Earlier, airlines sold their products directly to customers. No big deal, then. It was easy. Then, evolved the GDS (Global Distribution System). The complexities evolved too. Next, various other distribution channels like OTAs, Meta-Search engines, Web Services and many other travel intermediaries evolved. All these are “non-direct-channels” or “indirect channels”. While the indirect channel solved a lot of problem for airlines, it also brought a great level of complexity and challenge in managing it.

What is the complexity and challenge in non-direct channels? It’s another channel for airline to market and sell its products, right? So, its a revenue generating channel? Agreed its a revenue generating channel. But, let us describe in detail the disadvantage of all these indirect channels and how it affects the airlines/customers directly.

Lets discuss only GDS in this article. 50% of airlines bookings are sold via GDS. But, while doing so – the GDS doesn’t know any detail on the customer, it doesn’t know who is buying the product, it doesn’t connect to all systems/applications at the airline end (say a CRM, Loyalty Management System). Because of this loosely coupled architecture, GDS isn’t able to offer all ancillary services the airline offers in its direct channel (its own website). GDS can only query the airline’s database for inventory availability & confirmation, fare details, it can’t display detailed information about ancillary services, rich content display like an image. These issues together create a huge gap between the airline’s direct channel and all indirect channels. To put it simple – If airline offers 100 in its direct channel, the indirect channels could offer only 50 or 60. The remaining gets lost in the distribution gap. In the current indirect channel, airline loses control and opportunity.

The “anonymous sale” (because GDS doesn’t know any data on the customer) and limitation of legacy EDIFACT messaging (inability to connect to all systems at airline end) are the two key reasons of selling limitations within the current indirect channel. How to fix this gap? That’s the role that OpenAXIS plays.

OpenAXIS is a non-profit organization founded by 10 North American airlines. They are closing the distribution gap by calling it “Distribution 2.0″. It s a new indirect channel that expands the level of airline products and services available to travel agencies, GDS, corporates. Distribution 2.0 consists of three fundamental components:

1. Extending Modern XML Messaging Connections For Distribution (rather than EDIFACT)
With OpenAXIS’s XML standards, the travel intermediaries can develop and offer a wide range of new products/functionalities to customers. To put it simple: Indirect channels can offer all of their existing features + many new features. It’s an add-on. By adopting XML as the standard for distribution, the travel distribution industry will get the following benefits:

• Faster development & go-to-market
• Ability to send non-textual information (audio, video, images) that is not possible in EDIFACT
• Easy integration with web application systems like CRM
• Entire GDS can also be offered on mobile

2. Support For Traveller Authenticated Shopping

All indirect channels will be able to identify and KNOW the customer to whom they are selling. i.e, the traveller is authenticated while selling products to him/her. This model will enable both the airline and the travel intermediary to custom-tailor the product and offer a personalized product/service to customers. In this model, the point of sale system (travel agency, corporate booking tool etc.) will send the information of customer (say their personal data, frequent flyer data) to the airline prior to asking for price. The airline then returns its product/service that’s customized for the customer. This is known as “Pull Model”, where GDS pulls data from the airline system. By enabling personalization, the customer can select and pay only for the services that add value to his or her travel.

3. Expanded Transaction Reporting (IEMD)
With IEMD, the travel intermediaries will be able to accurately and timely report on ancillary products and services offered to customers. EMD (Electronic Miscellaneous Document) is an industry standard for processing, documenting and settling of ancillary services.

Overall Summary – Distribution 2.0 is good and much needed call for the travel distribution market. By adopting to distribution 2.0 – Travel intermediaries can remain competitive by offering innovating products/services to customers, increase customer loyalty, increase revenue through ancillary service offerings, ensure transparency while selling to customers.

On the implementation note - Air Canada has already implemented distribution 2.0 XML APIs in their web direct channel; Travelport GDS has made relevant changes in their GDS system to offer Air Canada’s ancillary products/services in their GDS. Note: Air Canada and Travelport GDS are not controlled by single company. It’s good to see independent players joining hands in adopting to the next generation distribution channel. Sow the seed, reap the benefit!

Image credit: OpenAXIS
Author: Karthick Prabu