Last fall, the International Air Transport Association (IATA) put out a call to all travel startups, alerting them that it had partnered with investment firm Travel Capitalist Ventures to create an ‘NDC Innovation Fund’ to accelerate use of the association’s New Distribution Capability standard by investing in the best and brightest new entrants in the space. This week, at IATA’s World Passenger Symposium in Hamburg, the association revealed that the fund’s first investment will be for Silicon Valley-based startup ETA, Inc.
ETA is chaired by Jeffrey Katz, who was the founding chairman, president and CEO of online travel agent Orbitz and who also previously served as CEO of now-defunct Swissair, as well as in senior executive positions at American Airlines and global distribution system Sabre. The so-called Executive Travel App being launched by ETA, Inc. aims to support seamless travel shopping, buying and management for the $120 billion self-managed travel market, according to IATA.
Having received a reported 70 submissions from geographically diverse travel startups, IATA’s selection of a Katz-chaired company might seem curious to industry newbies. After all, part of the driver behind the creation of the NDC Innovation Fund is to provide industry connections that startsups wouldn’t normally have access to.
As some travel startups are all too aware, “if you go down the wrong path as a startup you could spin your wheels for six to nine months. You need someone who understands the industry. Of course, there is a gap to bridge between startups and airlines,” Travel Capitalist Ventures partner Abrar Ahmad told RGN last year when explaining the purpose of the fund.
The NDC Innovation Fund “is structured to address the deep pain I know travel startups experience in terms of identifying investors who truly understand their businesses. Travel Capitalist knows the opportunities and idiosyncrasies of the travel industry and has capital to invest, and can provide expert advisors for strategic guidance along the way”, Ahmad noted in a statement published on IATA’s website.
In selecting a firm chaired by Katz – the former chief of an OTA, GDS and an airline – for its first funding distribution, does the NDC Innovation Fund see ETA, Inc. as requiring this level of expert advisory assist or simply access to the capital?
Explaining the decision in a statement, Ahmad enthused, “We are excited to invest in ETA as it develops an intuitive mobile application to seamlessly integrate personalized air, hotel, car, and in-destination services, while addressing key pain points across a business traveler’s journey. The self-managed business traveler will be able to support key aspects of his or her business trip via this app, including cross-airline product searches, displaying a unified view of their journey, engaging in community-based content with other business travelers, receiving contextual business traveler focused notifications, and duty of care and post-journey reporting needs.”
RGN reached out to Ahmad and IATA for additional comment, but the former punted our questions to IATA. The association’s Washington DC-based spokesman, Perry Flint, tells RGN: “The NDC Innovation Fund supports innovation around the NDC Standard whether in this case it’s in the form of supporting the unmanaged business traveler, or for supporting travel agents and others who stand to benefit from what the NDC Standard enables. The Fund is open to all kinds of innovation from in and outside of the industry. While Jeff Katz happens to be from within the industry the founders of ETA are not.
“In the view of the NDC Innovation Fund, there isn’t another NDC-enabled mobile app addressing the needs of the unmanaged business traveler. There are other unmanaged apps for business travelers but having an NDC-enabled one will deliver great service to the self-managed traveler, who’ll immediately benefit from the value the NDC Standard enables.”
On first blush, renowned travel analyst Henry Harteveldt seemed less enamored with the Executive Travel App, noting in a series of tweets at the event that the app suggests airlines, hotels, etc, based on factors such as loyalty status, upgrade ability and proximity, and uses left-right swiping motion to navigate, but that it “doesn’t appear to be particularly innovative”.
Haven't seen much innovation in Executive Travel App. Looks similar to other business travel planning tools. #iatawps
— Henry Harteveldt (@hharteveldt) October 20, 2015
But in a follow-up exchange with RGN, he said, “I was rather unimpressed with the Executive Travel App (ETA) based on its presentation. However, I subsequently learned that while ETA is honored to have been chosen by the NDC Innovation Fund for an investment, they were somewhat reticent to present. The product is still in development and they don’t want to reveal too much for competitive reasons.”
He also batted away the notion that any sort of favoritism for industry veterans affected the fund’s decision, noting, “In ETA’s case, Jeff Katz plays a role in the third criteria – helping ETA execute. Jeff brings substantial experience and credibility to the organization. Jeff, in my opinion, will help them keep focused, has excellent leadership experience, and will be very helpful in helping the ETA team understand travel distribution dynamics, strategies, needs, and challenges, as well as distribution technology. Jeff’s professional reputation may help increase ETA’s credibility and appeal to other investors. Funding, of course, is essential to ETA’s ability to execute.”
The partnership between IATA and Travel Capitalist Ventures is a first of its kind for the association. It is born out of IATA’s interest in stimulating innovation in the airline distribution space but with an appreciation for the fact that the association doesn’t have the internal capabilities from an investment side.
NDC, which offers a framework for XML-based data transmission standards, is expected to modernize the way airline products are presented through both online and brick-and-mortar travel agents. At present, most travel agencies book airline ancillaries (like extra legroom products, chauffeurs and upgraded meals) via airline websites, not the GDSs, according to a report from Harteveldt’s Atmosphere Research Group released at the World Passenger Symposium.
“Agents are concerned about the loss of productivity associated with moving back and forth between their standard [GDS] screen displays and airline websites in order to book ancillary options,” notes the report.
Improving visibility of ancillary products via NDC will ultimately improve the passenger experience (#PaxEx).