Skift Take
New technologies, practices, and vendors are emerging to help airlines distribute their airfares. The new landscape is complex. But Air Canada's latest effort reveals at least one part of the emerging picture.
The airline industry has talked a lot about how it can use new distribution capabilities to embrace novel ways of retailing airfares to corporate and leisure travelers.
But airlines and travel agencies have only begun to process transactions via the new ways. The shape of the future is unclear.
For a glimpse at what may come, look to Air Canada, which this week processed its first transaction via a new platform called NDC Exchange. Before explaining what that is and its significance, let's set the scene.
For several years now, Air Canada has offered internet-based connections for online travel agencies and travel management companies to access its airfares. These worked outside of the incumbent three giants of travel distribution, Amadeus, Sabre, and Travelport.
About 40 to 50 agencies access Air Canada's application programming interfaces, or APIs, to process about a million tickets a year via direct connections that avoid the intermediaries. This year, Air Canada will generate approximately $600 million in revenue via these APIs.
That's still a minority of Air Canada's overall distribution mix, which mostly goes through the global distribution systems. But it avoids the fees those middlemen charge and it enables the airline to have enhanced control over how the content appears on travel agency reservation systems to make sure they're presenting their full-service products in the best way and not encouraging customers to shop by lowest price.
In recent years, Air Canada and other airline industry players have gradually adopted new technical standards for their APIs that have been championed by the International Air Transport Association.
These so-called New Distribution Capability standards have been evolving at a rapid clip — too fast for everyone to keep up, with at least two versions released a year. That means that some travel agencies are still using a standard issued in 2016, others on one issued in 2017, and others on the latest version.
Suddenly, maintaining the internet-based connections has become a headache.
Keith Wallis, Air Canada's director of global product distribution, said, "The differences between the standard versions are pretty significant, and it takes a pretty big effort for an airline to maintain web services across all different versions. You eventually have to
