Certainly, involvement by major players is on the increase. Yanik Hoyles, IATA’s director, NDC program, says progress has been significant over the past year, with all three GDSs having followed through on their 2017 commitments to achieve NDC level 3 certification.
“The NDC leaderboard of 21 airlines is firmly established,” he says, adding that it’s driving toward achieving a critical mass of NDC transactions by the end of 2020 and is now up to 65 live NDC deployments by airlines.
IATA has announced two new levels of NDC certification to be introduced as of March 2019, Hoyles says. NDC@Scale, a new certification for airlines, is a set of criteria to demonstrate whether airlines (and their IT providers) have a minimum suite of recognized capabilities to drive volumes of NDC transactions toward 2020. And Level 4 certification recognizes full offer and order management and will include additional servicing messages.
“The maturity and stability of the NDC standard has evolved,” says Gianni Pisanello, director of airline strategy for Amadeus IT group. He says there’s a critical mass of airlines making serious investments, and cites an increased awareness and engagement from the travel agency community. Pisanello notes in recent months, momentum has grown for Amadeus’s NDC-X program with the addition of major partners including Flight Centre, Travix, Qantas, AMEX GBT, BCD Travel, Carlson Wagonlit Travel and American Airlines.
Lauri Reishus, executive vice president and chief operating officer at Airlines Reporting Corp. (ARC), sees a deepening understanding in recent months of the myriad business requirements involved in “servicing” an air trip beyond the initial steps of shopping and purchase.
“With stronger involvement of corporate buyers and travel agencies in NDC implementation discussions, issues such as how to handle schedule changes, irregular operations and duty of care requirements in an NDC-enabled transaction are being more clearly understood by all parties involved,” she says.
The conversation has shifted from theory to more tangible factors, says Mohit Chandiramani, head of global connectivity and EMEA air at Egencia. “All players now are discussing real use cases and getting into details on how NDC would work technically, what it can do and what it cannot.” At the same time, he adds, a number of weighty matters still need to be resolved.
“Much of the conversation is on the ‘first booking,’ which is a relatively easy, happy path,” he says. “The real complexity is on how this booking would be serviced, exchanged and so forth.”
All this could affect travel policy significantly, Chandiramani says. “NDC is about airlines positioning themselves as retailers, and creating product differentiation,” he says. “This will, in turn, make travel policy harder as it will make direct comparison harder.”
Travelers Take Center Stage
The trends toward traveler centricity look to be a key part of the picture. NDC should make the shopping experience more like B2C in some ways as the airlines want to become better retailers and differentiate their products from competitors, says Vince Chirico, US SVP global network and technology partners, Carlson Wagonlit Travel.
“A full-service carrier does not want to be compared to a low-cost carrier solely based on price and schedule,” Chirico says. “NDC will allow the carriers to be more traveler-centric in terms of what is offered and to make sure the traveler understands the differences between products and airlines.”
At the same time, artificial intelligence and other advancements will continue to enhance customization of the shopping process. “AI and other predictive and learning technologies will dramatically improve how airlines delight their customers by serving them relevant offers, services and information at the right time, across multiple touchpoints,” says Jim Davidson, president and CEO of Farelogix. “This activity will extend across the customer journey.”
From the perspective of the airline, Davidson notes that offer, pricing and bundling strategies are already dynamic. New generation offer engines are now using data such as origin and destination (O&D), load factor, loyalty status, and propensity to buy to adjust a starting price, or to trigger the packaging of products and services. “AI moves the needle in terms of the accuracy of the price and composition of the offer at scale, leading to greater uptake and more revenue.”
Davidson adds a knock-on effect will be a change in the relationship between the airline and its corporate customers. “Price negotiations will no longer be based on volume, but instead they’ll be based on value,” he says. He notes this value will not only relate to corporate spend but will also relate to the value the airline delivers to the corporate customer. And with AI-driven dynamic offers, the airline will be able to tailor the offer to each corporate customer and serve them through the relevant corporate booking channels.
Despite such potential, not everyone is enthusiastic about some aspects of such advances. Michael Strauss, CEO of PASS Consulting and head of business unit travel worldwide of PASS Group, thinks AI and other technical advances are grossly overrated.
“At the moment such ‘buzzword technology’ only works, if at all, on the user interface and/or data analyses, but not with numerous APIs,” he says. He keenly notes NDC is more of an interface challenge, pointing to over 18 NDC versions since their launch in 2012 and currently two per year.
