Using the word “new” may be a time-tested business strategy, but it's often as much a matter of marketing as of real change. However, in this instance, that doesn’t seem to be the case with New Distribution Capability (NDC). While the initial set of standards from IATA goes back to 2015, the latest developments show increasing momentum for this innovative approach to distribution.
By the end of 2017, a total of 50 airline NDC deployments had gone live with more carriers planning to follow suit in 2018 and beyond, according to Yanik Hoyles, IATA’s director of the NDC program. And of 196 airlines IATA surveyed last year, 113 indicated they planned to deploy or already had deployed the standard, up from 86 in a similar survey conducted in 2016.
Also bringing momentum to NDC has been last fall’s release of the 17.2 standard. “Building on feedback from early adopters, this release includes significant restructuring work and thus provides notable improvements over previous releases and has been well received by the industry,” he says.
Hoyles notes it has been recognized by major technology companies, including the three global distribution systems, as providing a baseline benchmark for industrialization. In addition, last year all three GDSs committed to achieving Level 3 NDC certification, the highest level attainable, by the end of 2018.
NDC is really about transferring the creation of the airline offer (price, price plus ancillaries, bundles, etc.) from the GDS source to the airline, says James K. Davidson, CEO of Farelogix. Davidson refers to this as the airline “owning and controlling” the offer, and says this is the biggest impact of NDC.
Based on the type and amount of information willingly provided in a search request – ranging from anonymous to authenticated – the airline will instantly create an offer for that request. Depending on the airline, a variety of relevant offer options may be returned in the search response. Davidson predicts these options will vary over time as more airlines fully adopt NDC and begin to differentiate their individual offers.
Data from ARC indicate purchasing ancillary services outside an airline website currently isn’t easy, according to Mike Premo, president and CEO of ARC.
Those figures show an average of one sale for every 143 tickets across all ARC-accredited agencies, compared to one for every 290 tickets via TMCs.
Premo explains there is logic to fewer sales via TMCs, since business travel is going to have a higher proportion of travelers with status to avoid paying for some ancillary products, but a ratio of 1:290 seems extreme. And if TMCs can’t book, sell and service ancillary products, they can’t help corporations manage them.
“The entire purpose of NDC is to enable all or nearly all products available via airline websites to be shopped, sold and serviced via agencies including TMCs,” Premo says. “So we’re fans of NDC – bringing this content to TMCs and agencies is a good thing.”
Improved Options
With the growing number of players and the increasing sophistication of NDC solutions, the benefits are becoming more apparent. According to IATA, pluses for corporate travel buyers will include greater control, with fewer out-of-policy bookings, as well as improved reporting thanks to the ability to track all authorized products and services. Other features include the ability to view and compare all available air transport options and relevant fares, as well as to select the most appealing travel options for employees based on policy as well as preferences.
To gain a broader understanding of what travel managers are looking for, IATA has recently carried out proposition marathons, dubbed “Propathons,” in which corporate travel buyers have brainstormed new ideas for airline products and services for the business travel community.
Results have also included suggestions for the key components of what a future airline/travel manager relationship might look like. Other collaborative stakeholder activities with travel buyers include the annual AIR (airline industry retailing) Business Travel Summit and the European and North American Travel Management Advisory groups.
Competition should bring continuing advantages, insiders believe. “There will be many opportunities as airlines compete with differentiated offers," Davidson says. This will involve moving the current airline/corporate relationship – which tends to be a volume-based commercial negotiation – more toward an airline product negotiation where the airline can compete with an array of available product options. Many will be based on inventory availability such as premium seats, upgrades, priority boarding, lounge passes and more.
The potential to reduce overall hassle also seems strong. “Unless you’re a traveler with a higher loyalty status, ancillary products that you might want or need can be a challenge to obtain via your TMC,” Premo says. They can be inaccessible, costly and risky – for example, giving out airline website log-ins so TMCs can service these on behalf of travelers – and possibly creating challenges with data collection and reporting.
The combination of making the offered content available via NDC is step one to address the shopping side, Premo maintains. Step two is the actual purchase via an EMD (electronic miscellaneous document) or the future “OneOrder” shopping cart order to enable transparency of the purchase via card /TMC data sources.
Among the most active advocates for NDC is Travelport, which so far is the only GDS operator to achieve IATA’s highest certification as an NDC Level 3 aggregator. Travelport is now extending its range of products ready for the new mixed-economy era of airline distribution. This year it will launch a standalone application bringing in NDC content that agents can see and book, to be followed in 2019 by a unified desktop system that conveniently mixes all content on a single desktop platform.
