Analysts skeptical of IATA's shift away from NDC certification

IATA says its decision to replace the current NDC certification process with a multilayered program called the Airline Retailing Maturity (ARM) index is intended to spur quicker NDC adoption and implementation by the airline merchandising value chain. 

But the initiative is being met with skepticism by analysts. 

“I’m not sure this new way of benchmarking is going to make any change. There are airlines that are aggressive with NDC and those that are less aggressive,” said senior Phocuswright analyst Norm Rose, who added that the airlines that tend to be more aggressive are the stronger carriers. 

Next October, IATA will sunset the existing NDC registry, under which airlines, travel sellers and airline merchandising system providers are certified as levels 1 through 4 or @Scale for the NDC capabilities. 

In its place, the ARM index registry still details the specific NDC capabilities of companies in the airline merchandising value chain, but without the certification level designations. It also folds in the One Order fulfillment capabilities of companies, which until now have been maintained in a separate public registry. 

IATA says the new registry also uses more straightforward language than the NDC registry, providing a new lens for industry participants to look through. Already 25 companies have made the transition into the ARM index, including Amadeus, Accelya, United, American and British Airways. 

The new registry is just the first pillar of the three-pillar ARM index. Together, IATA says, the pillars are geared toward helping the industry more fully realize the revenue potential that could be unlocked by modern merchandising. 

One element of modern retailing is the selling of ancillary and bundled products. Another is continuous pricing, in which airlines offer a wider variety of price points than the 26 fare buckets that they have access to at a given time under legacy merchandising technology. Still another is personalized offer creation, in which fare bundles are personalized in real time to airline shoppers.

The second and third pillars of the ARM index will be private. The second pillar, which IATA is labeling Partnerships Deployment, is intended to give airlines and sellers insights into how well they are doing in scaling their NDC-enabled capabilities. 

The third ARM index pillar, which IATA labels its Value Capture Compass, is only for airlines. Its purpose, said IATA distribution director Yanik Hoyles, is to help airlines understand how they are doing relative to peers in implementing modern retailing strategies and solutions, including bundling products and content; pricing and revenue management; and order fulfillment. 

The maturity report will show airlines whether they are underperforming, on par with or overperforming similar types of airlines in those various categories. 

Atmosphere Research Group founder Henry Harteveldt said he believes IATA has unstated motivations for launching the maturity reports. 

“The goal is to get business for IATA’s consulting division,” he said. 

Still, Harteveldt said the new three-pronged ARM index has merit and will likely improve over time. Combining One Order and NDC capabilities into a single registry, he said, will provide a more complete view of each company’s capabilities. 

And the maturity reports, by showing an airline how it compares with its peers, will be the most important part of the initiative over time, he said. 

Rose, though, said that he believes IATA is focusing too much on pushing advancement of NDC-enabled retailing, and not enough on whether NDC channels have adequate fulfillment capabilities, even though that has been a major sticking point across the merchandising value chain. 

“If the servicing is not there, the customer is not happy and the distributor and the intermediary are not happy,” Rose said.

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