“This (new product stream) makes it difficult to keep pace with an interface that the user neither sees nor appreciates,” he says. “It's analogous to replacing all your pipes in your house twice a year just to keep the water flowing – even if just you wanted to change your shower head.”
Policy Makeover
Even if technical advances are uneven, there seems to be no question of NDC’s overall impact on policy considerations. Chirico says NDC will definitely require travel managers to adjust how they look at their travel policy.
“If the policy has historically been about booking the lowest fare, NDC is going to make this more difficult,” he says. “When a carrier begins to bundle various ancillaries beyond just the airfare, how do you determine if the lowest fare is booked?” Maybe the higher fare is the right choice for the traveler.
He adds preferred carriers will tell travel managers their offers will be compliant to the policy. However, he asks, what happens when a carrier that is not part of the preferred program begins to provide offers to a traveler that are outside of policy, yet the traveler likes the benefits being provided? “It will be interesting to see how these types of situations play out as NDC begins to gain traction,” he says.
Chirico predicts fare guarantees will most likely go away as the pricing is no longer static and driven off ATPCO, but will come directly from the carrier. Airlines will provide unique offers to travelers which may not, for example, be offered to another person flying on the same flight on the same day.
Policies will need to take into account a number of advantages offered by NDC. Among them, Reishus says, is the capability for companies to choose what to show, and to flag any non-compliant purchase at the time of purchase, not weeks or months later. She adds NDC also opens up the potential for airlines and corporations to more easily negotiate and support the shopping, booking and purchase of corporate travel bundles.
Chandiramani notes the underlying technology of NDC, XML, allows for more information to be exchanged between parties, allowing travel options to be more detailed. “NDC will give travel buyers the power to strike tailor-made deals to suit the needs of their travel program” he says. “The conversation between the airline and the corporation will go beyond price, and travel buyers will have higher expectations of the airline coming up with innovative proposals once the technology is in place.”
Choices & More Choices
Perhaps the biggest plus is the capability of meeting different needs. But NDC is not just a seat in an enclosed space, Strauss says. “It tells you what this seat looks like and what comes with it.”
NDC allows selections to be made according to both corporate and individual priorities as well as frequent traveler status, he says. “Once the problem of standardization and ever-changing APIs is solved, NDC opens the door to really getting what you want.” One traveler may need the convenience of a lie flat bed on a night flight to come to a meeting rested, but can live very well with economy class during the day while using the time to work on the plane. Another may be able to sleep anywhere, but prefer the service and amenities of business class on the return flight.
In addition, according to Pisanello, NDC is the natural answer for the travel industry to what he calls the “Amazon-ification” occurring across all industries. This Amazon-type phenomenon allows corporate travel buyers to access richer content at the time of booking: more images, information, traveler reviews and bundles of services. “This will improve end-user experience, replicating the useful elements that can be found on online leisure travel sites,” he says. “This in turn will increase adoption and adherence to corporate booking tools.”
Looking forward, travel managers will continue to face challenges in crafting polices that adequately mesh with NDC. “Like other new travel technologies, NDC-enabled shopping and booking will create no small amount of work for travel executives,” Reishus says. Some of the issues will be around integration, display, managing preferences, reporting and servicing. “It’s unlikely to be an easy or quick learning curve,” she adds. “But the benefits will be clear – a better shopping experience for the business traveler and immediate visibility of purchases for the travel manager.”
One hurdle is achieving economies of scale and efficiency, Pisanello says. “We need standards to be followed and solutions to be implemented in a standard way,” he says. “If not, costs will be high for the whole industry, and adoption will be low.” This needs to be supported by the right economics too, he adds, with the ROI working for all participants.
Furthermore, Chirico says travel buyers will need to exercise patience for now. “IATA and the airlines have done a really good job of creating interest with NDC,” he says. “However, the infrastructure hasn’t caught up yet with the ideas. NDC is going to take time to reach scale.
Historically, he notes reporting provided to travel programs has been based on factors such as what was booked, what was the lowest fare available at the time of booking, and how far in advance the booking was made. “NDC could shake this up based on how the airlines begin to retail their products and provide offers to travelers that are not dependent on booking in advance, but who you are as a traveler and what company you are associated with,” Chirico says.
At the same time if the airlines go down the path of hyper-personalized offers, a managed travel program will need to solve the problem of display, comparability and policy compliance, Chandiramani says. “We continue to encourage collaboration and engagement among the industry as a whole, and ask airlines to adhere to IATA’s standards so that, together, we can diligently seek to keep the customers’ best interest at the center of NDC.”
