Comments of Aviation Professor Emeritus Nawal Taneja

Introduction

I have worked in and around the airline industry for more than 40 years, making it literally a life- long 

study. As a practitioner, I have provided strategic planning consulting for major airlines and airline 

service industries globally. As an academic, I have served as a Professor and Chairman of the Aerospace 

Engineering and Aviation Department at Ohio State University, and as Associate Professor in the Flight 

Transportation Laboratory of the Department of Aeronautics and Astronautics of the Massachusetts 

Institute of Technology. During my career, I have authored two series of books: first, eight books for 

graduate and undergraduate students; second, seven books on various aspects of the industry for 

practitioners, often at the request of airline executive management. In the second series, two of my 

books, Fasten Your Seatbelt: The Passenger is Flying the Airplane, published in 2005 (Taneja, 2005) in 

which I examine the changing relationship between modern airline passengers and airlines, and The 

Passenger Has Gone Digital and Mobile: Accessing and Connecting Through Information and Technology, 

published in 2011 (Taneja, 2011) delving further into the role of technology in these changes, are 

particularly relevant to this issue. 

Today’s Travel Consumer

There is no doubt that consumers are largely in control of the airline market, although this may contrast

with the general perception of most travelers. But the evidence is clear. The most telling statistics are 

the inexorable decline in average yields from passengers – a trend that can be traced from the early

days of commercial flights. Despite cost cutting, airlines, as a group, have been consistently unable to 

earn profits at even modestly healthy levels. In contrast, passengers in this highly competitive industry

have paid less per mile for air travel, while air travel itself has become faster and safer at the same time. 

My research, involving hundreds of interviews with passengers and airline executives, disclosed

important trends which, when combined with consumer control of the market, are central to IATA’s 

initiative: (1) a growing segment of passengers wants more choice of fares and ancillary services when 

they shop for air transportation , (2) many passengers are willing to pay more than the cheapest fare for 

basic, no frills transportation when they clearly understand the added value, and perceive the additional 

cost as fair, and (3) a growing number of passengers would choose a personalized shopping experience 

if one were available. These forces impact all participants in the marketplace who must pay close 
attention to these trends to survive. All must become more consumer-centric in their distribution 

strategies, as well as their product and service value propositions.

Many of today’s modern air transportation consumers understand there are differences in fares, driven 

by advance purchase time and the flexibility of the fare in terms of refunds or changes and other 

variables. When they see a highly-restricted, deeply- discount fare, they want to know the cost of a fare 

with fewer restrictions in order to make an informed choice. Further, these consumers understand 

there are differences between carriers, particularly low cost carriers and the legacy network airlines, and 

the recent “unbundling” of services and amenities has increased the passengers’ spectrum of ancillary 

service choices. These consumers know that some aircraft come equipped with in-flight entertainment 

or WiFi, not all seats are equally comfortable, and that some airlines offer ground side amenities such as 

priority passage through security or airport lounges. Not surprisingly, these consumers want the 

information necessary to shop around these quality and amenity differences. These consumers are 

accustomed to comparing differences in hotels, car rental services and a wide array of other consumer 

experiences from buying books, music, computers and other products online, and are looking for a 

comparable experience in shopping for air travel. The existence of websites and mobile applications 

such as seatguru.com and tripadvisor.com among many others, underscore consumer demand for the 

consolidation of this information. And there is a growing number of tech-savvy, frequent traveling

consumers who are willing to go beyond mere transparent product and price to use technology to 

personalize their shopping experience. These consumers are happy to have their travel agents or 

preferred airlines keep their preferences and profiles on record, and use them to deliver the best deal 

with the amenities they value. As this trend grows, we can expect airlines, travel agents and others to 

test new, innovative ancillary services so long as the technology allows those offers to be marketed and 

sold efficiently to consumers. 

