THE 75th IATA and World Transport Forum was held in Seoul, South Korea over this past weekend (01-03 Jun) and I was on the ground talking to all of the aviation stakeholders about the value of distribution via travel agents.
It surprises me just how much views vary about the way travel agents should be recognised and treated, and the challenge of the inconvenient truth that travel agents still sell a very large percentage of air tickets purchased around the world. Some of the headline numbers are big. IATA has downgraded its industry forecast for collective airline profit for 2019 to a mild $28 billion, representing about $6.90 profit per seat sold. This would be across the 291 member airlines which represent about 82% of the industry.
The BSP, which is the financial instrument that clears the funds between freight forwarders, travel agents and airlines, transacted some USD$384 billion. That’s just a few billion short of the GDP of Norway - or in other words, a lot of money that is still being transferred between intermediaries and airlines. It seems it underpins the point about the continued relevance of agents in the travel value chain.
The other really interesting discussion point at this year’s AGM was digital transformation and sustainability. On the digital transformation front, NDC definitely dominated the discussions at the coffee breaks and lunches. It is clear that there may be an IATA standard in Resolution 787 for compliance on data transfer, but there is absolutely no standard for how each airline is planning to roll out its NDC strategy, what it will include, how much it will cost, and in real terms, what the actual value proposition is for agents.
I think the digital transformation desires of the airline industry are out of step with the physical capability of the small to mid-size travel agents, and having spent three days talking about it at the meeting, sadly, I don’t see a simple solution forming as yet. I suspect as more airlines embark on their own NDC strategies, I hope they draw some learnings as to how not to do it, which I would suggest is the common view to date on those that have embarked in the dark art of NDC transformation.
I suspect IATA will need to rethink how to better support member airlines in launching, communication and training the global agency community as to what it all really means, why and how it will make life and doing business easier for the travel agent and their client.
We shall see, but it would suggest over the coming year there will be much more commercialisation of NDC into the industry than in the past year and I will continue to do all I can to be involved and help get mutually beneficial outcomes for everyone involved in this seismic shift in distribution