10 minute read
IATA and industry update
Digest
Omicron hits passenger demand
IATA announced full-year global
passenger traffi c results for 2021 showing that demand (revenue passenger kilometers or RPKs) fell 58.4% compared with the full year of 2019. But this was an improvement compared with 2020, when full-year RPKs were down 65.8% versus 2019. International passenger demand in 2021 was 75.5% below 2019 levels.
Capacity (measured in available seat kilometers or ASKs) declined 65.3% and load factor fell 24 percentage points to 58%. Domestic demand in 2021 was down 28.2% compared with 2019. Capacity contracted 19.2% and load factor dropped 9.3 percentage points to 74.3%. Total traffi c for the month of
December 2021 was 45.1% below the same month in 2019, improved from the 47% contraction in November, as monthly demand continued to recover despite concerns over
Omicron. Capacity was down 37.6% and load factor fell 9.8 percentage points to 72.3%.
Omicron travel restrictions slowed the recovery in international demand by about two weeks in December. International demand has been recovering at a pace of about four percentage points/month compared with 2019. Without Omicron, international demand for the month of December was expected to improve to around 56.5% below 2019 levels. Instead, volumes rose only marginally to 58.4% below 2019, from -60.5% in November.
“Overall travel demand strengthened in 2021. That trend continued into December despite travel restrictions in the face of Omicron,” said Willie Walsh, IATA’s Director General. “That says a lot about the strength of passenger confi dence and the desire to travel. The challenge for 2022 is to reinforce that confi dence by normalizing travel. France and Switzerland [recently] announced signifi cant easing of measures. The United Kingdom has removed all testing requirements for vaccinated travelers. We hope others will follow their important lead.”
BREAKING NEWS As we went to press the Ukrainian government closed its airspace in response to Russian military activity. IATA Director General Willie Walsh said, “Safety is always the top priority for aviation. We hope for an early and peaceful resolution.” IATA will continue to support airlines as the plan their operations around airspace closures in Ukraine and parts of Russia.
Cargo continues to send strong signals
IATA data for global air freight markets
shows that full-year demand for air cargo was up 6.9% in 2021, compared with 2019 (pre-COVID levels) and 18.7% compared with 2020.
This was the second biggest improvement in year-on-year demand since IATA started to monitor cargo performance in 1990 (behind 2010’s 20.6% gain), outpacing the 9.8% rise in global goods trade by 8.9 percentage points.
Global demand in 2021, measured in cargo tonne-kilometers (CTKs), was up 6.9% compared with 2019 (7.4% for international operations). Capacity, measured in available cargo tonne-kilometers (ACTKs), was 10.9% below 2019 (12.8% for international operations). The lack of available capacity contributed to increased yields and revenues, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues. In December 2021, rates were almost 150% above 2019 levels.
Economic conditions continue to support air cargo growth. For instance, global goods trade rose 7.7% in November (latest month of data), compared to pre-crisis levels. And global industrial production was also up 4% over the same period.
Supply chain issues that slowed the pace of growth in November remain as headwinds. Labor shortages, for example, partly because of employees being in quarantine, insuffi cient storage space at some airports, and processing backlogs all continue to put pressure on supply chains.
HEALTH MASTER LIST A STEP FORWARD FOR ONE ID
IATA welcomed ICAO’s
creation of a global directory of public keys required for authentication of health credentials. The directory— called the Health Master List (HML)—will make a real contribution to the global recognition and verifi cation of government issued health credentials.
A public key enables third parties to verify that a QR code displayed on a health credential is authentic and valid. The HLM is a compilation of public key certifi cates signed by ICAO and regularly updated as more health proofs are issued, and new public keys required. Its implementation will ease the global recognition of health credentials outside of the jurisdiction in which they were issued.
“For international travel today, it is critical that COVID-19 health passes can be effi ciently verifi ed outside of their country of issuance ,” said Willie Walsh, IATA’s Director General. “Though the keys for verifi cation are available individually, the creation of a directory will signifi cantly cut complexity, simplify operations, and improve trust in the verifi cation process. ”
Health Master List:
The new HML will improve the global recognition of COVID-19 health passes
6.9%
IATA data for global air freight markets shows that full-year demand for air cargo increased 6.9% in 2021, compared with 2019 (preCOVID levels) and 18.7% compared with 2020.
Arnulf A.C. Pribas
CEO, pribas airlines solutions GmbH
Amit Chawla
Global Business Unit Head, Travel & Logistics, Nagarro
Transforming airline distribution
pribas and Nagarro are bringing together NDC Off er and Order Management with digital engineering capability
pribas and Nagarro are transforming airline distribution by bringing together NDC Off er and Order Management with digital engineering capability, enabling greater airline customer engagement.
