June 11 - IATA Cape Town Resolution: Doveryai no Proveryai


INDUSTRY ANALYSIS

By Kevin Mitchell

Business Travel Coalition

Bowing to pressure from travel industry stakeholders regarding its Resolution 787, the International Air Transport Association (IATA) on June 3, 2013, during its Annual General Meeting (AGM) in Cape Town, adopted a Resolution (link at bottom) related to its New Distribution Capability (NDC) proposal. The ostensible purpose of the AGM statement is to mollify growing concerns about the purpose and intended effects of the trade group’s new worldwide business model, as set forth in Resolution 787 for the pricing and sale of airline tickets.

It is indeed a welcome first step that IATA has acknowledged, through its AGM statement, the problems that it has caused itself and the industry by excluding virtually all stakeholders as it developed its NDC strategy behind closed doors, and then chose to communicate with the industry and regulators in opaque and shifting terms. As a statement of aspirations or principles, the new action by AGM is positive; however, given what’s at risk for all stakeholders we must be guided by the Russian proverb Doveryai no Proveryai, Trust but Verify! 

Reliance on the broad statement by the AGM of general and good intentions would be especially ill advised since IATA has already made clear that assurances by the AGM have done nothing to change the wording of Resolution 787. As the June 5, 2013 Open Allies for Airfare Transparency (Open Allies) Answer (link at bottom) to the new Resolution to the U.S. Department of Transportation (DOT) pointed out, fresh IATA assurances cannot be reconciled with the explicit language of Resolution 787 and IATA has since declared that the troubling text of Resolution remains unmodified. 

Specifically, a June 6, 2013 article in The Beat reported: 

An IATA spokesperson said the new resolution does not change the text of the original Resolution 787, which is the 'foundation standard' for NDC.  

In short, the general assurances by the AGM have now been revealed by IATA itself as meaningless unless transformed into definitive and enforceable modifications to Resolution 787. 

IATA’s Obliquely Worded Promises Must Be Made Definitively Clear and Enforceable

As Open Allies makes clear in its June 5, 2013 supplemental filing to DOT, IATA’s set of assurances is obliquely worded in ways that do not rule out the possibility that the current wide range of published fares would be abolished along with anonymous shopping. Indeed, many travel industry participants are spending considerable time endeavoring to parse IATA’s new and Delphic communications.

While Open Allies provided a detailed analysis to DOT concerning the new statement by the AGM, let’s review five IATA assurances in a June 4, 2013 Travel Weekly (UK) article, “Airlines ignore trade opposition and endorse NDC,” quoting the trade association’s director general Tony Tyler.

1-IATA STATES:

Nothing in the NDC standard requires passengers to supply personal information to receive an offer.

BTC OBSERVES: Yes, but IATA stops short and does not guarantee that such an “offer” would not be a rack rate, or in IATA’s terms, “vanilla pricing,” the equivalent of a price on the back of a hotel guestroom door that is so high no one ever pays it.

The IATA Statement consumers, travel managers and travel agencies are looking for is

IATA guarantees that all the options in a market would be returned, not just the ones that NDC airlines want consumers to see; moreover, consumers would not be penalized with higher fares for not surrendering any or all of the intrusive personal details that carriers have agreed among themselves they have the right to demand from consumers under the express terms of Section 3.1.1 of Resolution 787.

2-IATA STATES:    

And, NDC will not eliminate comparison shopping.

BTC OBSERVES: Yes, but IATA stops short and does not guarantee that all available fares in a market would be able to be comparison-shopped. IATA’s statement can be technically true if NDC airlines just send consumers the limited offers or bundles to compare as opposed to the current broad universe of publicly available fares any consumer can presently shop and buy.

The IATA Statement consumers, travel managers and travel agencies are looking for is

IATA guarantees that all fare offerings would continue to be publicly published for anonymous comparison-shopping purposes and that NDC participating carriers would be channel-neutral and not discriminate against consumers when using a travel agency.

3-IATA STATES: 

And it [NDC] will enable passengers to compare the base fare as well as the cost of all the options that are available.

BTC OBSERVES: Yes, but IATA stops short and does not guarantee that all base fares in NDC and non-NDC markets would be available for comparison-shopping. IATA’s statement can be technically true if NDC airlines return only the limited bundles that they want the consumer to see and break out the base fare from the “enhanced content.”

