Airlines and ancillaries: are the GDSs doing enough?

Disparate solutions and a lack of standards makes it tough for technology companies to keep up but is that just an excuse? Ritesh Gupta takes a detailed look

Airlines have existing ancillary products and services and are continually thinking of new options. But this isn’t just about revenue generation. Ancillary offerings can also help airlines to differentiate in a highly commoditised category.

That said, the sale of airline ancillaries isn’t straightforward. An airline may develop a new product that works perfectly well in the GDS (global distribution system) environment, but that may no longer be enough for the multi-channel world. “As an airline, we often find that we have developed a product with the GDS core system but then the OTA is not able to utilise it,” says Sandeep Bahl, regional general manager for Asia at Air New Zealand.

According to Bahl, the ideal situation would be to develop a product or service and know that when it’s implemented in the GDSs, it also works with OTAs - or, at least, OTA developments follow closely behind. Legacy systems seem to be the problem. “GDSs have traditionally been excellent at matching schedules, pricing and availability. But they are lagging behind when it comes to helping airlines differentiate their products and services or help airlines maximise their sales potential,” he says. There is the promise that XML and New Distribution Capability (NDC) could improve matters but “this will require GDSs to buy-in and agree to the NDC concept.” 

Two options for the distribution of ancillaries

Airlines have the choice to distribute their ancillaries using industry standards such as EMD (Electronic Miscellaneous Document), but GDSs also offer an option to distribute their services, including ancillaries, via an XML interface. Travelport, for example, claims that its platform is increasingly offering airlines the flexibility to connect to the GDS channel.

When it comes to the XML interface, developments are taking place. In late march, for example, AirAsia said it was ready to distribute all of its fares and ancillary services through the Travelport GDS for the first time.   

GDSs are looking to integrate XML-derived content into the standard GDS workflow, the method AirAsia has chosen to distribute its entire range of fares and ancillaries to Travelport connected agencies. So when agents make a shopping request in Travelport, AirAsia will now seamlessly appear alongside traditional rivals in the normal GDS workflow.  

According to Sabre, it has implemented EMD through the GDS with a number of airlines who are using this standard to sell ancillaries. Qantas is the most recent carrier to do so. “Some airlines are choosing not to use EMD and we can enable the sale of ancillaries without it as well. US Airways is an example of an airline selling ancillaries in Sabre using direct settlement rather than EMD,” explains Sabre’s spokesperson Nancy St.Pierre.

Room for improvement

While EMDs have now been launched by GDSs, this functionality is largely under-developed, says Bahl, citing two examples of the limitations.

·         Many airlines have had EMDs in place for over 18 months for purchasing simple products such as additional bags, however this product is not refundable.

·         Problems arise with EMDs when airlines have to deal with reissues, partial reissues, schedule changes etc.

“Airlines like Air New Zealand have scheduled an ‘EMD strengthening’ project to help deal with these functionality shortfalls, and it would be good if GDSs accelerate to deploy solutions on their side as well,” says Bahl.

When it comes to XML interfaces, there is no industry standard; this is what the IATA’s NDC programme is trying to establish.

“Without an XML standard airlines needs to be handle each third-party supplier differently, including the GDSs. This requires a massive maintenance effort on the airline’s part,” says Bahl.

Many airlines are strongly behind the IATA, NDC’s programme to agree an XML standard. GDSs, on the other hand, are generally keen to encourage the sale of EMDs. However, more work is required to strengthen EMD capabilities, particularly when they are used to sell high-value products.

No easy solution

New entrants and emerging channels, as well as established OTA’s, corporate booking tools, mobile applications and more look to technology companies to provide a single, aggregated source of content.

But Shelly Terry, Sabre’s vice president, supplier merchandising, says the primary challenge in executing a multi-channel, multi-device merchandising strategy is the disparity in how carriers distribute ancillary content on these [indirect] channels. Some are adopting industry standard processes using ATPCO OC and EMD for fulfillment, for example, while others are using XML-based direct connect solutions for accessing and selling ancillaries. This disparity drives technical complexity, not to mention cost, for technology providers wanting to integrate this content into their booking tools and mobile applications.

But Bahl says that GDSs have to be prepared to develop capability to display and sell these products. “I think the confusion exists because there are so many mixed messages about GDSs support for NDC and how these ancillary purchases should be fulfilled,” he says. “Airlines are tired of waiting for industry agreement and standards to be set, that is why they each go down a slightly different path”.

On a conciliatory note, Bahl believes the GDSs are generally keen to assist airlines sell ancillary services. The issue is more about the GDS’s ability to facilitate these sales; existing systems are currently not able to support, for example, real-time transactions such as interactive seat-maps with dynamic pricing.

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