“We view NDC as an extension of what we have been doing already for years,” a spokesperson for Travelport says. “NDC is a significant change, but it’s an important opportunity not only to bring airline distribution into the fast-paced digital world but also to build a different relationship between all the parties, one that recognizes the value provided by each component.”
As another player to embrace it fully, Amadeus has created a dedicated program called NDC-X to drive the industrialization of NDC. The company is now collaborating with several airlines to define a solution that gives travel sellers access to travel content using the NDC standard. The objective: To make NDC content easy to access and compare so travel providers and sellers can serve travelers simply, quickly and accurately.
Securing richer, more diverse ancillary benefits for travelers is an opportunity enabled by NDC, agrees Mike Koetting, EVP of supplier and TMC service for SAP Concur. “Negotiations will no longer be limited to fare discounts,” he says. “Early boarding, bag allowances, cancellation windows, change fees, seat assignments and so forth can all be part of an NDC-enabled relationship between an airline and corporation.”
However, he cautions buyers to be wary that NDC-enabled personalization doesn’t circumvent travel policy. “Just because a carrier or intermediary may have determined a particular traveler is likely to purchase an economy comfort seat, for example, that doesn’t mean the travel policy of first offering an economy seat should be ignored.”
Remaining Challenges
The entire travel shopping and purchasing ecosystem needs attention to bring all this to life, according to Premo. “Displaying what might be non-apples-to-apples offers to travelers or agents might not be as easy as we’re used to,” he says.
One challenge is the likelihood that updating quality control and other robotics will be necessary to account for more complex policy applications and contracts, as well as the actual fulfillment process of issuing e-tickets along with relevant EMDs or OneOrders.
In fact, digging into how NDC will affect airline relationships will be key for travel managers, Davidson notes. "It will mean a deeper understanding of corporate traveler needs and transforming those needs into a new airline product-based relationship, rather than one that is based on the traditional airline price."
Koetting points out that for most of the industry, NDC is not itself a particularly controversial issue. “After all, it’s merely a distribution schema,” he says. “The issues arise when NDC content is not adopted across all distribution channels, especially the GDS, or when distribution fees or fare differences are assigned exclusively to one channel and misleadingly attributed to NDC.” He says incorporating NDC requires significant investment by the GDSs and to a lesser degree by the major users of the GDSs – TMCs and corporate online booking tools.
“Until NDC content is uniformly available in the GDS, however, corporations and their travelers will seek access to the NDC content, and the intermediaries who serve them will struggle to sell and service this non-GDS content,” Koetting says. He notes that SAP Concur is trying to accommodate both channels. Its TripLink solution allows travelers to shop and book NDC content directly at the suppler website, while Concur Travel OBT offers NDC content from the GDS and other distribution channels.
“The success of NDC hinges on the ability of all stakeholders to collaborate and agree on how the standard will be used across the industry,” says Gianni Pisanello, VP, NDC-X program at Amadeus. “While airlines and other content providers need to ensure interoperability and cost management, travel sellers and corporate travel owners need to be involved in the design and evolution of the standard. The more we can help accelerate adoption of NDC-based services, the faster we’ll see success across the travel ecosystem, which corporate travel can only benefit from.”
Going forward, NDC will enable the air transport industry to transform the way airline products and services are sold, Hoyles says. "It will enable travel agents to have access to the same content that is easily displayed on airline websites, as well as personalization, compared to the mostly commoditized displays of fares and schedules available in the travel agent channel today."
The next phase, Hoyles predicts, is about driving a critical mass of NDC transactions. The focus through 2018 will be on adoption across the travel value chain and implementation support.
In keeping with this objective, IATA has announced creation of the NDC Leaderboard featuring airlines that seek to grow their NDC volumes rapidly. The leaderboard, which can be accessed at iata.org/whatwedo/airline-distribution, is comprised of 20 airlines that are looking to contribute to an industry goal of 20 percent of their indirect transactions being from an NDC API by 2020.
It seems clear carriers will continue to rely heavily on the product methodology they’ve put in place to compete – consisting of competitive baseline fares and products with optional upsells based on traveler wants and needs, Premo says. He notes that corporations and TMCs need access to all that content to obtain the right negotiated offerings for each client company, and to service and manage those expenses.
“NDC’s promise is to deliver on that need,” Premo says. “Seems like it can’t come soon enough.”