The IATA Statement consumers, travel managers and travel agencies are looking for is: 

IATA guarantees that all base fares and “enhanced content,” or ancillary services, would continue to be made available by carriers adopting NDC for any market for anonymous comparison shopping by any and all consumers.

4-IATA STATES:

IATA said it would continue to support the existing ‘legacy standard’ while demand for it exists.

BTC OBSERVES: Yes, but IATA stops short and does not guarantee that it would require interoperability between the current system of publicly published fares and the proposed NDC system.

The IATA Statement consumers, travel managers and travel agencies are looking for is:

IATA guarantees that the current system, NDC and its enabling messaging technologies would be interoperable for so long as consumers, travel managers and travel agencies support demand for the current system. 

5-TRAVEL WEEKLY UK REPORTS:

IATA members confirmed that airlines and other industry players will be free to decide whether or not to adopt NDC to support some or all of their distribution needs.

BTC OBSERVES: Yes, but IATA stops short and does not guarantee that if airlines choose to distribute “enhanced content” though multiple channels (the buzz words used in the preamble of Resolution 787 to define its scope) they would be free to reject Resolution 787 and to do so within the current system for distribution. And just as important, IATA does not guarantee that other industry players would not under any circumstances be obligated to support NDC in whole or in part. On its face, Resolution 787 makes clear that if an airline seeks to distribute “enhanced content” it and system providers (that is a Global Distribution System or “GDS”) “shall” do so according the business processes that comprise NDC.

The IATA Statement consumers, travel managers and travel agencies are looking for is: 

IATA guarantees that its member airlines would be free to distribute their “enhanced content” and any other products and services through any distribution system or within any business model construct that they choose and that other industry players would not under any circumstances be required to follow the processes adopted by Resolution 787.

Resolution 787 Should Be Withdrawn From DOT, Redrafted & Resubmitted

The conundrum that IATA has created for itself in seeking to appease critics of Resolution 787, through a broadly worded new AGM statement of intentions, is that there is now more confusion about exactly how NDC would be implemented. And there are no assurances being offered to the travel industry to translate any of the AGM’s statements of good intentions into enforceable commitments to other stakeholders. The general statements by the AGM cannot in any way whatsoever be reconciled with the detailed description of NDC in Resolution 787.

Compounding the problem is that the AGM did not fashion the new Resolution as an amendment to Resolution 787. Moreover, it’s not even clear if the AGM has the authority to do so as it was IATA’s Passenger Services Conference that adopted binding Resolution 787. And lastly, IATA’s declaration to The Beat that the AGM’s statements do nothing to change the text of Resolution 787 removes any doubt that reliance on the general assurances of the AGM to protect consumers and other stakeholders would be most unwise.

Nevertheless, if IATA is genuine in its efforts to clarify its NDC proposal it should withdraw its application before DOT; amend Resolution 787 to include the principles embedded in the new statements by the AGM, with more specificity and guarantees, and after sufficient stakeholder consultations; and resubmit it to DOT for its consideration. Only then would there be needed visibility to what IATA is actually seeking DOT approval for and an understanding of the potential positive and negative impacts on consumer choice, airline competition and personal data privacy. If IATA intends to point to the new broad statements of intent of the AGM to add support to its pending application at DOT, then it must incorporate them in Resolution 787 in a way that is unequivocal and that is enforceable by other industry participants.

Should IATA be unwilling to be anything other than 100% straightforward regarding the purpose and intended effects of NDC, and should it be adverse to guaranteeing exactly how NDC would operate, then DOT must simply reject its application. No matter how well intentioned, a feel-good set of general assurances, at fundamental odds with Resolution 787, does not strengthen IATA’s case for industry or regulatory support. With so much at stake, IATA, industry stakeholders and regulators must get this right. Doveryai no Proveryai!

     Access new IATA Resolution at http://btcnews.co/13NujdF

     Read Open Allies’ Answer at http://btcnews.co/14Jgdsx

     Review analyses of IATA's new business model at http://bit.ly/10hxua2

     See curated press stories at http://btcnews.co/16u1swM

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