IATA pushes for and expects a modern retailing ecosystem to substitute the legacy airline distribution world until the end of the current decade. Although the New Distribution Capabilities (NDC) and the ONE Order initiative defi ne the new industry standard and deliver a robust blueprint, most airlines have found it challenging to embrace the change.
“From our point of view, if airlines want to regain control of their products and their customers, they should move away from outdated systems and processes as quickly as possible,” says Arnulf A.C. Pribas, CEO of pribas airlines solutions.
“To make this shift, it is important to use the appropriate instruments. The basis is an Off er and Order Management System that uses the new standards that can fl exibly implement the airline’s requirements depending on the business model and customer groups. Couple this with an NDC middleware, which can choreograph the Off er and Order Management Systems with the remaining airline ecosystem such as CRM, airport systems, DCS, and revenue management, and we have a complete modern distribution ecosystem,” adds Pribas. pribas airline solutions was founded in 2018 as a spin-off of the pribas holding. Over the past three decades, it has earned a reputation for connecting airlines and touristic systems thought to be impossible to connect. Their cloud-based AirBrokerONE is the most mature Off er and Order Management System that includes reservation and inventory on the market, based purely on NDC and ONE Order.
Likewise, Nagarro is a reputable global digital engineering leader with more than 15 years of experience in the industry. The company’s off erings include digital product engineering, customer relationship management, customer experience, AI, ML, and cloud-based solutions. Nagarro is currently helping airlines build their next-gen distribution systems by providing NDC strategy, consulting, middleware development and system integration, as well as customer platforms.
The two partners believe that creating a middleware between all internal and external platforms will immensely simplify airline operations. Be it mobile or web-based interactions, interline or codeshare interactions, PSS-CRM-Revenue management system interactions, travel agents-revenue manager interactions, etc., a middleware will induce agility, faster time-to-market, and operational eff ectiveness. It will ensure replicability and reduce duplication, saving all the other APIs from constant changes. A middleware with the right capabilities will ensure airlines maximize all the benefi ts NDC has always promised.
Taking the leap
“The next few years are going to be critical for NDC adoption, and we believe many
A fully NDC-compliant airline
In 2021, Nagarro helped Norwegian start-up airline Flyr successfully launch a new, digital fi rst-airline based on pribas’ OMS solution, AirBrokerONE, powered by an NDC middleware in less than ten months. The solution enables them to create new fare choices at will (recently launched UNG fare, completed 50,000 bookings) with a lean and agile operational setup.
“Getting the chance to help defi ne one of the world’s fi rst native IATA One Order & NDC airlines has been highly challenging and motivating at the same time. We take immense pride in playing such an important role in helping Flyr launch their operations and delivering an exceptional digital experience to their customers,” says Amit Chawla.
airlines will transition towards a modern NDC distribution,” says Amit Chawla, Global Business Unit Head for Travel & Logistics at Nagarro.
“The overall airline ecosystem is complex and has taken decades to reach its current state. Added to this is the complication of all the diff erent ecosystem providers and partner airlines being in their own journey of NDC adoption. While a working Off er and Order Management Solution is the crux, airline managers should consider the challenges of combining diff erent solutions from diff erent providers to provide new distribution and retailing opportunities. This is critical for a smooth operational transition,” adds Chawla.
“A key challenge today while thinking about transition is to manage the co-existence/ status-quo of the legacy and NDC-based systems. But we can help airlines answer this question. Our Off er and Order Management Solution off ering is mature, and together with the integration capabilities from Nagarro, we have the experience to cater to these transition scenarios,” says Pribas.
“It is always convenient to maintain the as-is status,” he jokes. The changing market dynamics and evolution of passenger behavior have reiterated the need for airlines to move away from legacy systems to a modern distribution system that improves their ROI and meets the needs of the new-age passenger.
Realizing the benefi ts
Upcoming technologies such as AI, AR/VR, and blockchain will be instrumental in helping airlines achieve the NDC vision of taking airline distribution to the next level.
“The impact of these technologies on retailing could be immense as already evident in other industries such as e-commerce. Complementing the Off er and Order Management systems with these technologies would help airlines turn their end vision of hyper-personalized, contextualized and rich content into reality,” says Chawla.
“This would further build on the capabilities of the Off er and Order Management Solution as the digital engineering capabilities can create a personalized recommendation engine for ancillaries and fl ight bookings for passengers. They can also create an analysis of passenger preferences to share the off er in the right format with the passengers,” Pribas concludes.
