What’s Next For ATPCO’s NDC Exchange?

by 
David Kaplan
Friday, January 17, 2020
 • 
8
 min read

“What we have today with IATA’s NDC standard and the APIs that airlines use to connect to it is not going to achieve scale easily. There's the necessity for some kind of infrastructure – that’s where we come in,” says Graham Wareham, director of NDC Solutions and Partnerships at ATPCO.

“Interoperability” may not ever be a buzzword in the commercial aviation industry.

But as airlines work to expand their digital retailing capabilities and incorporate greater mobility, e-commerce, artificial intelligence/machine learning, dynamic pricing, that term is the foundation.

And that’s why the two-year-old NDC Exchange has been emerging as an important tool for airlines to connect with Global Distribution Systems (GDS), Online Travel Agencies (OTAs), Travel Management Companies (TMCs) and other online booking and selling systems.

In our latest look at how ATPCO, the airline pricing, content, and data distributor,powers the sales functions for NDC Exchange, we spoke to Graham Wareham, director of NDC Solutions and Partnerships at ATPCO, about airlines’ specific needs that drove the marketplace’s creation.

With 85 airlines and channels currently in various stages of onboarding with NDC Exchange, and over 25 of those who are major airlines and channels now connected and or live and nearly production-ready, we spoke with Graham about how the marketplace’s services are evolving to better meet the industry’s demands.

Kambr Media: How does your background influence your thinking in running NDC Exchange at ATPCO?

Graham Wareham: I have been in love with the idea of what NDC Exchange represents since way before I started at ATPCO. When I was head of distribution at Air Canada, I would have loved to start something like this. The [Global Distribution Systems] still weren't talking about NDC at all. There was really nowhere to lean except for Farelogix or Datalex. But they were really just small startups at the time, not what we know them as today.

It would've been awesome to have had NDC Exchange back then. It was around that time I started thinking about the need for the infrastructure like a total peer to peer network, so when the ATPCO opportunity came around, I realized here's a way for me to have a platform to talk about that. As a single carrier you don't have that opportunity, but as an organization that serves the entire industry you can make that a reality.

When did you join ATPCO and how did NDC Exchange begin to form?

I started in January 2015 as Director of Distribution, Revenue Accounting. Distribution for ATPCO is slightly different than distribution for an airline. What we're talking about is getting our data to the market, our fares and rules. So, I was head of that, and also our Revenue Accounting.

We started exploring the idea of ATPCO playing a role in NDC and what that would look like – where we could provide the most value. My role continued to evolve, and we started NDC Exchange about two years ago. The technology wasn't quite there when we started. But we took a little while, worked out a partnership with SITA, which was something new for us. SITA did an RFP that was the genesis of ATPCO sewing it all together. From there, we were strategizing and sorting through contractual and logistical details, before NDC Exchange really came to the market.

How has NDC Exchange evolved since then? Is SITA still involved?

NDC Exchange continues to evolve from a product that offers connectivity and translations to a platform that offers layers of additional capabilities. 

SITA’s still involved, as NDC Exchange runs on its infrastructure. We were always the lead of commercial aspects, because we had the existing relationships with all the carriers.

Although SITA obviously has relationships with carriers, it's more in the operational space – such as airport operations. Because we’re in the commercial division – distribution revenue, management, that's in ATPCO's wheelhouse. Therefore, we were taking the lead on commercial operations, marketing and development.  

You mentioned the need for something like NDC Exchange years ago. What makes this moment particularly right for it?

There are two things that are occurring that has created the demand for NDC Exchange right now. One is the focus on retailing. NDC Exchange offers a comprehensive view of how an airline is going to market, inclusive of controlling the offer, better products, and integration of images. The Routehappy information augments the story around an airline becoming a retailer. So that's one pressure point.

The other pressure point is airlines want to be able to scale. If you have those two things, you have this pressure to retail better, and you have this pressure to grow.

What we have today with IATA’s NDC standard and the APIs that airlines use to connect to it is not going to achieve scale easily. There's the necessity for some kind of infrastructure – that’s where we come in.

In a general sense, does the emergence of NDC Exchange reflect the wider change in airline distribution models and strategies?

We're in this kind of bipolar world, where distribution is very different from the way it was in “the old world.” With the new world, ATPCO comes to the party with an ability to provide interoperability. While airlines are in this place where they have both distribution models, we serve a purpose, as will the GDSs, as they grow in this space; we’ll see the interoperability between the old and new. It's really something that ATPCO hits a sweet spot in.

What can you say about the way NDC Exchange functions on a daily basis: how many transactions are there daily? What’s the breakdown of the participants in the marketplace in terms of airlines, GDSs, OTAs, TMCs?

I don't have my fingers on the number of transactions but what I can say is while the growth started a little slower than expected.  it's moving faster now. Recently it has been kind of exponential growth thanks in part to the joining of Southwest Airlines.

Southwest is extremely serious about driving volume through the direct channel. They're focusing on the corporate travel space. We've connected them to a couple of very good corporate OTAs, and so the volume has kind of blown up a bit for us. Which we're obviously quite happy about.

