Change in the Air: New Capabilities, New Connections
As the NDC ecosystem scales up, more partnerships are emerging
By Mark Rowh
We may have entered a new era. After sometimes slow initial progress, IATA’s New Distribution Capabilities standard seems to have taken on a life of its own, at least when it comes to collaboration among established players in the airline value chain.
“The most important change related to NDC in the last two years is the level of cooperation that’s been established between airlines, GDSs, agencies, booking tools and corporate customers,” says Neil Geurin, director of distribution strategy for American Airlines.
The past couple of months in particular have seen a flurry of activity, as leading players have increased collaborative efforts related to NDC. Among them is American’s announcement, along with American Express Global Business Travel (GBT) and Amadeus, that they have now processed live bookings using NDC-enabled content.
The goal is to exercise full functionality of end-to-end booking flow and servicing when capabilities reach scalable production levels. Through the arrangement, American will seek full benefit of the Amadeus travel platform, through which travel companies such as American Express GBT can provide access to comprehensive and robust travel content.
In August, Serko and Southwest Airlines announced an agreement to provide NDC content in Zeno, Serko's travel management application. Under the agreement, Zeno clients will be able to shop, book, ticket and change Southwest Airlines flights. This includes the ability to purchase early check-in during initial booking as well as post ticketing.
Also in August, Travelport began its first bookings with Qantas using NDC. The bookings are being made through Travelport’s Smartpoint program in a live production test environment, as the airline prepares distribution of differentiated NDC content for later this year. For Travelport, which has previously connected to five European airlines’ NDC content, the move represents continued efforts to expand customer access through enhanced and personalized content.
Sabre Corporation and CWT have also announced an increased level of collaboration with the aim of developing and delivering end-to-end NDC solutions to the marketplace. And BCD Travel recently signed an agreement with Qantas Airways to participate in the Qantas Channel. This follows previously struck channel booking deals with Air France/KLM and British Airways/Iberia.
Channel agreements provide travel agents who sign up for them access to a wider range of fares and content, and allow clients to book reservations without paying the airlines’ channel booking fees, says Rose Stratford, BCD’s EVP, global supplier relations and strategic sourcing.
BCD has also signed an NDC agreement with Lufthansa Group while working with Amadeus NDC-X program, Sabre Beyond NDC and Travelport’s NDC advisory group to help shape the future of NDC via the GDS. The strategy is to ensure that companies retain the ability to shop from among multiple competing offers between like city pairs – and can capture essential data needed to keep travelers safe on the road.
Scaling Up Graham Wareham, head of NDC and partnerships at ATPCO (Airline Tariff Publishing Company) says the recent announcements are not overly surprising. “NDC has been around for quite some time, and has shifted into a phase of scale,” he says. “Scale is very difficult without large-scale partnerships and industry infrastructure.”
ATPCO is among those committed to helping the industry enable NDC, according to Wareham, even though the complexity of moving to this scale should not be under-estimated. “I think most feel as we do, it’s no longer if but when,” he says. “We’re excited that the industry – airlines, GDS and TMCs – are all working to implement NDC.”
Geurin is also optimistic about anticipated advantages brought by the standard. “NDC content available via indirect channels will bring choice and convenience to customers that wasn’t available previously,” he says. Customers who need or choose to shop via third party channels will have the opportunity to interact more seamlessly with airline products and services that previously were only available via one or more subsequent direct transactions, he adds.
It’s actually quite encouraging to see the airlines begin to embrace the GDSs as part of their overall NDC strategy, says Jason Toothman, EGM–global air distribution, Flight Centre Travel Group. “Clearly, the GDSs have the most scale and reach for distribution, and those are elements that airlines want to capture with an initiative of this size.”
While there are many technology providers in the travel ecosystem who can provide capabilities and functionality for airlines, he explains, the GDSs have a proven track record of speed, reliability, performance and efficiency that most airlines would love to see at the heart of their NDC program.
