The International Air Transport Association this month launched the DDS marketing intelligence tool to replace the controversial PaxIS. IATA also recently announced plans for a "New Distribution Capability" including standards for a more sophisticated form of indirect distribution than is possible today. Amon Cohen, contributing editor for The Beat, last week discussed both developments with IATA senior vice president for industry distribution and financial services Aleks Popovich. An edited transcript follows.
Cohen: Will DDS comply with Article 7 of the European Union CRS Code of Conduct, which bars marketing, booking or sales data intelligence products from identifying travel agents without their consent?
Popovich: Yes. All our intelligence reports will comply with Article 7. It is very important to us that we have consensus around this issue with the travel agency community. We have agreed a process with the European Union, and we don't and we won't identify corporate clients either [which is possible if a single client is served through an agency IATA location]. It would be in defiance of the Code of Conduct.
Cohen: IATA originally took the position that its information products did not need to comply with the Code of Conduct, saying the code only applied to MIDT booking data provided by global distribution system operators. Are you now complying with Article 7 because the European Commission told you to do so in November 2011 or because you have changed your mind on this issue?
Popovich: We haven't changed our belief, but it is a requirement of the EU and we will follow that. We are taking great pains to ensure we are compliant. The principles on which DDS was built comply with the Code of Conduct and EU competition rules.
Cohen: We reported last week that IATA is in negotiations with travel agency representatives to ensure the information in DDS is masked sufficiently to obtain their consent. Can you confirm that is happening?
Popovich: Yes. We want to have a really collaborative approach here. We have been approaching a number of top travel management companies on DDS and on the New Distribution Capability project as well. We have been listening and pointing out some misunderstandings, and we have been demonstrating the product to ask if they are satisfied with how we are masking the data. A number of agents are beginning to say that there is information in DDS which could be of value to them. It's early days yet, but one example might be asking, "How does my performance compare with the market at a high level?"
Cohen: In the past, IATA has been accused of being uncommunicative. Is there a deliberate strategy now to engage more openly with other parts of the travel industry?
Popovich: Under the leadership of Tony Tyler [who in July 2011 succeeded Giovanni Bisignani as IATA director general], the conscious decision is to have a collaborative approach with the value chain, so yes. There is value in this for everybody and we are better off if we work through this together rather than alone.
Cohen: Are you prepared to include travel buyers in your collaborative approach?
Popovich: Yes. We have been talking to GBTA Europe managing director Paul Tilstone. We had similar discussions about DDS to those we had with TMCs, again clearing up some misunderstandings. I have invited him to attend our World Passenger Symposium [in Abu Dhabi in October].
Cohen: Can you confirm that, as reported in The Beat, IATA is liaising with Accelya to ensure its eSmash information product also complies with Article 7? [Accelya administers the Billing and Settlement Program on behalf of IATA although there is no ownership connection between the two organizations. ESmash is a data intelligence product that, like DDS, takes data from BSP remittances, but unlike DDS does not comply with the Code of Conduct and therefore openly identifies agency, and in some cases, corporate client data.]
Popovich: We have on repeated occasions written to Accelya advising it to conform to the Code of Conduct. It concerns me deeply that it has a product which may not. It must be addressed.
Cohen: Accelya says it is not covered by the Code of Conduct.
Popovich: I don't understand how Accelya can be exempt from that. I have spoken to the president of Accelya on this very point.
Cohen: What did you make of our story on a corporate client who found an airline had obtained complete details of his company's air spend through eSmash?
Popovich: As soon as it was drawn to my attention, I was on the phone to Accelya.
Cohen: But what about the fact that Accelya draws its data from the remittances it manages on your behalf?
Popovich: That is the source of the data. Our contract with Accelya is for processing BSP transactions. The data doesn't belong to IATA or Accelya. It belongs to our airline members. We will only include data in DDS if we get the permission of the airlines.
Cohen: How does DDS differ from its predecessor PaxIS?
Popovich: We lost a court case over PaxIS against Amadeus [which argued successfully that it owned the data drawn from its GDS transactions and could not therefore be used by IATA]. That led us to remove data originating from Amadeus, which weakened the product. The main reason for DDS is a further strengthening of our data offering. The goal is that airlines should own their own data intelligence product. We can cover for the lost Amadeus data, and airlines are also prepared to provide their direct sales data.
There are other information service products out there, so another objective for us is to add more competition to bring down the price. Since the launch of DDS last week, I have already had one airline telling me it has been offered a price reduction on MIDT.
Cohen: On a different topic, what is the idea behind NDC?
Popovich: The strategy here is a collaboration involving airlines, global distribution systems, travel management companies and other partners. This is not a GDS bypass plot. If you go directly to the website of an airline, you don't simply get the price, you get more, such as speedy boarding options. Airlines can get to know their customers and offer them many things.
In the indirect channel, the key issue is the airline is not easily able to show the full value of its offerings. Largely speaking, the airline offering is commoditized. To be fair, the GDS is not just a green screen any more but it is still very hard to show the richness of airline products or to customize them for the traveler. The airline should be able to design its own product offering, so the consumer can say, "I want a lie-flat bed, I want Wi-Fi, I want a car. Give me some choices."
In this world we want to create, the airline owns the product and chooses the channel through which it distributes. The growth in ancillary revenues is not just for airlines but for the travel management community too.
There is a second objective, which is to lower the cost of distribution. The open standard we want to create will create an opportunity for new entrants, and that will bring the cost down. I do foresee new entrants adopting these standards. It won't just be the same names again.
Cohen: Do you expect NDC to supersede or compete with the current indirect distribution model, which typically includes loading fares through the Airline Tariff Publishing Company and selling through a GDS?
Popovich: At the moment, the schedule is drawn from OAG, the fares from ATPCo and the availability from the airlines, and the product construction happens in the GDS. We want the product to be constructed at the airline and then forwarded to a distributor. We all have to think about our roles. For example, at IATA we need to thinks about our BSP product and how NDC will affect billing and settlement in the future.
It is early days yet, but the question about whether existing processes will be replaced will depend on the speed at which the industry adopts NDC. It is possible there will be a migration to the new world while keeping the existing one running.
Cohen: Are you confident NDC will see the light of day?
Popovich: I am confident it will happen. It is rarely that I have seen such unanimity among airlines, GDSs, other technology companies and TMCs. It is one of the IATA board's big projects going forward, like eticketing was, and when the board gets behind a project, it gains a lot of momentum.