While not everybody backs IATA’s New Distribution Capability, a $5m start-up fund could shift plans up a gear. Sally White reports

The airlines hope to speed up delivery of next-generation distribution technologies for the travel industry with a $5m innovation fund. Their trade body, the International Air Transport Association (IATA), has announced that the start-up fund will be run with California-based venture capital firm Travel Capitalist Ventures (TCV). IATA is putting in the expertise and TCV the money.

The aim is better tools for the New Distribution Capability (NDC), the industry-supported programme launched by IATA for a new XML-based data transmission standard. This will give airlines the ability to distribute all their content through third parties – and theoretically give travellers far more information for shopping and booking, improving their experience, too. However, as revenue and optimisation consultant and industry veteran Tom Bacon argues, customers could see this as more ‘unfair’ than current pricing practices.

Nevertheless, IATA seems committed to moving forward. Investments into the fund will between $500,000 to $1 m and the target will be companies around the world which are creating next-generation distribution technologies for airlines, hotels, car rental, cruise, and tours and activities. TCV already works with operators within the industry, specialist travel technology and media partners and investors. 

TCV, which seeks revenue sharing opportunities, says the sort of investments it has in mind range from ‘travel content, travel e-commerce sites, travel hubs, travel technology companies, travel apps, to software-as-a-service’.

IATA says it expects to see an acceleration of NDC implementation in 2015 and mass implementation in 2016

According to Tony Tyler, Director General and CEO of IATA, the NDC standard will modernise the way that airline products are presented through travel agents (both on-line and bricks-and-mortar). It will also help to promote efficiency and innovation, while supporting consumer demands for personalised travel products and services through travel agent channels.

On launching the fund Tyler said: “Airlines and travel agents will require tools and applications to manage this content. While we have every confidence in the abilities of existing players, IATA and Travel Capitalist have created the Innovation Fund to help spark creative solutions even more broadly”.

IATA has been working hard to win backing for its NDC Standard for several years, lobbying on the grounds that it enhances communications between airlines and third parties. Support is now coming from such bodies as the US Department of Transportation. Amadeus, Travelport and Sabre are discussing bringing in NDC as a core service. IATA says it expects to see an acceleration of NDC implementation in 2015 and mass implementation in 2016.

Sally White is an independent economist, consumer market and financial analyst and writer who works in the UK and western and eastern Europe and travels extensively. She has published in national newspapers, magazines, radio and television, and on web-based media, and has run programmes for the BBC and edited sections of the Times, Telegraph and Evening Standard.