Wareham points to the focus of the airlines on retailing and allowing their customers to better understand the products they have to offer. “As a result of this focus, we do see that the whole industry, including ourselves, are needing to think more about the retailing experience,” he says. His company is actively creating Next Generation Storefront, or NGS, standards to enable better retailing across the distribution environment.
“We encourage all TMCs to get engaged with the NGS initiative to explore how this can benefit their own organization,” he says. “And we encourage all buyers to speak with their corporate tools about their NGS plans.”
With NDC, both TMCs and corporate buyers should have increased flexibility and opportunity to negotiate fares, Toothman notes. “For TMCs specifically, the creation of personalized offers and orders on the airlines side means that frequent flier profile information is even more relevant to the supplier at time of shopping and purchase,” he says.
In addition, the incorporation of ancillary products such as paid seats, baggage allowances and lounge access all become part of the negotiation landscape related to private fares. Private fares themselves become private bundles that both the TMCs and corporate buyers can negotiate with airlines to secure as part of their commercial agreements.
Bumps in the Road Despite the progress to date, making the transition to NDC still poses significant challenges. “It will be a tough choice for corporate travel buyers, there is no denying that,” says Mohit Chandiramani, director, global transportation supply at Egencia. “Buyers have always been able to rely on the fact that any content accessed through the GDSs is fully supported with the tools and processes built around it and the contracts that they negotiate with airlines.”
But NDC isn’t currently working in the same way, he says, advising corporate travel buyers to consider this when making their choice. Chandiramani asks, do you want to accept a lesser service experience today as a way to maintain access to all publicly available NDC content? Or accept less-than-complete access to publicly available content, and maintain the high-quality travel experience supported by the GDSs?
“No current NDC distribution channel offers the ability to service a booking at the level GDS bookings do today,” he says. “And there are other gaps in functionality associated with bookings made through NDC distribution channels which need to be solved to make the experience comparable.”
Gaps include developing systems and processes around ticket changes and cancelations, and the fact that the process to receive and respond to scheduled changes to flights is not the same as with GDS. In addition, the data needed for duty of care reporting is not yet being delivered by airlines, not all forms of payment are accepted by all airlines and there is no clear way to redeem cancelled tickets.
“We recognize that NDC has tremendous potential in business travel, but we also know that it’s not ready for consumption by all of our customers,” Chandiramani says. “The standard is still maturing, and the current gaps and complexities mean that we can’t yet deliver a high-quality end-to-end experience for every customer.”
When it comes to negotiations, one possibility is that they will become murkier. Initially, GDS-based solutions allowing shopping and booking through NDC will begin deploying alongside traditional GDS functionality, Stratford says. However, not all of the nearly 300 IATA airlines will adopt NDC in the same way and at the same time.
“This is guaranteed to add another layer of complexity of the airline distribution landscape,” she says. “If it is a true unique offer, the likelihood of two airlines offering the same would be unlikely.”
Another point to consider is the attributes that clients receive today as a result of their loyalty status; does the offer they’re receiving not include something they already get for free today? “Apples-to-apples comparison will be much more difficult in the future,” Stratford says.
For NDC to be truly successful, agencies, OBTs and travel buyers all need to have access to a “fit-for-purpose” solution that is scalable across the industry, Toothman says. In the absence of having this type of solution, the buyer side will incur significant costs and tremendous inefficiencies in trying to enable the technology in a way to make it work for all parties.
If that were to be the case, buyers, agencies, TMCs and others would be frustrated with the outcome and likely to seek alternatives to facilitate an easier, more productive booking experience. “Collaboration between the airlines and GDSs creates a much more likely scenario of success for NDC in the travel industry,” Toothman says.
In fact the more communication, the better. “We encourage anyone interested to reach out to your airline, agency and GDS partners to join in the process,” Geurin says. “Your point of view is critical to help us build connections that benefit everyone.”