We are focused on creating best practices around NDC transactions.

Interview with Shelly Younger, Head Director, Airline Retailing Strategy, ARC

Shelly Younger, Head Director, Airline Retailing Strategy, ARC

Shelly Younger has been with Airline Reporting Corporation (ARC) based in Arlington, Virginia, for nearly two decades. She is the Director for Industry relations and Airline Retailing after holding many high-profile positions in ARC since joining in 2005 as a Business Analyst. Shelly is a key part of the ‘change brigade’ at ARC and looked up to in the industry as the face of things to come.

Not just the face of change, Shelly is the expert having covered the entire depth and breadth of the ARC Settlement System and was involved both in product development and product marketing. Before life at ARC, Shelly came from American Airlines doing Transaction audits – undoubtedly the best way to understand the business! Shelly holds a master’s degree in business administration.

You had a long, happening, career at American Airlines in travel agency risk management and auditing before moving to ARC in 2005. Today you are part of the ‘change battalion’ at ARC – leading the airline retailing solutions team including Direct Connect with NDC, aggregator relationships and ARC’s core settlement product. Did you stint with American give you the insights needed in convincing airlines to make the change and move forward?

It is hard to believe I have been at ARC for 19 years and it is tough to leave once you work in the travel industry.

American Airlines was the perfect place to start. I was exposed to a broad scope of the airline business since my roles focused on agency channel fundamentals, including transaction auditing and debit memos.

This helped me understand the airline business in the third-party channel. I collaborated with revenue accounting, sales, distribution, risk management, corporate contracts, payments, and other areas at American. Externally, I collaborated with ARC, ATPCO, IATA, and the GDSs. Coming to ARC broadened that scope from one airline’s point of view to a larger distribution ecosystem.

Even in my early days at American, the airline explored agencies connecting directly to airline fares. These distribution conversations were across the industry. ARC’s unique position in the industry allows our team to incorporate feedback from across stakeholders so the solutions we develop benefit the larger ecosystem.

2023 was a momentous year for ARC in terms of ensuring strong technological foundations. These include new API for ARC Pay, reducing the need for manual intervention, expanding the commission percentage to the 100th decimal, to name a few. What are the focus areas for the current year in terms of technological interventions for the ARC?

Thank you, it certainly was a big year and advancing NDC remains a focus. ARC is enhancing our Direct Connect product to modernize data transmission, expand data insights, and enhance payment options, among other items. We are also committed to bringing the industry together to create best practices around NDC transactions through our NDC Advancement Working Group, which we set up last year. This group brings together representatives from TMCs, airlines, technology providers, back and mid-office providers, and GDSs to smooth out the servicing issues that are preventing these parties from unlocking the true power of NDC.

ARC’s 2024 priorities include expediting data exchanges for airlines and agencies that will increase the output and availability of our settled data, both NDC and GDS EDIFACT. We will begin testing our Transaction API solution, which allows airlines and technology providers to participate in ARC’s ASP reporting, settlement, and data platforms using more modern technology and gives ticketless airlines the same options without abandoning their existing ticketless systems.

Coming to the topic of the hour, NDC. Transaction volume grew from eight percent to about 19 percent in 2023, including 30 airlines and over 1,000 travel agencies. How long do you think before one can overcome the resistance to change from traditional models, to see the benefits and there is a broader adoption?

We know there will always be some resistance to any change of this magnitude; that is natural. However, for many, I am not sure I would call it resistance to change, as stakeholders need time and the resources to adapt. There are so many factors playing a part. If you look back in airline history, all significant changes in distribution and the third-party channel have taken years and sometimes decades to reach widescale adoption, like booking airline tickets online or through your mobile phone vs. phoning an agency or airline, the move from paper to e-tickets, from obtaining a physical boarding bass to scanning one from your phone. These changes impact such an extensive scope of stakeholders that it can take some time. But history teaches us that change happens whether we are ready or not.

ARC saw NDC volume double from 2022 to 2024, and it does not appear to be slowing down. We have 11 airlines in some onboarding stage, so seeing the NDC volume double again year over year would not surprise me.

You established the NDC Advancement Working Group to provide a forum for industry collaboration on issues impeding NDC adoption. What are the main challenges the Working Group? What are the main milestones that you have achieved to date? Do you believe that the rate of change/movement is adequate over the years? Do you think other retailing methods may overtake these efforts?

Since IATA first introduced NDC in 2012, implementation has been slow. As I mentioned in the previous questions, these changes take time and impact many stakeholders.

Over the past year, though, integration across airlines and travel agencies has accelerated. Established last year, ARC’s NDC Advancement Working Group brings together industry stakeholders to identify best practices that will smooth NDC operational and servicing challenges. We have participation from TMCs, OTAs and other agencies, airlines, aggregators, GDSs, industry technology, and service providers and have invited other industry organizations to participate.

The NDC Advancement Working Group has identified several significant challenges that we hope to address. These include the need for consistent communication of change notifications, voluntary and involuntary changes, simplification of airline rules, unused value management, and realizing the original commitment of eliminating debit memos.

We continue to outline and refine these challenges and plan to have industry best practices by the end of 2024. That said, we already see airlines taking the group’s feedback and implementing changes to make it easier for agencies to buy and service tickets through the NDC channel. Additionally, ARC uses this feedback to guide airlines as they onboard to our Direct Connect (NDC) program.

As we are aware, LCCs, or low-cost carriers, are ticketless and do not participate in the ARC and IATA settlement systems. While this works for distribution in the home market of an LCC, it does become a challenge when venturing across borders and trying to interline with legacy carriers. IATA developed an API solution, the IATA Financial Gateway (IFG), to help LCCs get into the IATA BSP by adding a ticket number for each transaction. Is it possible that this may also be adapted for use by ARC? Do you see ARC working with Navitaire to create a seamless connection to offer settlement services to LCCs similar to the way ARC works with GDS? Do you see ARC creating a direct connect API for LCCs like IndiGo who are hosted on Navitaire?

Low-cost carriers (LCCs) are often modeled on a ticketless platform, with Navitaire being the primary provider of ticketless services. Legacy airlines have been on ticket platforms since the beginning of commercial aviation. The LCC model has been closer to “ONE Order” or order-based for much longer. Their model and technology are much newer and, by design, more simplified.

The legacy airlines created and have been moving data to IATA and ARC for many years. Those standards have been in place for a long time. IATA created an API for their IFG product, which made transmitting data from the LCCs and legacy airlines easier.

Similarly, ARC created the Transaction API to allow airlines and technology providers, like Navitaire, a more modern and flexible way to participate in ARC’s ASP reporting, settlement, and data platforms without abandoning their existing ticketless systems. The API would give low-cost carriers access to our comprehensive dataset while opening the untapped corporate traveler and B2B markets. We are excited to begin working with Navitaire, a ticketless airline, and open this opportunity for legacy airlines.