As air travel begins its recovery, new distribution capabilities are meeting new traveler expectations
By Mark Rowh
There's no escaping the fact 2020 was a lost year for commercial air travel, with IATA reporting a drop in demand of nearly 66 percent compared to the previous year. If that's not bad enough, January bookings for future travel were down 70 percent compared to a year ago. Still, everything isn’t gloom and doom for business travelers and those who manage travel. Progress continues on a number of fronts, not the least of which are the inroads being seen with New Distribution Capability.
In anticipation of business travel’s return as we move through 2021, corporate travel buyers are gearing up for changing demands – and NDC could be central to meeting new expectations for booking, reporting, negotiating and paying for travel.
While the issue of how best to take advantage of NDC may not be this year’s most burning question, the timing seems right to tap into the potential of this increasingly valued standard.
“Amongst all the various challenges and priorities facing today’s corporate travel manager, handling cost and traveler safety remains top of the tree,” says Charlie Sullivan, head of product, air distribution capabilities at CWT.
During this unprecedented time, it’s unlikely that preparing for changing demands of NDC has been a fundamental strategic priority for all travel buyers, Sullivan notes. Yet while servicing and capabilities around NDC-enabled content is not yet on par with non-NDC related content, travel managers need to start considering the potential opportunities NDC presents and make sure they understand how NDC will fit into travel programs.
“NDC is progressing, but the conversation is very different today than the one the industry was having until relatively recently,” says Maurita Baker, vice president and managing director, North America at Travelport. She notes that NDC’s potential to equip agents with content to best fit the customer’s needs doesn’t necessarily mean the cheapest fare, but rather the best value. “A key part of that is the ability for agents to interact dynamically with airlines, not just on price but with other aspects of the airlines’ offering, be that ancillary, frequent flier, corporate preferences to get the best offer to match the customer’s needs.”
That reality corresponds the progress being shown by air carriers. At American Airlines, which has reached IATA’s goal of 20 percent indirect business by the end of 2020, the next big shift in NDC will be the quality of content being offered, according to Neil Geurin, managing director of digital and distribution.
“The beauty of NDC technology is what it does to modernize the way in which airlines create and present offers and ultimately create value for the customers,” he says. With that in mind, this year American plans to introduce more ways to offer certain seats, bags and boarding privileges together at the time of booking in response to customers seeking a streamlined booking and travel experience.
Robert Buckman, head of Americas travel content sourcing for Amadeus, says that travel buyers should continue to watch this space closely and be ready with updated policies for an NDC-enabled content future. While acting as vocal advocates of choice and transparency, travel managers should be able to compare and shop across airlines, obtaining the most value for the travel spend.
Buckman focuses on NDC’s ultimate goal of providing richer, more visual content at the time of booking, with more complete descriptions, captivating images, videos, virtual tours of flight amenities, pictures, food and beverage options. “Now that we’ve laid the foundation of NDC, new and innovative content and content packaging are beginning to emerge,” Buckman says. “NDC’s technological advances can not only provide business travel buyers, and also travelers, more information about flight fares, but also bundles of services.” Best-case example: A tailor made, personalized offering such as a standard (corporate) fare but with the inclusion of a bag, priority boarding, WiFi on board and lounge access.
More Growing Pains Even with rising interest in NDC by many players, it may be unrealistic to expect such a large-scale transition to take place rapidly.
“The initial NDC offers we’re seeing in market from carriers are pretty basic and largely mirror what has traditionally been available through the GDS,” says Bob Shaw, chief strategy officer at Serko. “However, the NDC architecture will naturally evolve over time and there is absolutely a strong value proposition around more efficient facilitation of airfare purchasing and servicing.”
At the same time, the coming year may see marked improvement, at least in some areas. NDC-invested airlines are expected to introduce more NDC-specific content, servicing capabilities and offers in 2021, according to Mike Kubasik, global chief technology officer at Corporate Travel Management. This will change the landscape, with impact on contracts, payment and reporting.
“Buyers should be excited about the opportunity to track and leverage total carrier spend more comprehensively,” Kubasik says. “Your TMC should be supporting buyers in preparing for this change and ensuring they understand all the considerations. Although new requirements will appear, the goal is to offer the corporation and traveler an improved and straightforward experience in the end.”
Geurin points out that on the commercial side of corporate deal negotiations, value from an airline perspective has been largely tied to airline network and discount structure based on fare types. But with retailing powered by NDC technology, corporates will be able to choose the channels most valuable to them for transactions. This should lead to more opportunities to have different conversations related to value. For instance, the value equation may be driven by simplicity in booking travel and reducing the time and number of platforms travelers need to visit to complete their purchase. Other possibilities could include pursuing carbon offsets in the booking path or obtaining enhanced duty of care information.