The other one that's on the verge of really expanding is the Air Canada portion of this. They're going through a PSS migration, so it's a little bit flat right now. But as they complete this migration, NDC Exchange has promised to play a larger role in their connectivity there. We expect that to really significantly increase the volume in the first quarter of 2020. Then there's a number of other airlines that we'll be announcing, over the next couple of months. They're large carriers that will put NDC Exchange as part of their distribution focus, which will be another big growth factor for us.

How do you convey the specific benefits to prospective airlines?

We are typically offering NDC Exchange to carriers that already have some understanding of NDC and feel that it is or should be a part of their own distribution strategy. It’s important to point out that we play an advisory role as well. Many of our carriers that work with us ask us questions about marketplace trends. I was talking to a carrier recently and they were asking why they should do NDC?

My first response was to question them about whether there’s a product fit mismatch with your distribution model. Or, is everything selling fine?

His answer was “No, we really don't have any products that don't sell through that channel.” So NDC Exchange is not going to be a silver bullet to create anything for them.

If you don't have a distribution challenge, then you probably don't need direct API growth, because your products are hitting the market fine. But if you're thinking about retailing and bundling, and you keep on delaying those activities, and if you're going to change your product and you create a mismatch with distribution you should be exploring NDC Exchange. In and of itself, we don't go in and pitch potential partners and say, “You should use NDC Exchange because you're going to save millions of dollars. What we say is if you have or are thinking about NDC as part of your strategy, and you've already bought into that, we can help you get there faster.

Could you explain the nature of the "mismatches” that tend to occur in airline retailing? How does NDC Exchange resolve those issues?

There are two typical mismatches. There is a commercial mismatch and a product mismatch. If you look at some of the European carriers, they have an affinity to drive sales direct. They're putting surcharges onto other channels in order to try shift customers’ purchases to the airlines’ direct sales channels. To me, that's a commercial mismatch. They've decided that one channel is more important than the other.

With a product mismatch, a carrier might sell a product that doesn't technically fit into the GDS. A lot of their upsell is around ancillary and clarity on what you get from one product to the next. In a GDS model, where it's low fare search, they don't get the exposure of the products that they're looking for.

With respect to the upsell, there are many airlines that are in the same boat.

What plans do you have to expand NDC Exchange in 2020?

Our focus is on expanding the four groups of services that NDC Exchange now enables: marketplace, API management, message enrichment, and integration services. The first was the marketplace. This was at its core, a connectivity hub.

As we started expanding beyond marketplace, we would do one and two-day deep dives with airlines and say, “Tell us what you're building, tell us what you're doing, and we'll see how we can help.” We met with a number of airlines for extended periods of time.

From those meetings, we started developing a list of “gaps” which are a focus for us in 2020– these are functionalities that the airlines have on their list to do that they haven't quite gotten to yet. Those range from full blown servicing, where they shop and book and they can't service, to having gaps in their APIs and not being able to manage connectivity with other APIs to complete a transaction. They needed some filtering services, or they needed some credential management services.

The other three categories are:

API management services:

I talked about filtering, throttling, credential management. These are modular services that we now can provide to carriers that help manage their APIs., which addresses the issue when a customer is missing something from your offer that we can add for you. A good example of that is Routehappy rich content.

Message enrichment services:

So, we take a Routehappy’s UPAs, UTAS, and Amenities, and we actually insert them in offer responses for the carrier. That data is now in the offer response. We do that as well with baggage information and can do that with a number of other services as well.

Integration services:

Which is where we connect third party services to airlines via NDC exchange.

As we grow in terms of our product, and our platform that assists airline retailing, we find ourselves talking to a much broader group of airlines. We're no longer just talking to a distribution director. Now we're talking with revenue management, we're talking with digital, and we're talking with to sales and revenue accounting.

It's a longer process but much deeper integration at the same time, because now you have to get alignment across a broader base of the company and if they're going to make a decision to go with NDC Exchange, plus Routehappy rich content, plus baggage calculator.

With NDC Exchange as the platform where marketplace is held and the transactions are processed, how much does ATPCO guide the buyers and sellers as they conduct their own negotiations?

Negotiations between the carrier and sellers is not a part of our engagement.  We do see our role as ATPCO to support the industry through industry scalable services. Because of our neutrality, business model, expertise, and capabilities we're doing a lot of guiding, based on industry best practices. And honestly, we embrace it. As an industry infrastructure provider, we work with the whole industry on alignment.

We're doing exactly what we need to be doing. On the seller side, we're spending a lot of time on helping the sellers understand what the airlines do. And on the airline side, we're spending a tremendous amount of time directing them to think a little bit about what their gaps are and how do they close them in order to make it easier for sellers to use their APIs.

*Editor’s Note: Other articles in our NDC Exchange series include:

The distribution of pricing content over the last 10 years has changed dramatically.

This is “Part One” our look at the NDC Exchange: what it does and why it exists.

This is the second part of our series on NDC Exchange: The Airline Perspective.

It takes a lot of intersecting “virtual pipes” to connect corporate travelers to airline products.