The once-stable landscape of travel management companies has been significantly shaken in recent years, driven by a surge of disruptive technologies and processes, particularly the airline industry’s New Distribution Capabilities. As more airlines join in, the real implications for managed travel programs and their relationships with TMCs are becoming increasingly clear.
NDC is a technology that offers airlines new capabilities to distribute their content in a way that enables more modern retailing. Maurita Baker, vice president and managing director, North America at Travelport, believes that while the adoption of NDC has taken some time, this content is now on a trajectory to overtake traditional content sources.
“This evolution from traditional booking methods reflects a shift towards meeting customers’ desire for more personalized travel experiences while at the same time equipping agents with solutions that enhance simplicity, efficiency and overall customer service,” Baker says.
In theory, NDC simplifies the complexity of managing or servicing trip disruptions significantly since it allows factors like waiver codes, change eligibility, etc., to be controlled entirely by the technology. This enables agencies to bring complicated changes online for faster management by the traveler, reducing the risk of human error, even in those instances when a human agent is involved.
“NDC is transforming the way the travel industry sells and buys flight-related products,” says Jay Richmond, senior director, solution consulting at Amadeus. “NDC technology brings new possibilities for better retailing, like giving the airline the ability to build offers based on the identity of the traveler or corporation. This increased level of personalization can be based on preferences, historical and real-time data, or simply the context.”
So What’s New About NDC?
The fundamental difference between NDC and the legacy EDIFACT distribution system is that a broader array of content with more individualized offerings can be created and displayed via NDC-capable channels. “Because of this extra content and personalization, managed travel programs that take advantage of NDC can oftentimes find better fares, increased content and more personalized corporate bundles,” says Charlie Sultan, president of Concur Travel.
Murray Warner, SVP of managed travel for Serko, which recently acquired Sabre’s GetThere booking tool including its NDC capabilities, says when it comes to NDC, things are running at different speeds in different part of the world.
“From an airline’s perspective, it’s a hugely interesting proposition, and in the US, airlines have been much more aggressive and mature in their offerings and capabilities,” he says. “Still, we are in early stages. For business travel in the US, there are some businesses who can have a net positive from NDC, and some that can’t.”
The best way for travel buyers to assess whether it makes sense for them, Warner says, relies on the servicing component of it. That means considering important criteria such as whether their TMC has invested in the technology to fully support NDC. Are they accessing NDC through the GDS or directly with the airlines? Can they handle the exceptions such as ticket exchanges, refunds, seats, etc.? If not, are they open to allowing travelers to book direct until they have the technology in place to support these features?
Each TMC touts its own unique model for dealing with the hidden flaws which may trip up an NDC booking – from problems with changing tickets to travel disruptions. Sultan notes that in their quest to avoid commoditization, airlines have differentiated their offerings, so it is no longer a simple comparison of lowest logical fares because some products will include seat assignments, priority access, lounge access or other amenities. This will require travel managers to review their travel policy to identify which products travelers should purchase to realize the best value.
One of the primary challenges has been the readiness of the tools and processes needed for end-to-end servicing of trips in the context of a managed business travel program.
“The business travel ecosystem is complex, with many stakeholders having a role to play,” says Jean De Durfort, senior director air distribution for CWT. “The different booking channels – and online booking tools (OBTs) in particular – as well as downstream processes such as payment, billing, travel documentation and safety reporting, all need to work effectively with NDC to create a seamless experience for the customer,” De Durfort cautions. “And it’s not just about the initial booking; we need to support travelers through exchanges, cancellations and disruptions. We have seen that NDC works well when airlines, GDSs, OBTs and TMCs collaborate closely.”
CWT also sees certain functional limitations. Right now, De Durfort notes, NDC content, even from airlines with mature NDC programs, is mainly suited for simple point-to-point trips. “Mixed-carrier or interline bookings aren’t yet supported, and handling unused ticket credits – critical in regions like North America and Asia-Pacific – varies by airlines and is often still a manual process,” she says. “Many OBTs also lack the capability to handle online exchanges for NDC bookings.”
Getting on the Same Page
Another key issue is the lack of standardization in how airlines implement NDC. The environment is rife with variations in processes, data formats, and how content is activated, which makes it harder for corporate travel programs to adopt NDC at scale. GDSs are doing important work in harmonizing these differences, which helps streamline the integration process for TMCs.
Some corporations have expressed concerns over whether NDC and its increased personalization will hit their bottom line. But it doesn’t have to be that way, Richmond maintains. “Travel managers can now work with airlines to really narrow down what they want, and what they don’t want in their offers, to make sure they have the right content that fits their corporate policy,” Richmond says. “Additional products and services offered by airlines could be negotiated as added value as part of traveler or corporate recognition programs. Some of this spend might be taking place outside of corporate control anyway, so it’s also better to have it all in one place.”
For example, airlines could offer corporations lower fares on alternative flights, or bundled pricing for lounge access, if they regularly booked these services separately on the airline website outside of the OBT. Since offers can be based on traveler categories instead of travel items, this can also change the way corporations create their travel policies.
Rich Liu, CEO of Navan Travel, notes that like any new technology, NDC adoption has had its challenges, including servicing, which has drawn the most attention. That said, the rollout process and data centralization stand out as unique opportunities for standardization.