Airlines must be prepared to respond to today’s modern consumer by balancing simplification with

more choice and genuine consumer value with cost. Distribution technology must improve to provide 

transparency not only for fares, but complete offers which will include more options, choices and 

services. Whether offers are generic bundles produced by airlines, built by the consumer using a

“shopping cart” methodology or are customized based on information provided by the consumer, 

distribution technology must ensure the consumer understands what each offer includes (and does not), 

the total cost and has transparent access to alternatives for comparison. IATA’s proposed 
standardization of a robust, flexible XML data format appears to be a necessary, if not sufficient, step in 

the process needed to support this consumer trend. 

IATA’s Resolution 787

As I understand, Resolution 787 has two distinct features. At its most basic, the Resolution merely 

directs IATA to develop new data interchange specifications in XML, creating one new working group in 

the process but otherwise relying on its existing governance structures. This is hardly revolutionary 

since IATA, together with ATA, developed and managed the current data specification long ago. The 

novel aspects are only the use of XML and requirements for increased functionality. At the same time, 

Resolution 787 describes potential changes for which the new standard would provide a foundation. 

Despite some protests, many of the cited changes are inevitable once the airlines have differentiated 

the products and services surrounding the basic element of air transportation. With an array of 

products and services, airline distribution will follow the means and methods of other online retailing. 

“Shopping cart” product selection, re-bundling discrete packages, and customized offers to reward 

shoppers’ loyalty are obvious paths for airline distribution to replicate. These are all either wellestablished or are growing trends in the online sale of consumer products and those same consumers 

will demand the same experience in shopping for differentiated travel services. 

Travel Agents Should Be Supporting Resolution 787

In this context, opposition by travel agents is perplexing. Today, airlines are making improvements in 

their own websites, enabling the marketing and selection of alternative, less restrictive fares and 

ancillary products and services. Consumers seem to appreciate the information and choices, voting with 

their wallets and driving revenue opportunities for the airlines beyond the sale of mere transportation. 

Airlines control this environment and are profiting from it. But airlines no longer control the technology 

available to travel agents, which has lagged the rapidly changing marketplace. IATA’s proposed 

standardization of the data interchange in XML is helpful only in the indirect, travel agency distribution 

channel, and has no impact on airline direct website sales. Thus, its adoption only benefits travel 

agents by mitigating one technological barrier to access to better price, product and service choices. By 

opposing IATA’s initiative, agents increase the obstacles blocking their access to this content. 

Critics’ suggestions that IATA’s proposed New Distribution Capability will diminish transparency and risk 

increasing the sense of unfairness and discrimination in pricing, even attempting to “gouge” consumers 

is equally unfounded in my opinion. With the growth of different airline models, new in-flight products 
and an expanding array of ancillary services, transparency must include not only price, but much more 

information about the qualities of the promised service, product and alternatives. Comparison 

shopping of this differentiated airline product is difficult today because the information is generally only 

available on individual airline websites, not through online or brick-and-mortar travel agents. IATA’s 

proposal specifically targets that gap, hoping to make the revenue opportunities of these choices 

available through more channels. The corollary effect of facilitating the presentation of these consumer 

choices through the travel agency channel is to increase comparability of different offers, enhancing 

transparency. Critics argue the risk of gouging resulting from broader distribution of price, product and 

ancillary service information into comparison shopping formats. However, it appears to me that the 

skills of professional travel agents will be augmented with better information. 

Despite the concern caused by some participants in the airline community, IATA is not proposing an 

overnight revolution in airfare distribution. Resolution 787 appears to help the industry smooth the 

transition to a standardized use of XML instead of the outdated EDIFACT data structure language. IATA’s 

processes ensure broad input and ATA and IATA together developed and maintained over decades the 

data structure in use today without controversy. The establishment of an XML standard is overdue and 

necessary to support point of sale marketing of the full spectrum of airline fares, products and services 

through all distribution channels. Standardization enhances efficiency and lowers costs for all 

concerned; airlines, agents and technology service providers such as GDSs. While necessary, it is not

sufficient to bring about the changes in distribution described in parts of Resolution 787. Once the XML 

standard is in place, it will be up to the airlines to listen to the consumer demands for more informed 

choice. The marketplace will determine the pace of adoption and development of the functional 

capabilities the Resolution anticipates. In this industry, we can expect those changes to take years to

spread. 

