application seeks approval of the data standard and new distribution model that Open Allies believes is not beneficial for buyers.
GBTA Position: GBTA has been monitoring developments regarding the NDC for over a year and is open to any initiatives that benefit business travel buyers. The vast air travel distribution marketplace is a complex, sometimes challenging, web of direct and indirect travel providers and distribution channels, all competing for hundreds of billions of dollars in air sales and billions of dollars in transaction and other fees. Particularly in today’s economy, business travel buyers work hard to spend their air travel dollars wisely. Direct suppliers, intermediaries, and distributors work equally as hard to attract business customers – understandably focused on maximizing their own revenues by eliminating costs. Airlines, global distribution systems, travel agencies, technology service providers, online providers, and others are key players in the distribution marketplace – often taking conflicting positions on what is “best” for the travel buyer and consumer. But business travel buyers know what is “best,” provided that sufficient information is available to make informed choices about distribution changes that benefit their interests.
Business travel buyers support market transformations and technologies that benefit businesses and their travelers, who make more than 400 million business trips each year. Distribution “must haves” for airfare and associated products and services include transparency, choice, competitive pricing, full content, a better experience for the travel buyer, appropriate safeguards to prevent unauthorized buyer profiling resulting in price increases for business customers, and consistent delivery across distribution channels. With limited information and conflicting opinions on how the NDC will work, business travel buyers are trying to assess its potential benefits and risks. IATA claims the NDC will allow airlines to create their own product offers within their systems and make them available through all distribution channels. It will increase transparency, choices, efficiency, and content (including ancillaries). Open Allies claims that the new business model will decrease competition, end fare transparency, and reduce choices, efficiency, and content.
GBTA asked the DOT not to approve the IATA application due to a lack of clarity about the application itself and insufficient information available to GBTA or to the DOT to determine if Resolution 787 is “not adverse to the public interest,” the legal standard used in this DOT proceeding. All comments on IATA’s application must be filed with the DOT by May 1, but there is no timeline for a DOT decision. GBTA will continue to monitor developments, communicate with all interested parties, review available results from pilot programs, and engage in the debate. Links to the DOT filings of IATA, Open Allies, GBTA and others interested in this issue, and to additional informational materials on the IATA and Open Allies websites, are below.
Open Allies Comments/DOT
DOT Docket on IATA Application
IATA New Distribution Capability
Open Allies for Airfare Transparency