The way air travel is shopped and booked is changing. But for corporate travel, these changes may be more than screen-deep
Here it is more than a decade after the introduction of New Distribution Capability, and we’re still trying to assess its eventual impact. As airlines push forward with their NDC rollout, one thing seems clear: The way air travel is shopped and booked is definitely changing. But for now, the reality is that corporate travel buyers can’t be sure what to expect.
“Some airlines don’t have an active NDC strategy, while others are making public statements that they’ll be one hundred percent with offers and orders in just a couple of years,” says Kathy Morgan, vice president, product management distribution experiences, Sabre Travel Solutions.
The latest developments have brought a new focus on NDC, according to Eric Hall, director, B2B channel and TMC relations at Southwest Business. “Recent moves by other carriers have brought NDC conversations to life in the United States domestic travel market,” Hall says. “These actions are now forcing travel agencies, booking tools and GDS providers to invest in newer and better technology to serve their customers, which is a positive move for the industry.”Buzz and More Buzz
Of course, the biggest attention-getter has been the new approach taken by American Airlines. In an April letter to travel industry partners, vice president of global sales Thomas Rajan announced that American would begin to offer “our best available third-party public channel content only through NDC connections.” Under the new practice, travel retailers can continue to view fares in EDIFACT, but an NDC connection will be needed to book and ticket those fares.
Not surprisingly, American’s move has brought a variety of reactions, including criticism from those who are being bypassed by the process. “We have seen an array of responses from clients, but the sentiment is generally unfavorable,” says Maureen Brady, COO, North America for Corporate Travel Management. “Corporations are the actual buyers of airline tickets and some corporate buyers feel they are being ignored by appealing directly to travelers.”
At the same time, American’s model does offer cost savings to direct buyers. TripBam’s Steve Reynolds notes that with American covering 40 percent of the markets with some type of discounted fare averaging 20 percent less, corporations using Concur and/or a travel management company using a GDS are potentially overpaying by 20 percent. “That’s a huge price increase for staying with the legacy channel,” he says. “In some markets, the fare difference is over sixty percent.”
Current figures reported by Navan, the travel, expense and corporate card provider, bear out the savings angle. NDC bookings now represent 45 percent of AA’s US domestic flight bookings, saving Navan customers an average of 7 percent per booking. For US-originating international flights, the percentage of NDC bookings is also 45 percent with an average savings of 27 percent per booking.
“While NDC/EDIFACT content differentiation is a trend we’ve been following and solving for in EMEA for years, this is the most significant move we’ve seen in the North American market,” says Tom Rigby, Navan senior vice president, commercial. Rigby adds that the inability of legacy TMCs to prioritize innovation is leaving travelers scrambling for options. “As a result, once again, customers are being asked to call carriers to complain, even though they’re paying TMCs a premium to ensure access to this content,” he says. “And once again, travel managers have yet another concession to make, faced with options that seemingly all have negative consequences.”
At Southwest, API technology has been used since 2009 when the airline launched its own API in the marketplace. “While the standard is not NDC, it works extremely well today in selling the products we offer,” Hall notes. “Southwest is proud to have all-inclusive fare families, and our technology serves us and our customers well today.” At the same time, he says Southwest has plans for investment in NDC in the near future, with the goal of bringing more efficient technology to its selling partners. But the matter won’t be forced. “One thing we won’t do is force NDC adoption to start selling more fee-based products and services,” Hall says.
With different moves expected from different airlines, developments will need close monitoring in the coming months, Morgan says. “A few airlines are starting to create truly distinctive NDC offers, but many airlines are still in the early phases of offer creation and management,” she says. “As a result, it’s important to ask airlines questions about their NDC strategies.”
Given that NDC is a work in progress, capabilities and content will continue to evolve. “There will be operational changes to your business, but twelve months from now will look substantially different than today,” Morgan predicts. This means it’s best not to make the assumption that the current state of affairs will be the long-term condition.
“I think many players are still in wait-and-see mode,” Rigby says. “It’s still anyone’s guess what happens from here, but AA’s content strategy is showing signs that it may succeed, and if that happens, others are likely to follow.”
While American’s move has gotten plenty of attention, recent advancements on the technical front should not be overlooked. Jay Richmond, senior director, global solution consulting for Amadeus, points to substantial progress in the past 12 months. “This has significantly increased the level of solution and operational readiness of the industry,” he says.
Richmond notes that the newest version of NDC (21.3) is designed to resolve some of the existing challenges around standardization, especially for servicing. “We’re confident that as the technology matures, and more airlines move to the latest NDC version, the ambitions of a more streamlined flow and user experience will be achieved,” he notes. “Because the description and guidelines of how each flow should be implemented and working has been done in much more detail in this new version, it facilitates the global adoption of NDC even further.”Sorting Through Options
While there is no shortage of options to source NDC content, at present there’s a lack of consistency in sourcing, servicing, workflow management and reporting for those bookings versus traditional EDIFACT bookings, according to Julian Russell, executive director of IT and supplier relations, GlobalStar Travel Management.
