A team at IATA is quietly preparing for a revolution. Its plan is to enable airline businesses to transform themselves from providers of flights, seats and sundry related services into digital travel retail platforms. The name of this revolution? The One Order programme.
The One Order Working Group comprises airlines and system providers, facilitated by IATA. It is developing a standard that will simplify the currently arcane internal airline processes for product and service delivery, fulfilment and accounting. The intention is to strip away passenger name records (PNRs), e-tickets and electronic miscellaneous documents (EMDs). These records variously contain booking details, their monetary value, their financial and delivery flow, and ancillary transactions.
Sebastien Touraine, IATA's head of the One Order programme, says this costly data duplication – "inherited from the pre-internet age and paper-based industry processes" – will be consolidated into one single order record under the airline's control. He says One Order will leverage and complement the New Distribution Capability (NDC) standard, which allows airlines to make real-time offers to any third party while directly managing other functions within the indirect distribution process.
Airlines can get going with NDC without One Order – in fact, 33 carriers are already using the NDC data interchange standard, primarily in support of flight and ancillary sales, according to IATA. In theory, says the association, airlines will be able to implement One Order for their direct sales without implementing NDC.
However, those close to the One Order programme say that once airlines are able to use NDC and One Order together, a digital retail transformation will occur. NDC combined with One Order promise to let airlines participate in the modern digital economy, in a similar way to the likes of Amazon, Alibaba, Google and Uber.
PASSENGER CENTRIC
Daniel Friedli, managing director and partner at consultancy Travel In Motion, says: "It is the combination of [NDC and One Order] that brings airlines to the digital retailing model, the digital retailing system[s], which the Amazons and Alibabas of this world already use... [not only] in terms of the way they run the business, but also in terms of technology and enablement."
He adds: "This is going to be huge once it is transitioned, largely because airlines will find they have a lot more flexibility to change things, as in business models, or things as in what kind of products [they] offer."
A key NDC and One Order win for Friedli will be the opportunity to move beyond personalisation and respond to the passenger's context. "It's personal and contextual. So, in the context of what you are asking today, or where you are asking from, or how you are asking, we might offer something different. I think that's a big opportunity to put every query into a context and respond accordingly."
An enhanced personalisation capability will turn airlines from seat-centric into customer-centric organisations, says George Khairallah, president of JR Technologies, an airline-retailing and NDC specialist.
"Think that the airline system is no longer an inventory-centric system, it's rather a passenger-centric system," he says. "From that perspective, everything that is recorded within the passenger distribution system or inside the passenger service system (PSS) within the airline is looking at the passenger first. 'What makes it easier for the passenger?' This is how transactions will be recorded. This is the big idea."
Rob Broere, co-chair of IATA's Simplifying the Business (StB) steering group and think tank – and vice-president IT, PSS and passenger experience – at Emirates says: "Right now with NDC you can offer more things, but the execution is still done through a ticket, or through an EMD for anything that is not a flight. That's already very restrictive in what you can do. If you want to start adding in hotel nights and everything else, it just becomes extremely complex... One Order makes the seamless execution much easier."
Ultimately, One Order will allow airlines to better manage service fulfilment. Khairallah says. "The information is available today – but not in real time and not related to that passenger. This is what makes it difficult for an airline to follow what is happening to [the product or service] sold to a particular passenger. You are not only offering something, but you are also making sure, 'Is it delivered?' And you are proactively following up on it. That is what NDC and One Order bring to the equation."
Seat and ancillary bundles run the risk of falling apart during disruptions or irregular operations (IROPS). The innate inaccuracy of batch-processed data from multiple legacy systems results in wrong passenger information. One Order could address these problems. IATA's Touraine says: "The notion of One Order also implies that you have a single source of truth of the orders that will be managed and controlled by the airline, the offer-responsible airline. We are working on the detail of the IROPS use-case within the task force, with airlines and system providers, so that the standard is fit for purpose."
A future NDC and One Order distribution platform will make it easier for airlines to do business with each other, whether they are a network carrier, low-cost or hybrid, perhaps even giving interline pricing to each other on an ad-hoc basis. "The way they do it today is a lot more complex; they prorate, and it's a big headache to do," says Khairallah. "That will be extremely simplified if both airlines [in the interline transaction] have adopted NDC messaging and adopted the principals of One Orders and NDC in their distribution."
Large airline groups increasingly have a low-cost carrier in their business portfolios, and for IATA, a key One Order motivator has been to enable more seamless connections between traditional (e-ticketed) and low-cost (ticketless) airlines. "This is pretty cumbersome and sometimes you don't get the right data exchange," says Touraine. "One of the arguments that airlines were pushing IATA to move on... is to streamline and enable this capability of interlining between low-cost and traditional airlines; or intermodal – train, bus, taxi, Uber – with the traditional airlines."