Sullivan adds that NDC will transform the way air products are retailed by tackling the industry’s distribution limitations. “NDC alone, however, will not transform the industry,” he says. “It’ll be a combined effort of many including the likes of One Order and Next Generation Storefront, to name a few.”
A plus NDC offers to both corporate travelers and corporate travel managers is the ability to obtain travel offers designed specifically for them, says Shelly Younger, director, airline retailing strategy and head of NDC at ARC. She notes that while contract changes can be done today, adapting contracts quickly can be difficult. The ability to speedily change fares, discounts, ancillaries or other fees to respond to market conditions is important, especially in today’s environment. Since NDC allows for more personalized offers for travel programs and their travelers, airlines and their corporate customers could leverage this feature in reimagining their contracts.
Buckman explains that NDC is only one step in an even larger context to take retailing of airline offerings to a whole new level. It involves significant investment and fundamental changes in processes and infrastructure for all players in the industry. “What’s more, NDC requires a new mindset and industry players to evolve their roles and value contribution,” he says. “It is, in a nutshell, the biggest change the industry has seen in a long time.”
There seems to be widespread agreement that for full adoption of NDC to happen, true standardization is fundamental. Only then can the economies of scale and fast time-to-market that the industry requires be unlocked. “It’s important to note that this quest for a neatly defined and implemented industry standard does not at all contradict the additional room that airlines are seeking to differentiate their offering within NDC, by bringing innovative content to market faster in the future,” Buckman notes.
Currently, though, not all these elements are in place. The reality is that multiple versions and multiple interpretations of the standard are being used. And while many players are pushing to drive the change, not all players are yet convinced of the need for something new.
As NDC grows in the market, it will be important for travel buyers to consider how the company purchases airfare: Directly with the airline or through a TMC using a GDS, NDC, or both. “Currently, it’s difficult to change channels across the ticket-lifecycle,” Younger says. “If a corporate customer purchases a ticket directly with an airline, using NDC or directly on their website, it is more complicated for that ticket to be serviced by a TMC if the customer finds they need TMC intervention.” ARC and other travel technology companies are now exploring solutions to streamline cross-channel servicing for the industry.
Taking Full Advantage For the near future, staying on top of developments with NDC seems a business imperative, even if progress is uneven.
“While NDC has gained momentum, it is still in early days and adoption levels vary by region of the globe, and by carrier,” Kubasik notes. “IATA has done a remarkable job of pulling in the TMCs, airlines, corporations, and GDSs to push the standards forward.” He advises buyers to follow the news, keeping up with what each carrier is doing in your market and periodically discussing the progress.
Using a pipeline analogy, Sullivan explains that at present NDC is still focused on “plumbing,” ensuring that basic corporate traveler expectations and needs are met in areas such as response time, servicing capabilities, and access both online and offline. At the same time, NDC content needs to materialize and mature. This means moving beyond pushing the same content that exists today in a traditional “‘pipe” through a new “NDC pipe.” Rather, airlines should be providing compelling NDC content that has new features and capabilities to create value for the customer.
“Quality of content is what our customers really care about,” American’s Geurin says. “The booking tools, travel agency and other technology partners you choose to align with, and their focus on adoption, is incredibly important.” He says that a number of airlines are ready to help you improve, along with plenty of GDSs, agencies and booking tools that are ready today or will be soon. “But they have to be part of the conversation with you. When we collectively improve, the traveler experience, efficiency, savings, and overall satisfaction will improve.”
Shaw recommends taking a fresh look at what travelers require to feel safe, successful or satisfied when returning to the skies for business. Since NDC brings ancillary services into the main booking process, making this area of spend much more visible, traveler sentiment and frequent requests can be used to inform your ancillary policy. For example, the likely rise in demand for additional legroom or premium cabins that support enhanced social distancing might be addressed. “Look at company spending on ancillary services to get a big picture of what’s at stake by having an NDC-first strategy,” Shaw says.
No single stakeholder can ensure the success of NDC, Sullivan emphasizes. “It will take collaboration across the value chain and customer journey to truly realize the promise of NDC which ultimately benefits the corporate traveler in terms of improved experience, productivity and outcomes,” he says. This necessitates aligning goals while keeping the traveler in focus.
“We believe this is an optimal time to revisit travel-related contracts and new technologies that can help corporate travel executives and other stakeholders enhance their travel experience and support the rapid changes happening to this industry,” Younger says. She advises continuing to research and reach out to your preferred airlines and your agency to understand where they are on their NDC journey.