“This has led to inefficiencies for the TMC and a reduced traveler experience along with additional costs to the corporate customer in many cases,” he says. Russell notes that some of the larger global players are able to shield their customers from airline NDC strategies to a certain extent through the development of internal platforms or privately managed agreements with specific airlines. However, a number of TMCs are left to decide upon a course action.
Questions include: Is this the right time for the travel management company to integrate with third party aggregators? Should they wait for the GDS NDC content to improve? Perhaps they should invest in an NDC Direct Connect strategy? Or simply focus on existing EDIFACT and low-cost carrier content, passing on any additional costs to the customer? “It’s multiple choice at its complex best,” Russell says.
Reynolds speculates that the times call for a different kind of thinking. “It’s not just NDC fares through a GDS; it’s NDC directly from the airline or web fares as well,” he says. “Airline booking leakage could look like hotels where travelers start booking direct on the airline website.” It would be hard to tell a traveler to book through the approved GDS channel if that means overpaying by 20 percent. It might be better to identify when there is a significant fare difference and implement a new process that allows a traveler to rebook through their TMC or directly on the airline website until the OBT catches up.
Whether or not such measures are followed, the rationale for embracing NDC seems solid. “NDC is here to stay,” Rigby says. “Instead of fighting against it, the corporate travel industry should focus its energy on adapting to the new reality for the sake of moving the industry forward.” He acknowledges there are functionality gaps that exist, as with any maturing technology. But he argues that instead of questioning the premise of new technologies, energy will be better spent working with airlines and their technology providers to close gaps and improve capabilities.Moving Forward
“The transition to NDC will be gradual,” Morgan says. “For the foreseeable future, the world will be one of hybrid content: Traditional ATPCO/EDIFACT options and NDC offers.”
Customers will need to be able to navigate both types of content, she notes, and adopting NDC will require organizations to change and to succeed with this hybrid content. Suggested preparatory steps in this direction might include assessing operational impacts of NDC; examining the NDC compatibility of your existing applications, including mid- and back-office solutions; providing teams with training about the graphical shopping-led workflow, and talking to corporate about their booking tools and readiness for NDC.
“Be sure you and your TMC partner are aligned on end-to-end servicing as you engage with NDC,” Brady advises. She notes that even with the ability to “turn on” NDC fares, it’s important to understand the end-to-end traveler experience and how it may affect your program priorities.
Morgan advocates paying attention to current events and preparing for change. Given the variability in approaches by airlines, it’s important to establish a perspective on what NDC means for your operation. “Start testing NDC as soon as possible to understand what it will take to operationalize NDC content in your environment,” she says. That way, you don’t miss out on content. You can also understand how capabilities are evolving and how your organization will evolve as the industry changes.
Even with things in a state of flux, there seems to be plenty of reason for optimism. “NDC is an industry transition that will bring many benefits going forward,” Richmond says. “And to make this transition happen, collaboration between TMCs and airline partners and technology providers is key.” He believes the TMCs and corporations that get involved with NDC now will have more influence as the messaging standard evolves and will be able to make sure their voices are heard.
In the process, the impact on travelers should be a priority. “As we see a significant shift to NDC as airlines further develop their NDC strategies, think about the needs of corporate travelers and how NDC can simplify the process,”
Richmond advises. This means asking what services or ancillaries travelers have been booking on airline websites, and then expensing back. It also demands having a clear vision of what they want from NDC and discussing with providers how they’ll deliver on this promise. Discussions should identify the type of content bundles that will work for travelers such as lounge access negotiations for certain routes, WiFi bundles, buying pre-assigned seats, extra carryon luggage, and fast-track or semi-flexible tickets.
Hall notes that for some buyers, NDC will bring a better experience with more customized offers. “But for other buyers, it will be more of a nuisance because content has just been moved from one place to another with added friction related to shipping, booking, ticketing and servicing processes.”
Russell adds that while NDC will change merchandising capabilities for the better, all involved must accept that it will take time, and the road won’t be a smooth one. “We are all playing catch up which is not uniformly defined or implemented by the airlines,” he says. “This is likely to impact productivity, service and costs for some time.”
Richmond agrees that progress will be gradual. “Even though we do expect that the transaction volumes will shift increasingly toward NDC as the technical standardization evolves and innovation accelerates, we’ll be living in a hybrid world for quite some time, where EDIFACT and NDC will coexist,” he says. “It’s therefore very important that travel solutions can handle both technologies in parallel and at scale and, ideally, in a seamless, non-disruptive way.”
Russell advises coordinating with your TMC to understand the challenges at hand and agree on short-, mid- and long-term goals to manage NDC together. “The benefits will be worth it and will outweigh the bumps encountered along the way.”