Simplify the Systems
No, I am not a NDC expert and I am not a NDC consultant. But I have been following the evolvement of NDC over the last couple of months and spent hours reading documentation and news about NDC. In fact, anyone who is interested in NDC and wants to learn more about it will find very valuable information about it on the internet. I have found the IATA website to be by far the best source.
IATA has also spent quite some time of making very useful presentation and even video clips which they posted on youtube under https://goo.gl/FcZCl5. These videos are really great and easy to understand. I think they are of better value than hiring external consultants just to explain you what NDC is. Most of these consultants actually learned their knowhow from watching these videos. The videos I like most are those of Yanik Hoyles, Director, New Distribution Capability (NDC) Program at IATA.
Don’t get me wrong, I don’t make any money by saying good things about NDC. I have just realised that NDC is in fact the right track and the future of how suppliers in the industry offer and sell their products. There is no way around NDC. It’s the best thing that ever happened to IATA members and the industry.
However, and here comes my BUT, you are not going to save any money by introducing NDC. Well, not right away and it will certainly take some time until the fairytale becomes true. So whatever your consultant has told you, at the end of the day you’re not saving a single cent, at least not for now, but you can make more money, as you can, in theory, sell more – and more easily.
How’s that possible? Well, by introducing NDC you open yourself to new sales channels and upcoming sales platforms and aggregators. More systems will be able to distribute your product and you can pass richer and better customised offerings to your prospect customers. Just imagine what would happen if Google builds an interface to NDC – or facebook starts to dynamically advertise your product through your NDC channels. If you don’t offer a NDC compliant, or better certified, API, then you will be left out and no one will know about your product and no one will be able to book it, unless they follow the old sales channels like GDS.
So you can sell more through NDC and you can sell more customized offerings to your passengers as you can control what and how you sell.
However, NDC has its cost and complexity. You have to implement the interface, you have to operate and maintain the system and most importantly, you have to maintain and optimise your product offerings. These are additional expenses you will have and by introducing NDC the other distribution channels, such as GDS, OTA and others will not disappear or become obsolete. You will still have your GDS expenses as travel agents will continue to use GDS, unless there’s a comparable NDC aggregator platform available. You will still keep your existing interline and codeshare interfaces and you will still have to run a callcenter.
But the more you sell on NDC, the lower your average cost per booking will be. It has to be in your interest to push sales through channels which are cheaper for you. Remember the EUR 16 GDS surcharge Lufthansa introduced? The better you can control your distribution, the lower your cost will be. GDS will be around for the next 20 years, but with NDC you can offer a much cheaper alternative and at the end that’s what lowers your cost – not tomorrow, but over time.
The other issue with your cost is how your system provider implements and runs NDC APIs. They simply put NDC on top of your existing system. As such, in addition to the cost of your current PSS you will also have to pay for NDC. Problem is that these systems are not made for modern distribution channels. Lewis Hamilton wouldn’t win a single formula 1 race in a 40 years old car with a new steering wheel. And by maintaining the car only and giving it a fresh paint he would still be outperformed. The good thing for you is the fact that all of the current PSS providers run on old cars as well and some have promised to add a new steering wheel. So in terms of competitive advantage you’re not better or worse than all the others.
In order to really benefit of IATA’s initiative there needs to be a new breed of systems. IATA calls this “Simplify the Business”. But how can you introduce simplicity when you run on complexity. If you don’t get rid of complexity then simplicity is just a dream. My statement for today:
current systems are too complex to support simplicity.
You can only benefit fully from IATA’s NDC and One Order with systems that are built from ground up to support the vision. Don’t believe your provider or consultants if they tell you that the world is too complex and cannot be changed. Providers don’t want change cause they made significant investments into their current platforms. Consultants don’t want to see change because they can only get business in a complex world. They want to scare you and so far they do a good job – and they can do that as long as there is no real alternative.
I don’t think that selling airline tickets is more complex than for Amazon selling their products. We all want to sell like Amazon but we can’t accept that Amazon is not using processes and architectures from a time when computers filled large datacenters and transistors produced more heat than your open fireplace at home.
So let’s just accept that the airline (rail, ferry, bus) industry is years behind the retail industry with eCommerce. But that doesn’t mean it has to be like that forever. If we want to support IATA’s simplify the business then we have to accept change, a massive change. It will happen, because it will lower the cost and because we need to make a big step forward. And thanks to IATA we know which direction to go.
Simplify the Business – Simplify the Systems