New Distribution Capability (NDC) has captured the attention of airlines and travel providers around the world, with its promise of content-rich displays through multiple channels.
NDC has also inspired the industry to look more deeply into other out-of-date or unnecessary processes, including order management processes that date back to the era of paper tickets and that were never updated when the industry moved to e-tickets.
“We have made ourselves artificially different and the systems were built 40 years ago,” says Keith Wallis, Director Global Distribution, Air Canada. “With the advent of e-commerce, we tried to adapt our systems instead of moving to modern systems.”
Sebastien Touraine, Head of Airline Merchandizing at IATA, concurs. “The way we manage the customer booking processes today is a hangover from the old days,” he says. “We need to re-engineer back-office practices and not simply automate a paper trail.”
The IATA Simplifying the Business group is championing the concept of “One Order” (see below), in which the NDC order record becomes the single truth about each customer’s journey.
Traditionally, at least two elements are involved whenever a customer books a seat on a flight. The passenger name record (PNR) is related to the reservations system and is generated at the point of booking. A PNR contains the relevant travel information—including Special
Service Requests (SSRs) for free or paid extra service—that needs to be exchanged between the various partners involved in enabling a journey. It transmits data to airport departure control systems and ground handlers, for example.
Ticketing (ET), which provides proof of payment and an entitlement to travel, is a separate part of the process. It is used mainly for accounting purposes, to facilitate financial transactions and reconciliation along the value chain, especially in interline scenarios.
Much of the data in PNRs and ETs is replicated and, as there are two distinct processes, airlines end up performing a reconciliation process in the back office, often manually and at great expense.
More recently, a third element has further complicated matters. Ancillary sales, nowadays handled by the electronic miscellaneous document (EMD), are on the rise and airline merchandizing—likely involving the bundling and unbundling of content—is becoming more complex.
“And that complexity only adds to the challenge,” notes Touraine. “We need to merge these three separate processes so the customer has one reference point and all industry partners benefit from a more efficient way of working.”
Three core principles underpin the One Order vision: a customer-oriented architecture; an efficient billing process with real-time synchronization of relevant information between all parties; and simplified airline merchandizing delivery.
The One Order concept will facilitate universal access to a customer’s information, using a common data dictionary. In turn, that customer information will have a single identifier, facilitating service provision not only for the customer but for the service providers, including travel agents, interline partners, airports’ ground handling agents, catering companies, and third-party resellers.
Merging booking and ticketing functions will drive the simplification of product delivery and accounting functions by avoiding redundant data feeds between parties or internal reconciliation. “It will make life easier for the customer to have a single reference, it will complement NDC with a ‘technology refresh’ of the airline ecosystems and it will facilitate the current airline merchandizing trend,” Touraine explains.
The data would provide a complete picture of the customer’s journey, and would inform downstream airport processes or any entities involved in services delivery. As delivery can be tracked, it enables invoices to be generated on completion of services. In other words, there is also instant financial information, an invaluable boon in the dynamic, modern market.
The benefits of One Order extend far beyond its obvious, positive impact on the customer and airline efficiency, however. Touraine explains that the project to evolve reservation systems into platforms aligned to the e-commerce world and capable of dealing with the One Order concept will necessarily bring far more competition into the market.
“Dealing with current reservation systems capable of following complex industry processes has been the remit of a few suppliers, but One Order could promote new entrants,” he says. “An industry standard will interest new IT providers, and a more active market could provide savings to airlines.”
There could also be a more active market in interlining. Low-cost carriers (LCCs)—considerd as ticketless carriers—have, broadly speaking, been set up differently from legacy airlines. They use a single electronic customer order record to confirm payment and service delivery data. And because they invested in truly electronic processes from the start, they are unhampered by the legacy, paper-based PNR and ticket reconciliation requirement.
This has played a large part in the lack of LCC interest in interlining with the legacy-process carriers, as it would have involved extra cost for them to effectively “retrofit” to a more cumbersome process. As LCCs mature, however, the prospect of interline agreements is starting to impinge on their strategic decisions.
Ryanair now sells tickets through a global distribution system, and CEO Michael O’Leary says this is, “a sign of the change and evolution that’s going on. We expect to appeal to more of the bigger businesses.” He won’t rule out the possibility of a codeshare, admitting he could “see a future where we are doing contract flying.”
But it is not just the LCC-legacy partnership that One Order would make viable. “Why stop at other airlines?” asks Touraine. “One Order would assist a wide array of business models, and enable interlining between all carriers and further entities. It would really open up the more complex ancillary products enabled by NDC.”
The One Order story: all change for procedures
The ordering and delivery of airline products is not as easy as it should be. How to deal with the constraints arising from three separate process—PNR, ET and EMD—is being discussed by a specialist One Order group that will deliver its recommendations to the IATA Board of Governors in December 2015. Subject to the Board’s approval, work on developing One Order standards will continue and the aim is to start trials at some point in 2016.
“IATA’s role in this will be to allow systems providers free reign on their architecture definition and to facilitate a shared industry vision and interoperability standards,” says Touraine. “Some airlines will want to retain their separate PNR and ticketing structures and simply evolve their order management while others will re-design an extended PNR that includes ticketing and EMD information and that fits in with best practices in e-commerce.
“But this is not something that will happen overnight,” warns Touraine. “It will take several years to make One Order the norm. This is on par with other major projects in the industry. Remember, we are talking about a total realignment of back-office functions to take advantage of progress in technology. It is not about putting a paper process onto a computer.”
Eliminating silos: why One Order is needed
The existing process structure, with PNR, ticketing and EMD each creating its own data silo, can be challenging for the principal players in the travel value chain. For the customer, which reference to use when checking-in or requesting a change to an itinerary isn’t always clear. Aside from the airline PNR, there is the global distribution PNR and an e-ticket number. If all the above could be synchronized to provide a single reference, it would be much easier for the customer.
For airlines, the process simply isn’t scalable. Previous projects merely automated paper processes, a valuable but ultimately limiting concept. An e-ticket and EMD each have a maximum of 16 coupons, simply because this was the maximum message size accommodated by industry messaging in the 1970s. There is no business case to accept such constraints in a fully digital world.
Even booking ancillary products is much the same as inserting an SSR into the PNR to notify specific passenger requirements or services (whether free or payable). “The reliable delivery of the complex merchandizing that airlines wish to sell today can’t be supported this way in the long term,” says Touraine at IATA.
For travel agents, the difficulty is the lack of consistency in booking flights and ancillaries. Different airline business models necessitate different booking methodologies, a problem made worse by the multifaceted business rules that travel agents have to interpret in both the booking process and fare selection. A modernized single customer order will further facilitate the servicing, tracking and accounting of purchases.
“If you started the airline industry today, would you design in the complexity of processes and systems that we have?” asks Rob Broere, Vice President PSS–Transition, Emirates. “What we have has served our industry well, and airlines have led the e-commerce revolution since the 1970s. But our processes and systems are now outdated and behind other industries. They are holding us back from innovating and serving our customers. We need to rethink from the ground up, as otherwise we will never move forward.”