Aviation Business News

T2RLEngage2023: Interoperability is key as airlines face retail tech transition

Airlines that continue to rely on traditional retail and distribution systems could find the decision about when to move to modern IT is taken out of their hands by systems suppliers and developers.

That was the warning at the T2RLEngage conference from chief executive Richard Clarke, as he assessed the ability of the aviation sector to transition to more modular modern tech architecture.

This week’s conference in London brought more than 500 delegates together to explore how aviation will transition away from single unified PSS technologies to more modern Order, Offer, Settle, Deliver (OOSD) systems.

Clarke said the economics of developing and supplying these next-gen retailing technologies that airlines need will rely on the interoperability of systems and the ability to integrate them at scale.

But he said large developers will inevitably offer discounts for supplying multiple modules in the emerging OOSD world making it more likely airlines will buy from one.

“The economic reality is that the vendors who do everything are going to offer more of a discount when you buy more modules from them,” said Clarke.

He added that Covid losses “are going to take time to recover which means we have an investment gap at a time when we want to have our cake and eat it.

“The reality is you have to think about whether this interoperability is real for you and what you want to do about it.”

T2RL believes there is a “tipping point” of around 50 million Passengers Boarded (PB) annually above which airlines have the resources and infrastructure to handle complex systems integrations at scale.

Below that, the consultancy and tech specialist believes airlines will face a more limited choice. And, with the transition to OOSD likely to take time incumbent, IT vendors will have a major advantage.

Clarke said, in addition, higher incremental costs associated with New Distribution Capability (NDC), a data standard Iata has been developing and rolling out since 2012, have been accepted and “baked in”.

He added: “This is a moment when the vendors are being asked to make significant investments and guess who is going to have to pay? That’s you, the airlines.

“The reality is we are now at a point in the industry when the way we think about the commercial model is going to have to change.

“You need to think about partnerships. You are not going to have the money to build everything you need to build.

“We do not believe everyone in the industry will went to go to OODS. But at the end of your PSS contract vendors will ask for a premium for continuing with legacy technology.

“The guys who move first will move first and vendors will have huge incentives not to support two systems and they will decide on your migration date.”

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