An enduring lack of industry distribution standards is continuing to hamper airlines’ efforts to exert more control of how their fares are sold in indirect channels.

Yasin Demir, vice president of distribution at Air Baltic, told the UATP Airline Distribution conference that low cost carriers (LCCs) continue to have an advantage over their full service competitors in controlling their product.

He said as an LCC with around 70% of distribution direct, Air Baltic is in a position to experiment with things like dynamic ancillaries.

“We actually see that less is more. We do not have lots of fare brands. We are taking best practice of what’s working well and developing that.”

Air Baltic is developing its approach to next generation offer order retailing and aims to apply that approach to the remaining 30% of its distribution through third parties.

“LCC’s have a bit of an advantage when it comes to unbundling, especially when you look at the technology constraints behind the full-service carriers. It’s a difficult ask for the full-service carriers.

“We would always want our product sold as well as we do on our direct channels. You tend to lose that control when it comes to that indirect space. If you depend 50% on indirect trade you spend millions on fare products only to lose that. It’s an industry problem.

“It comes down to a lack of standards in the marketplace across NDC [New Distribution Capability] and EDIFACT and more importantly talking to agencies about how they sell us.”

Demir added: “We have been talking about NDC for 15 years. The LCCs have been doing API direct connectivity for a long time. Standardisation is not there. Every airline is doing it [NDC] differently.

“We do not do a good enough job understanding our industry workflows and how things connect there.

“Agencies are looking after looking after themselves. They want to wait for more mature NDC product which are more reliable.

“As an airline it’s difficult to drive NDC adoption because it takes time. We are trying to tie this into a longer term vision and strategy but the reality is this is going to take a long time to deliver.”

Keith Wallis, managing director of customer digital and distribution at Air Canada, said the carrier was among the first to go down the unbundling route and the airline retains a culture of innovation and experimentation with “science” and artificial intelligence being deployed to “price more accurately and drive more value”.

He said Canada is a “graveyard” for low cost carriers due to the country’s “challenging” regulatory regime. “I’ve seen dozens of LCCs have a go in Canada and not be successful. Our largest competitor is probably one of the original hybrid airlines.

“That’s why our bundling strategy is more important.  We want to offer some more formal fares and other opportunities for consumers to buy more flexibility and more comfort. Choice sometimes confuses people, and you can go too far.”

Wallis said he expects AI to be used to bring the most relevant fare options to customers. “The hope is we can help consumers find something quickly, the travel experience they want from us and buy that and get out of the door quickly. NDC is the new technology that allows us to do that with the indirect channel.

“This change is going to be difficult, it’s a transition, it’s going to cost money. If you do not do it now the cost will only be more in future years. We are starting to put in place capabilities to generate new opportunities for customers.

“The whole point of NDC was to give travel agencies the opportunity to get those new opportunities for customers. You will naturally see the transition grow more as airlines put focus on modern retailing.”

Air Canada estimates NDC adoption is now at around 20%-25% but that this is not uniform across all indirect channels with the large OTAs on around 70% or 80% because due to their technology resources and scale “they can make it work”.

Corporate travel remains heavily in the traditional PNR and GDS ecosystem, Wallis said.

Christine Rivelli, Finnair chief revenue officer, said the airline has been able to successfully switch its domestic fares to NDC because it has clients who were easy to transition and move forward with the new distribution technology.

She said customer insight on who airlines are selling to is evolving. “Now the profile of the traveller is changing. The data you get about who they are and what they like is changing. Not only do we have more information about who is buying the product we also have more information about what they might like to buy from us and what we’re not selling to them.”

Rivelli said that by the time a customer arrives at an airline website they have already made four or five decisions about what they want and “don’t have many left” to make. But the modern airline does have more touch points, like the app which allow carriers continue to selling after the initial purchase.

“A part of it is what are we actually selling, the other part is how well do we know who we are selling to. Somehow in between you have to make those decisions possible. That’s what we are doing with NDC – divorce the PNR (Passenger Name Record) with what we are selling to our customers.”

Rivelli added: “It’s prioritisation and digital development we have to do, which sometimes comes into conflict with the regulatory burden imposed on us. It’s a balance for us.”

Asked what is holding things back, she blamed a “legacy mindset”. “We are in an industry where you can’t take chances. That mindset tends to translate into the rest of the head office. You cannot take chances unless you know something is going to work.”

Wallis said he was optimistic. “There are a lot of great companies here and in the industry that are building amazing products that are going to help us be a profitable industry. We know where we are going and how to be profitable. We have a really solid plan to get there.

“Every good five year plan contemplates at least one disruptive event. But other than that our industry is on a really good path. Geopolitical stability would help, more planes would be helpful. If we can just calm down and get on with it I think we can do it.”