Will 2020 be the year NDC finally takes off?

Travel managers have been hearing about the proposed benefits of NDC (New Distribution Capability) for many years – so much so, it may be tempting to think it’s never going to happen. However, those working on the many current NDC-based projects insist it’s now poised to take off as a significant distribution platform.

There remains a level of misunderstanding about NDC. Put simply, it is a set of technology standards designed to make it easier for airlines to enhance their “indirect” distribution through TMCs and other third parties – a so-called “Amazon-style” experience for booking flights has been one of the promises.

While the introduction of NDC-enabled booking channels has been painfully slow, the process is finally starting to gather pace and impact the way flights are purchased. So what does this mean for buyers and how can they prepare themselves for this new world of airline distribution?

Overcoming limitations
In July, Claudia Adams (pictured above), travel manager at Allianz, became the new chair of IATA’s European Travel Manager Advisory Group (TMAG), replacing inaugural chair Jens Liltorp, global category manager for travel and meetings at LEO Pharma, who stood down after four years in the role.

The TMAG is formed of several travel buyers who meet a number of times per year and act as a “sounding board” for the roll-out of NDC-based platforms and also its sister project, One Order, which aims to simplify the current multitude of airline booking documents into a single order number.

Travel buyers need to decide whether they want to become first movers

Adams tells BBT that NDC “overcomes current distribution limitations, bringing indirect distribution into the modern age”, and will allow travellers to book ancillary products within corporate booking tools and remove the temptation for them to book outside these channels. NDC-based platforms will also allow access to all of an airline’s fares or “content”, which may no longer be available through GDSs.

“Bringing back full content to the corporate booking channel is one of the key benefits,” she says. “I’m also expecting to see new ancillary content in the future. If the full and rich content is easily accessible, travellers will no longer be attracted to booking outside of the corporate channel.

“This, in turn, will automatically improve traveller experience and traveller satisfaction, which are the key drivers in a traveller-centric programme.”

But with any major change like this, there inevitably comes some degree of disruption to the way the flights are sold within managed corporate travel.

“My advice is to engage with peers, suppliers and associations to understand the individual implications of NDC/One Order for your organisation and set-up,” says Adams.

“Travel buyers then need to decide whether they want to become first movers – with the opportunity to shape the new airline distribution ecosystem for corporates – or followers that will adopt what others have developed.

“Both ways will trigger a transformation process to consume NDC content and there are wider implications for the structure of travel programmes today from the indirect impacts of NDC which travel managers should consider – policy, booking tools, etc,” she adds.

“In the end, we as corporate buyers need to accept a certain level of disruption ourselves; we can’t just expect it of others.”

New booking platforms
Taking a proactive stance on NDC/One Order and their potential impact on travel programmes is becoming more imperative as airlines, technology companies and TMCs work more closely on these new booking platforms. Lufthansa, an active player in NDC, says the number of NDC-enabled bookings in the UK grew 20 times between August 2018 and August 2019.

A major selling point for both TMCs and their clients is that using these NDC channels means avoiding Lufthansa’s distribution cost charge (DCC) of £14, which is levied on bookings made through GDSs.

More importantly for the UK market, British Airways is now charging a £12.50 fee for GDS bookings – this can also be avoided by booking through the airline’s NDC-based channels. None of these moves has been surprising as one of the stated aims of NDC at its outset was to reduce the GDS fees paid by airlines.

Ironically, the owners of the three GDSs – Amadeus, Travelport and Sabre – are bringing their own NDC projects to fruition, which may eventually turn the trickle of NDC-enabled bookings into the promised torrent.

We as corporate buyers need to accept a certain level of disruption ourselves; we can’t just expect it of others

Stefan Betz, director strategy and commercials for Amadeus’ NDC-X programme, says the industry is “still at the beginning of the NDC journey” despite “great strides” being made over the past year.

“There’s growing awareness and engagement from the travel seller community, and a critical mass of airlines is making serious investments,” says Betz. “Work and investment have been done on all sides of the industry.

“Travel buyers should continue to watch this space closely and be ready with updated policies for an NDC-enabled content future. Corporate travel executives need to be vocal advocates of choice and transparency. They should be able to compare and shop across airlines, ensuring that they are receiving the most value for their travel spend.”

While most of the conversation about NDC and One Order has centred around the technology, what remains unclear is how TMCs cope with the loss of the incentives they currently enjoy when making bookings through GDSs.

Martin Cowley, chairman of B2B travel marketplace eRoam and formerly Sabre’s senior vice-president for Europe, Middle East and Africa, is sceptical about NDC and its proposed benefits.

He thinks the process is less about offering improved technology and more about changing the business models within the managed travel industry by effectively choking off the revenue stream of GDS payments many TMCs have relied on.

NDC and the increased use of “private channels” by airlines, he argues, could drive further consolidation among TMCs around the world, leading ultimately to less competition in the market and potentially higher fees for corporate clients.

“I would encourage buyers to educate themselves,” says Cowley. “A travel manager of a corporate might think it’s not their job, but they should work with their TMC to better understand this stuff and the impact it’s going to have.

“Do you have an industry body that supports you? Talk to airlines about this subject – you fly with these airlines so you can prepare to make some changes.

“Being ignorant is not an excuse. It’s not really about technology; it’s all about the business models. Ultimately both buyers and travellers are going to be affected by this.”

NDC has been a long time in the making, and it’s finally set to make a real impact on how flights are purchased. The question buyers need to ask themselves is how proactive they want to be in helping to ensure this transformation benefits them and their travellers.

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