Impacts of Resolution 787: Consumers, Airlines, Travel Agents and GDSs

Assuming eventual adoption of the new standard, what will be the impact? For consumers, there 

should be more ability to buy just the transportation and related services desired, with full comparison 

shopping capability. And the shopping should be more dynamic, with the consumer able to filter, sort, 

compare and select services and prices on a wide variety of criteria. Take, for example, a 

businesswoman seeking a transcontinental flight able to look only at flights with WiFi connectivity and 

extra leg room allowing her to work comfortably and stay in touch with colleagues while she is enroute. 

Or on her next flight with her family, she may use the enhanced data and technology to limit her search 
to only flights with seat-back entertainment for her children. For her teenage son’s spring break, a 

traditional low fare, no frills, search may be best. With the robust capabilities XML offers, consumers 

should expect all of these capabilities. In the longer term, creativity and innovation not only by the 

airlines, but by travel agents and others may create new service opportunities. 

For airlines, there is an obvious revenue opportunity. Unbundling and the presentation of fare and 

service choices has provided product differentiation beyond mere transportation. The airlines will be 

able to offer those ancillary products and services that passengers actually value, identified by their 

willingness to pay. Some critics contend that these services used to be “free”, which is of course, not 

true. The cost of providing the additional services was simply shared by all passengers whether they 

utilized the service or not. With the ability to market products, such as additional leg room, or services, 

such as security fast lane access, airlines can more accurately determine which services passengers 

value and make the corresponding investment. Competition may be taken to a new level and airlines 

will have to pay close attention to the consumer’s needs, desires and willingness to pay. Just as small

fare differentials caused disproportionate shifts in market share, the full transparency of price and

ancillary service fees that will follow standardization and adoption in travel agency channels, may also 

lead to rapid shifts. It will be essential that airlines have the real time flexibility to respond to consumer 

demand. 

Travel agents will see their role enhanced. As airlines offer more complex choices, the travel agent’s 

role expands. Whether it is harmonizing corporate travel policies with a broader array of in-flight 

amenities, or guiding an occasional traveler through the alternatives, the value of an experienced, 

knowledgeable travel professional seems likely to rise. XML is much better understood and more widely 

used than EDIFACT, and XML programmers are ubiquitous. Thus, IATA’s open XML standard also 

increases the likelihood that innovative travel agents will find services and amenities they can offer at 

point of sale along with the airline’s offer of transportation, increasing their revenue opportunities and 

the service they can provide their clients. 

Technology service providers will feel the pressure to adapt. The shopping and booking process will be 

different, with airlines capable of responding to either anonymous shopping or customizing offers based 

on information provided by the consumer. GDSs will have to make new investments and will likely face 

new competition as new entrants offer services to the travel agency community based on the XML 

standards. This could explain much of the opposition that has been generated. But the need for some 

kind of intermediary is still apparent. While the role may change, the travel agent will still need a 
technology solution to formulate and submit the request, to filter the request to send it only to airlines 

that provide service on the requested route, and to organize and display the responses received from 

airlines for comparison, selection and booking by the agent. Resolution 787 seems to hope for new 

entry in this intermediary role, but the GDSs have enormous advantages over any prospective new 

entrant. GDSs have established relationships with travel agents and connectivity to the world’s airlines. 

And the business model which includes incentive payments to the agents and business support such as 

back office software, combine to make a formidable entry barrier. 

Conclusion

In conclusion, Resolution 787 and a new, open XML-based data interchange specification will provide 

broad benefits to the industry and consumers. It is a necessary, but not necessarily sufficient, step 

toward improved comparison shopping consumers already enjoy in a wide variety of other online retail

in other business sectors. The criticisms, ranging from potential “gouging” to some kind of grand 

conspiracy to compel consumers to provide detailed personal information just to receive a service and 

fare quote seem unlikely in this traditionally competitive industry. The standard seems aimed at 

enhancing the data to be received by travel agents where comparison shopping takes place either under 

the trained eye of a professional travel agent, or where various online shopping tools are only a click 

away. Accordingly, Resolution 787 has my full support as it helps the airline industry address the 

changes in consumer demand for a more complete travel shopping experience and personalization.