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Airline group seeks to open up personalized product distribution

Ever since airlines worldwide started separating out fees for various services and amenities from their air fares, consumer and travel agency groups have complained about a lack of transparency for such fees unless customers book directly with the airline’s web site, making total cost comparisons through other channels difficult. But now the world’s leading airline trade group says it wants to open up the process for everyone.

The International Air Transport Association (IATA) said its Passenger Services Conference has adopted a resolution calling for the development of what it calls a New Distribution Capability (NDC) to make product information and personalization more readily available to the 60 percent of ticket purchasers who use an intermediary rather than buying directly from the airline. Those intermediaries generally use a global distribution system, or aggregator of airline pricing data, rather than direct links to airline databases.

IATA’s proposed NDC would create new open XML standards “enabling innovation in the way airline products are distributed, and making possible personalized offers to passengers who will have access to all airline products and services regardless of distribution channel,” IATA said.

IATA CEO Tony Tyler said that for airlines, the ability to identify the individual customer is key. “Customers expect to be recognized when they shop online. And they are used to receiving tailored offerings based on their past purchasing behavior,” he noted. When a customer comes directly to the airline’s website, the airline “can recognize return visitors and make offers based on travel history, loyalty status, credit card brand or other metric,” he said. “And customers have complete visibility of additional products and services on offer.”

The proposed IATA plan would extend that same capability to transactions through intermediaries. “Airlines are trying to escape the commoditization trap through differentiation, and merchandising,” Tyler said. “They are developing products and services, such as special meals, expedited boarding, roomier seats and access to airport lounges. But the travel agent sees only fare codes—F, J, Y and their various derivatives—which cannot fully describe options available.

“Customers expect more,” he continued. “The solution is the NDC powered by open XML standards. This will enable innovation in the way airline products are distributed. One key outcome will be closing the gap between airlines and their customers so that customized offers can be made to travelers even through travel agents.”

IATA’s action comes as the U.S. Transportation Department is considering new rules that would require airlines to make information on all their ancillary fees available through every distribution channel. The DOT already requires that kind of transparency for checked bag fees but may broaden it to cover other optional services.

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