Travel in Motion's Friedli agrees there are revenue opportunities on the horizon around the passenger's end-to-end journey. "You don't have to differentiate between an airline and a rail company any more – and you can sell it that way. I think there is a big opportunity for an airline to streamline the creation of the whole door-to-door journey for a consumer."
Will we, once NDC and One Order common standards are in place, see some of the global retail players selling airline products? "I could see the big retailers, like the Amazons of this world, reaching out through NDC and creating a One Order order with the airlines, with the taxi service, with an Uber, because we have this defined simplified process," says Friedli. "Travel is just another retail product. NDC and One Order will finally allow the airlines to play in that game."
STRIPPING OUT COSTS
In a future where back-office legacy processes have been stripped away, airlines' business support requirements will be somewhat different. NDC and One Order are likely to reduce the revenue accounting requirement. "A lot of the things they do [relate to] proration between airlines and, with NDC and One Order combined, you don't have proration any more. If you don't have tickets, there's not much to audit. So the whole revenue accounting function will probably drastically reduce by 75% or more. Now that's a cost [saving]," says StB's Broere.
He adds that if, in future, functionality is added to enterprise resource planning (ERP) systems that allows airlines to consider them as alternatives to the passenger service system, and taking into account the fact that, driven by NDC, global distribution system (GDS) costs will "significantly" shrink, "you get a totally new landscape of how the cost hangs together".
However, as some functions shrink, others will need to expand, says Khairallah at JR Technologies. "For example, in today's environment you can show only the schedule and price. In an NDC environment you can show rich content, you can describe your product better, you can differentiate your airline from another airline, you can personalise your offer. Basically, departments that handle product marketing, product design, the data analysis [to] personalise offers – these will grow dramatically."
TECHNOLOGY TRANSFORMATION
The common standards of NDC and One Order are likely to increase technology choices for airlines. "There are very limited vendors in the market today: consequently, by de-specialising internal systems beyond PNR, e-ticket, EMD, this should open up to new airline IT vendors for order, accounting [and] delivery," predicts IATA's Touraine.
The technology landscape could look rather different if ERP and e-commerce retailing system providers take advantage of NDC and One Order to offer solutions customised for an airline environment.
The implications for GDS and PSS providers are unclear. While it will suit them to have hugely rationalised data interoperability with airlines, NDC and One Order together will have major ramifications for the way they operate. They will have to reinvent themselves and the nature of the service they supply to best meet the needs of the airline industry of the future.
Vendors such as Amadeus and Travelport are actively involved with IATA working groups to help shape the way the industry moves forward on One Order, as they did with NDC. Travelport, which was the first GDS to be designated NDC-certified and NDC-capable, is also thinking about how One Order will work for its non-airline customers. It believes having all the data for air, car and hotel in one place will also make sense for travel agents.
"Travelport has always made it clear that it recognises and fully supports the industry's need to transform the way air products are retailed, and the requirement to move away from legacy systems," says the company. "We have already successfully delivered our own in-house air merchandising capabilities with our award-winning Rich Content and Branding technology."
Amadeus notes that One Order is similar in concept to its Total Travel Record product, developed to help travel agents flexibly manage products and services from across different sectors. It is also considering the impact of One Order "across the whole distribution value chain", and says: "Among the issues that will have to be resolved is how to reconcile the airline-centric perspective of One Order (how it works in the airline systems) with the needs of travel agencies to continue to manage their operations efficiently."
One indication of how PSS may evolve can be gained from Unisys. It is working to ensure order management is native to its AirCore solution, and has partnered with JR Technologies to make offer-management native as well, thereby allowing airline adoption of NDC. "After we release this product, towards the end of the year, we will start adding the One Order and the interline functionality," says Khairallah at JR Technologies. "The fact that the PSS itself is transforming into an NDC and One Order platform is very significant."
In an NDC and One Order-enabled world, will some airlines go for an e-commerce retail system rather than a PSS? If an airline has its PSS contract coming up for renewal in the next three-to-five years, Friedli at Travel in Motion believes it makes sense to investigate. "We think that there's going to be similar migration costs moving from PSS to a retailing system. But these retailing systems, especially open-source systems, are a fraction of the price to run. Yes, you have some investment in development, and you are going to run these on the cloud somewhere, but in the end, your savings over five or eight years are going to be massive, even though your initial investment might be higher."
He cautions that this will not be an immediate solution for every airline. "Some airlines are just not well positioned to make this change. They may be far too dependent on other airlines or do not have the innovation power, the money, the risk, the know-how or just the people inside."
Work on One Order is at an early stage and a lot of dust needs to settle before it is clear what, in practical terms, can be delivered via its combination with NDC. The latter is currently being taken up organically within the airline business, but One Order, when it arrives, could disrupt the industry in a widespread way. Chief executives who do not see this on the horizon may find themselves caught out. Their challenge is to understand the opportunities and to map out the airline business of the future.
Source: Cirium Dashboard
