Emerging technologies in airfare distribution will blur the lines between direct and indirect channels but will see airlines taking control of the offer and pricing.
A keynote panel discussion at last week’s Aviation Festival in London heard from leading players in the sector about their vision for the future of airfare distribution.
Hugh Aitken, senior director of strategic partnerships at metasearch site Skyscanner, said it sees the future as one in which it takes out the friction of buying as consumers become ever more mobile.
He said “the models have to be different in a mobile world” because there is the potential for there to be much more friction than on desktop.
Over 60% of Skyscanner users today are on mobile and Aitken said it views its role as being a modern day marketplace where the Skyscanner brand is not superior to the airlines’.
“People come to use because they want to search and ultimately book travel and we want to give the choice and a range of prices so they can choose who to book with, and we want to make it as frictionless as possible to book their trip,” Aitken said.
This was where direct booking on Skyscanner comes in and Aitken said the emergence and roll-out of Iata’s New Distribution Capability will further help to push a conversions uplift because it allows shopping sites to build connections direct with suppliers.
Gianni Cataldo, head of research and development at ATPCO, which has underpinned traditional indirect GDS distribution for decades, said the key for intermediaries was how they “drive value back to the ecosystem”.
He said under NDC protocols they will no longer be in charge of the offer, but they will remain a key distributor of content linked to the airlines’ offers and give them access to markets they cannot reach by themselves.
Cataldo, said the lessons airlines have learned in the direct channel must be applied to the indirect channel so that airline partners can access the right content and reflect the suppliers’ brands to their customers.
“The days of airlines treating their customers as two distinct groups – direct and indirect – are gone,” he said.
Arber Deva, senior director, direct distribution at Lufthansa Group, said it was important that innovations in seat offers are made available to all channels.
But he said even today some intermediaries are not set up to display branded fares, despite the airline introducing then back in 2015.
“This maybe because of a lack of incentives, but we also thing this is because of the complexity based around legacy systems,” he said.
Deva said distribution through the more flexible and responsive API connectivity that NDC offers is what airlines want across the globe as they move to more dynamic pricing models.
“This is not a revolution, it’s an evolution. You could say the revolution happened 10 to 15 years ago when the Low-cost carriers entered the market because everything became digital and online.
“They were able to have completely different business models not bound by the old world.”
Deva said API-based distribution means airlines have to implement a change just once to make it available to everyone in the distribution chain cutting out invoicing issues and speeding up the development of the market.
Gilles Mascaras, head of product – digital transformation at Etihad, welcomed moves to embrace NDC by the GDSs which he said will give it the scale it requires.
And he added: “We should make it clear that the purpose is not to direct connect to every travel agent in the world. That would be super-inefficient.
“GDS is going to give scale to NDC and we need this and separately we probably have direction connection with some specific agencies or corporations.”
Deva added: “We are really happy to see the GDSs working with the [NDC] programmes because they are an important part of the value chain.
“It’s important to embrace NDC and that everyone in the technology world is supporting it and developing it.”
Deva said the GDSs and travel agents will remain important to airlines to as aggregators, as routes to new markets and acquirers of new customers and for the servicing of those customers.
But he said airlines will take back control of the offer and its distribution. “We [airlines] inherited business models that were unbalanced in terms of values. I’m looking forward to how this develops in the future.”