7th February, 2022
Airlines’ journey to retailing is far from a straightforward process. As for how NDC or New Distribution Capability is contributing in this journey, one vital aspect is related to airlines being the Merchant of Record as they come up with their offers for the queries from the indirect channel. So how the responsibility related to a transaction is going to shape up is being delved into.
It is imperative for airlines to re-consider processes and payment workflows with the adoption of IATA’s standard, NDC.
Speaking about the same during Ai’s webinar on NDC and Payment-related Use Cases, Thomas Helldorff, VP Airlines and Travel, Worldpay referred to “payment conundrum” and how certain “extra scenarios” demand attention. He explained NDC and airline payment value chain, including the role of all the stakeholders. With NDC, the utility of tokenization, which replaces sensitive data with random characters to shield the original data, is being evaluated – mainly looking at the entire booking flow featuring the customer, a seller like an OTA, NDC aggregator, airline and the payment gateway, the role of 3D data and authorization, and involving tokenization and de-tokenization.
Another area – evaluating authorised payment methods in BSP for NDC transactions or fraud liability shift. A BSP is the central point through which data and funds flow between travel agents and airlines. During one of Ai’s events a couple of months ago, IATA explained how airlines would continue to benefit from the BSP and its enhanced value proposition (e.g. NDC card transaction in the BSP, transaction details and how an airline can conduct the transaction in conjunction with its provider payment services).
Considering that the world of travel payments is “complex and specific”, as also pointed out by Manolo Bogajo, Head of Payments Consulting, Amadeus, payment-related aspects can’t be taken for granted and have to be inclusive in the NDC offering. Airlines must look at single gateway connection, one link for payment services including acceptance, capture, fraud management and reporting, and replicate their back office set up for NDC.
The role of tech and systems
Airline and travel technology continue to explore options related to doing away with legacy tech and instead gear up for a simplified set up that ably supports retailing, distribution, and fulfilment.
How to look at the tech stack so that the “low profit margin” associated with the airline business gets a boost? It is imperative to get rid of certain back-end systems and tech that is not “efficient and agile”, pointed out Ann Cederhall, Consultant, LeapShift.
Travel technology specialists have been looking at refining retailing capabilities of their offerings (the key point being aligning according to the IATA Airline Retailing Maturity (ARM) index, launched October last year. The index combines Settlement with Orders (SwO), ONE Order, and NDC certifications. In the OneOrder world: All information is now contained in a single Order.
From payments perspective, Lufthansa Systems’ Sebastian Holfert stated that there is a need to focus on simplified financial processes (accounting, settlement and reporting), in accordance with ONE Order and SwO. “The key would be to minimize accounting complexity and cost, enabling smooth transition period for all financial processes,” he said.
Lufthansa Systems’ Jean Adadevi spoke about payment reconciliation and control.
Accelya’s Teresa Rivera underlined the significance of being in control, and for this airlines have to look beyond status quo. She referred to cash flow and accelerating settlement process, end-to-end reconciliation and faster and accurate accounting.
Chiara Quaia, VP Travel, Mastercard, too, featured in the webinar.
By Ritesh Gupta
Ai Team