“NDC rollout is extremely complex,” Liu says. “Additionally, once a TMC or supplier is able to first adopt NDC, there is the added challenge of training and educating travel agents, airline staff and technology service providers about the benefits, functionalities, features and technical intricacies of NDC.”
What’s more, while one of the major promises of NDC is the centralization of data, there is still room for this process to mature, which is resulting in some challenges. Part of this is because of the variability of how and when that central data store is updated.
“An example of this complexity is when a TMC makes an NDC booking and then the user goes to the airline website to make changes to the booking,” Liu says. “Maybe they add a seat and a bag on the airline website. When that booking is updated again in the central data store with the seat and the bag, we on the agency side can sometimes not see who added it, how, or with what form of payment.”
Nicola Ping, global manager of travel distribution for Flight Centre Travel Group, notes the teams at FCM Travel and Corporate Traveler continue to take the necessary steps to address such concerns.
“First, when we are integrating NDC into the operations of our business, we want to always ensure that we are receiving information in a consistent and timely manner from the airlines,” she says. “Consistency is key for a traveler to self-serve, so we strive to make sure that our thorough testing reveals all the challenges upfront. From there, we work with the airlines, the online booking tools, and our technology partners to resolve any issues.”
Despite some challenges, the company has started to see considerable improvements in these areas over the last year. “FCM has been actively involved in the work that ARC has done around NDC best practice, so that practical requirements are delivered consistently,” Ping says. “Airlines and technology companies have also focused a lot on servicing, which is another welcome sign for business travelers. Given the recent momentum, I believe that we will continue to see even more positive progress in the NDC space in the year ahead.”
Making an Impression
The emerging trend as a result of widespread NDC adoption, Sultan says, is the need to search and book travel content across multiple channels, normalize the search results and displays – including amenities – and service those bookings online. “EDIFACT won’t disappear anytime soon, but we expect suppliers progressively will leverage technology like NDC to increase their control over content,” Sultan says.
According to Steve Reynolds, chief strategy officer of Emburse, his company has incorporated NDC within multiple solutions. For instance, its OBT is NDC-enabled on Sabre and Amadeus and can handle additional services such as seats and amenity purchases.
“Our re-shop solution can include NDC fares if desired by the corporate client and we capture NDC fares on every booking to provide analytics,” he says. “Most of them used our analytics to estimate the savings potential by fully accessing NDC fares.” Reynolds cites Daryl Keiper at Roche, Steve Mandlebaum at EAB, and Cindy Heston at Elevance Health as examples of clients who use these services. “This enabled them to push the TMC to support.”
Thane Jackson, senior vice president of supplier management and delivery for BCD Travel, notes the company is investing significantly in processes and platforms that support GDS-enabled Modern Retailing NDC content, which is scalable for larger programs and fulfills complex needs of booking and servicing.
“In this area, experience matters and we are live with NDC content for 13 airlines and expect to bring on 10 more early next year,” he says. “Every airline is taking a different approach to NDC, which creates more complexity. We believe we’re well positioned in working with our third-party partners to aggregate the content and adopt NDC at scale. We believe the existing content experts (GDSs and OBTs) are best placed to do this.”
Counting Up the Benefits
With NDC, the intention is for buyers to benefit from access to more competitive offers from airlines, more personalization and better merchandising.
The most significant advantages of NDC for managed travel programs, according to Reynolds, is cost savings as NDC fares can be significantly lower than GDS fares. After all, NDC fares can avoid surcharges, as well as offer basic economy fares and continuous pricing, so it’s a good way for travel managers to ensure that their travelers get access to all the content within their managed ecosystem. “To capture these savings, either the TMC has to fully enable NDC directly with the airline, or travelers book directly on airline websites,” he says.
At CWT, the NDC implementations that have been carried out to date have produced several positives, De Durfort says. “The GDS tools for NDC content have a user interface that is simple for agents to learn, and voluntary exchanges are easier than in EDIFACT,” she says. “NDC content also offers fast shopping response times, and we have found that the NDC workflow is generally well-suited for OBTs.”
Still, at the present time the major advantage of NDC content for buyers is that it can limit price discrepancies between their corporate booking channels and airlines’ websites, and can help them bypass surcharges. However, the bigger promises of NDC such as more personalized offers and an improved traveler experience are yet to fully materialize.
The Sky Ahead
When contemplating the future, Richmond says NDC is a journey and a huge industry ecosystem endeavor, and it is only by seeing the stakeholders in the industry work together that the technology can progress, develop and unlock its full potential and provide better travel experiences for travelers everywhere.
“But NDC is also not the end-game, or a goal of its own,” he says. “It is one step in a broader industry transformation of modern airline retailing, which is currently ongoing, spurred on by changes in consumer behavior.”
As the technical standardization evolves and innovation accelerates, the transaction volumes will shift increasingly towards NDC, but it will be a hybrid world for quite some time, where EDIFACT and NDC will coexist.
Reynolds believes a lot depends upon the difference in fares between NDC and GDS. “If they are fairly the same, adoption will be slow due to a lack of buyer demand,” he says. “If large differences, TMCs will be forced to adapt to keep customers, or they will bleed over to direct purchasing. With American Airlines doing a 180 on corporate travel and NDC, I think adoption will be slow for the next several years.”
As NDC content becomes more robust, it will become increasingly viable for managed corporate travel programs to adopt it at scale.
