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NDC SOLUTIONS WHITE PAPER 3RD EDITION Results of the study on IT solutions built around the NDC standard January 2019 By Sia Partners Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 2 CONTENTS 3 EXECUTIVE SUMMARY 4 OVERVIEW 11 DETAILED SOLUTION ANALYSIS 23 APPENDIX 1: METHODOLOGY 24 APPENDIX 2: WORKFLOWS 26 APPENDIX 3: PRESENTATION OF THE QUESTIONNAIRE Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 3 Executive Summary New Distribution Capability (NDC) is a key transformation project to modernize airline distribution. It began with the foundational standard approved in October 2012 by the International Air Transport Association (IATA), followed by the US Department of Transportation (DOT) approval in August 2014 and IATA delivering the first set of official standards in September 2015. NDC enables airlines to have better control of their distribution because offers and orders are built in the airline environment. Early benefits of the standard have been to improve the sale of ancillaries in the indirect channel and enable travel agents to access rich content (pictures, videos, etc.). For those travelers who wish to identify themselves, the airline can create personalized offers. As the NDC standard moves forward it opens opportunities, for example enabling airlines to create full dynamic pricing. A number of IT companies have built solutions to support NDC messages enabling airlines to bring new products and offers into the market. In 2016, IATA commissioned Sia Partners to carry out a study of the various IT solutions available based on the solutions certified in the NDC Registry. The results of this study formed the first NDC Solutions White Paper. As in 2017, IATA commissioned Sia Partners again in 2018 to update the NDC Solutions White Paper for two main reasons: - 2018 reflects the steady progress of the NDC adoption, with 65 NDC certified deployments and GDSs becoming Level 3 NDC aggregators;1 - IT companies continue to embark on the NDC journey and apply for certification, and it is necessary to include them in the overall analysis of solutions. The key findings in the NDC Solutions White Paper are that IT providers: - Have a clear vision of NDC and its main benefits; - Build solutions designed to reap the primary benefits of NDC; - Have incorporated in their roadmap a vision of NDC to further facilitate airline distribution transformation; - Feel there is still a need to further explain the full value and the potential benefits of NDC; - Think airlines still need support for their transition. Year after year, we see NDC solutions becoming more sophisticated, taking into account new airline expectations such as personalization and Order Management. The standard also evolves, the latest version (18.x) addresses a number of issues mentioned by carriers and IT providers by providing a more defined structure. Finally, the IT environment is also constantly changing as IT providers show a good understanding of possible challenges such as managing greater volumes of data and the complexity of interline. This report presents aggregated findings. Each IT company remains anonymous. In order to fully benefit from this report, IATA recommends that airlines focus on the core findings and on the methodology. Core findings will bring a valuable understanding of how IT providers have implemented NDC (offer management, order management, rich media, interline, etc.) within both airline IT and aggregation. The methodology is presented in the Appendix. It consists of an extensive survey that can be used as a helpful starting point in the dialogue between an airline and an IT company. We hope you enjoy the reading and welcome your feedback and comments. IATA NDC team 1 NDC Program Update, IATA, November 2018 Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 4 Overview For the third edition of the NDC study, 25 IT providers were invited to share their feedback on NDC. The information gathered was used to build a comprehensive view of IT solutions provided across the whole distribution chain, from airlines to aggregators to sellers. The study focused on understanding the dynamics and ambitions of all players. The results brought to light the expectations for NDC solutions in the next two to three years. The following section presents the scope of companies within the study and details key findings about the strategic understanding of NDC by suppliers. Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 5 Introduction NDC (New Distribution Capability) is an XML-based data transmission standard for the travel industry launched by IATA to enable API distribution. As more airlines adopt the standard and IT providers build solutions, IATA is keen to provide transparency and visibility on how solutions from NDC-certified and NDC-capable suppliers actually comply with the vision of NDC described in resolution 787. As part of its initiative to support adoption of NDC, IATA selected Sia Partners to carry out an annual survey and analysis of a selection of the NDC-based IT solutions currently available. This year the study has gathered 25 participants, including 5 new participants. Sia Partners has interviewed the participants and analyzed their solutions through an in-depth questionnaire (detailed in appendix 3). IT providers were invited to describe their NDC solutions; identify how the solutions features match the NDC reference architecture, NDC principles and business process descriptions; and highlight the companys NDC roadmap. The information gathered in the questionnaires was used to build a comprehensive view of IT solutions provided across the whole distribution chain, from airlines to aggregators to sellers. The study focused on understanding the dynamics and ambitions of all players. The results brought to light the expectations for NDC solutions in the next two to three years that will help airlines to make better decisions for their NDC programs. Companies in scope From May to October 2018, the 25 IT providers were surveyed. IT providers have already engaged significant teams to work on NDC solutions, all declaring NDC as a priority topic for their organization. All companies that participated in this study have either obtained a NDC certification or are in the process of acquiring one. Surveyed IT suppliers Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 6 Contacted IT suppliers are established all over the world, with a predominance of European, American and Asian companies. The survey scope demonstrates a worldwide engagement for NDC. The diversity of IT suppliers is also shown in the balanced mix of company sizes. The median age of the companies surveyed is 20 years old. However, among the 25 IT providers one can find well-established market pioneers alongside promising start-ups. Regardless of company size, most of the IT providers surveyed have engaged significant teams in their NDC programsWhat is new? 5 new participants including the GDS Sabre, newly certified Level 3 NDC Aggregator. All new participants were created before 2000 but received their original NDC certification in late 2017 or early 2018. All newly certified providers consider NDC as a top priority for their organization, and 2 out of 5 dedicate almost all their staff to the development of their NDC solutions. Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 7 Strategic understanding of NDC by IT providers The study aims to understand how the market of IT providers perceives fundamental elements crucial to the success of NDC, the value-added features of NDC and the developments to prioritize in the roadmap. These aspects are key in analyzing the choices made by each IT provider in terms of detailed offering, functional features and time scale. Surveyed providers are developing solutions according to new offer capabilities that are essential in bringing value to airlines Since last years study, the 3 top-priority items for airlines have not changed. When asked which NDC modules and features bring the most value to airlines, 90% of the suppliers surveyed again put offer capability first. IT providers prioritizing offer capability is consistent with their initial focus on offer management, as shown later in the study. When asked to evaluate the modules that bring the most value to airlines, surveyed providers overlook rich media. Compared to last year, 13% less actors have quoted rich media in the survey. This decline benefits to personalization and dynamic pricing, both modules occupying the second and third places behind air ancillary services. Indeed, personalization and dynamic pricing are key in helping airlines attract customers with tailor-made offers. Finally, interlining is still not considered as a feature bringing value even though some actors are convinced that it could have the potential to. The 2018 study underlines that providers increasingly include Order Management in their offer, while there is currently no demand for airline profile. In your opinion, what are the modules and features that bring the most value to airlines? (percentages represent the delta compared to last year) A few quotes “Knowing what to do depending on who asks is for me the most important feature that an airline can put in place nowadays” “Lots of OTAs dont offer ancillary services and NDC can help a lot” “In principle it is all around personalization/identification of customer and product/offer differentiation on basis of dynamic, tailormade offering and pricing” Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 8 Per IT providers surveyed, airlines are looking for guidelines on how to transition IT providers were asked for the most important pain points they encounter when talking about NDC with airlines. Three major points stand out. First, IT providers think that airlines dont have a clear view on how to transition and where to transition to as well as how to implement the standard without disrupting their current APIs. Moreover, per IT providers, airlines seem to lack a full understanding of the real benefits of NDC. IT providers do not think airlines have a clear idea on how NDC can be a real differentiator and what benefits it can bring to distribution. IT providers would like to see more use cases to demonstrate the tangible advantages of NDC. Third, IT providers noted the airlines relationships with PSS providers. While the airlines possible resulting dependency on legacy systems may be perceived as incompatibility with the NDC standard, many PSS providers are investing to provide airlines with NDC compatible APIs. Finally, IT providers do not consider that airlines do not engage the appropriate funds into NDC developments as only around 10% mentioned it as a pain point during the survey. What were the most important pain points for airlines when talking with them? Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 9 NDC IT Providers Global Satisfaction Index Average rating when IT providers were asked to rate how satisfied they are with the NDC Standard The study shows a high and growing level of satisfaction across suppliers as it gained 0.3 points since last year. Providers were also asked for positive points and areas to improve regarding the NDC initiative, based on their experience with airlines and sellers implementation. Below are the most frequent points quoted by the providers. Differentiation “The realization of NDC is paving the way for true dynamic retail, where airlines fully control creation of the offer that is delivered through an NDC pipe.” Disintermediation “NDC opens up a host of features to work directly with the airlines which was never possible before.” Cost efficiency “Standard structure of the NDC webservices reduced the cost of maintenance and development.” Agility “NDC enables real-time business intelligence and omni-channel retailing strategies. The integration of BI in real time pricing and bundling systems guarantee a consistent user experience and enhanced CRM capabilities.” Innovation “NDC API can be built in a way that it easily supports all modern selling platforms, e.g. voice.” Velocity “Fast ramp-up phase when starting the first analysis due to the usage of XML and a good documented XML-Schema” Accessibility “Common naming and handling of business transactions lead to easier understanding when discussing implementation details and therefore an easier adoption” Durability “In a globally connected industry, having a robust standard used consistently is essential, and NDC is achieving this.” Better standardization and scope expansion “Define best practices to achieve a standardized handling of the NDC messages”, “To include non-air content like Hotel the standard has to be expanded”, “Align air and non-air standards as airline become retailers for all products” Support and change management “NDC Implementation Guide is very easy to understand, but need much more detailing”, “Change management could be better handled (e.g. changing names of schema elements) - moving forward this type of change will make a lot of unnecessary work for NDC Developers on all sides.” Move on from legacy “NDC is still influenced by legacy. Eg: Mandatory ATPCO Fare Rules Category, No support for 2 digit booking classes etc.”, “More emphasis on solutions, setups, implementations that follow the vision of NDC, i.e. no ATPCO, no RBDs, product engineering approach, retailing analogy, fully integrated NDC/ONE Order etc.” IT providers main positive points regarding the NDC initiative IT providers main areas to improve regarding the NDC initiative 7.6/10 Sia Partners | NDC SOLUTIONS WHITE PAPER | January 2019 | 10 IT suppliers focus on personalization and merchandizing for the next two to three years The roadmap objectives ranking changed again this year as loyalty and RMS integration lost respectively 4 and 3 ranks. This can be explained by the fact that more and more actors have already implemented those features (see detailed analysis further in the report). This is also consistent with the fact that, as presented above, personalization and dynamic pricing (respectively linked to loyalty and RMS) are quoted as features bringing the most value to airlines. Top priorities in actors roadmaps include supporting more merchandizing, expand order management functions, and increase connectivity. Improving offer creation is still an ongoing effort. This year again, the study shows the rise of personalization and offer enrichment with merchandizing capabilities considered as a top priority for the coming years. With loyalty and RMS integration, suppliers appear to share a real enthusiasm for these features, as they allow airlines to offer travelers a more tailored experience. Many actors also plan to expand order management. Suppliers have put order management (booking, payment, ticketing, etc.) in
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