### British Airways and Iberia comments on the application for approval of an agreement

by the International Air Transport Association (IATA) on distribution standards (Resolution 787).

Data exchange standards established by IATA and other industry bodies have underpinned the air transport sector for the better part of 40 years. AIRIMP teletype and EDIFACT have been in use since well before the rise of the Internet, and support the basic data messaging functionality that is required where travellers are shopping on the basis of schedule and price alone. However, messaging standards have evolved materially in the Internet age, to support consumer

- driven demand for increasingly sophisticat ed and granular online shopping experiences. Extensible Markup Language (“XML”) was designed explicitly to emphasise simplicity, generality and usability over the Internet, 1 and it has come into common use for the exchange of data over the Internet.

In fact, XML is already used in the air transport sector (for example, the Open Travel Alliance and Open Axis standard is XML

- based and GDSs have used XML

- based connections with certain airlines and XML usage is common with low cost carriers). Unfortunately wider adoption of XML has been inhibited because of the absence of a single industry wide standard for the use of XML. IATA’s New Distribution Capability (“NDC”) is underpinned by the Open Axis Group standard, a modernised
XML standard created in 2010. In essence, NDC offers players in the air transport sector the potential to exchange data with one another through standardised APIs. It would not mandate who sector players communicate with or how they do so. For example, an OTA or corporate customer coul d use

an XML

- based IT solution to aggregate data that it acquires from one or more GDSs and any combination of metasearch sites, content aggregators and airlines, simply by interfacing with the

XML

- based Application Program Interfaces (“APIs”) used by thes e entities. This approach would enable the OTA/corporate customer to use such an IT solution to access data from a range of sources,
and would also provide access to a rich set of data about the various flight options. NDC has the potential to increase c hoice in both of these significant respects.

Indeed, by creat ing an industry message standard that can be used for the distributi o n of enhanced content through indirect channel s NDC would reduce entry and expansion barriers for new and existing market part icipants, potentially further increasing competition by facilitating new products

.
In a departure from the present situation, NDC would enable travel agents and customers to choose how and from whom to source the data that they use to select, book and mana ge their air travel, working with a technology p rovider able to design and supply an IT solution that meets their needs. They can choose to add such a solution to their current GDS

- supplied data stream, replace a current GDS solution, or to continue to us e a traditional GDS solution as they currently do.

In addition, NDC would facilitate real

- time and dynamic updates to pricing

, rather than the periodic updates that the current standards support . This clearly benefits the industry as a whole, through

access to the most up to date and accurate price s

.

1 http://www.w3.org/TR/REC

- xml/#sec

- origin

- goals.Having said all of this, while the use of XML APIs would facilitate a broad range of IT solutions

between different players in the sector, British Airways and Iberia understand that NDC would not provide a mechanism for anticompetitive exchange of (or access to) competitors’ commercially sensitive information. In other words, XML APIs would not provide a channel through which carriers could anticompetitivel y exchange product information between themselves. IATA is aware of the risks here, and we understand that IATA has taken steps to safeguard against inadvertent (and deliberate) information exchange.

Finally from the technical perspective, the ability to deploy an XML

- based IT solution could lower the price of air travel, both by reducing distribution costs by increasing options for ag ents customers and reducing the costs of some systems (e.g., modern IT systems that use message standards such as
XML are l ess expensive to maintain and operate than legacy mainframe systems; in addition barriers to entry would be lower for new providers of XML

- based systems, and increased competition would reduce the costs of such systems).

In addition to facilitating custom er access to, and integration of data from, multiple sources, NDC would continue to offer customers the ability to compare schedules and prices across airlines, helping drive a highly competitive market that has benefited consumers hugely. If anything, ND C would enable customers to increase the number of airlines that they are able to compare, by using XML APIs to access data for low cost and other airlines not currently displayed by GDSs or that already use XML for their interfaces with GDSs ( e.g. , Easyje t).

Importantly, IATA ’s NDC would enable airlines to meet consumer and corporate demand for more choice and information about products and services. The modern consumer expects to receive relevant and detailed offers when searching and purchasing, and t o be able to add and remove products and services that are (and are not) important to them. The AIRIMP and EDIFACT standards are inflexible and do not support comparison shopping on product and service features. When shopping for most products in other f ields, the ability for customers to compare product detailed features is an essential part of the shopping process, which the current airline industry infrastructure simply does not support. Full disclosure and information about product attributes is clea rly in the interests of consumers. Some consumers want to be able to choose particular services (including whether to receive a meal, seat selection and Internet access in the air) without having to purchase a bundle of such services, while other consume rs prefer premium service carriers where a number of services are included in a bundle irrespective of the choice of cabin. In all cases consumers want to avoid surprise extra charges and are better served with shopping options that allow them to understa nd what they are buying and compare not just price but also quality of service. NDC would enable consumers to easily see what is bundled in the core service, what other options exist for related products and services, and the relative cost of each.

If m ore choice and innovative products cannot be offered by third party distribution infrastructure because of technical limitations, new solutions are required. Otherwise, these choices and products will only be accessible to customers on airlines’ own web s ites. British Airways and Iberia recognise the importance of travel agency partners, for both customers and the airlines, and want to be able to get our extended product range to customers via travel agents and other indirect channels. We also recognise that there is rapid innovation with the web and mobile in how customers shop, and believe that the ability to retail products effectively through current and as many new channels as possible,
allowi ng customers to make objective decisions from the widest r ange of options, is essential.Personalized marketing enabled by NDC standards would give c onsumer s the option of avoiding

irrelevant products or generali s ed offers. All c onsumers would get the price benefit s of the hyper competitive airline industry, but each consumer would also have the choice of either shopping anonymously or shopping in a manner that provides them with personalised offers. Travel agents and other shopping outlets that use NDC standards could ask c ustomers if they wish to provide
infor mation in advance of shopping to indicate their preferences so that they can be provided with options that meet those preferences, just as customers visiting an online retailer, such as Amazon.com can do today

. C ustomers would also be given the option of remain ing anonymous if they prefer not to provide data regarding their preferences. The personalization contemplated by the NDC standard is similar to some existing practices for shopping for air travel (e.g., today customers can already opt to provide ad ditional information in advance when shopping, such as their frequent flyer number

, to receive tailored offers and more importantly, content relevant to their frequent flyer tier status (for example, seat selection free of charge) )

. Collection and use of personal information regarding the traveller is already an inherent part of the shopping and booking experience. The NDC standard would make the collection, exchange and use of this information more efficient and enable more options and relevant offers fo r the consumer

. Airlines, intermediaries and travel agents are already subject to privacy and data security laws and regulations around the world and thus today and tomorrow’s personalized offers would have to be fully compliant with the requirements of those laws and reg ulations.

The NDC standards w ould also enable functionality for offering travellers assistance when their travel is disrupted. For example, the personalization capabilities that are used for the sales process can be used to provide travellers with rel evant and useful solutions to their situation when their flights have been cancelled or delayed (e.g., through the prompt provision of personalized options for alternative travel and connections in the airport on their mobile device).

In sum mary , the NDC standard would facilitate innovation and competition in air transport distribution and lead to greater choice and lower prices for air travellers.

John Mornement Jacobo Herrero Peire Head of Selling & Distribution VP Sales British Airways Iberia Waterside Martínez Villergas, 52 PO BOX 365, Harmondsworth 28027 Madrid UB7 0GB, United Kin g dom Spain