Comment: 'Are you ready for the NDC era?'

 

There have been many disruptors in the travel industry over the past two decades. From the rise of high-speed internet in the early 90s to increased mobile connectivity in the late 2000s, the way people buy, manage and experience travel has been through several radical shifts enabled by progress in new technologies. TMCs have evolved in order to thrive alongside these technological advances. Today, the next step in travel retail is New Distribution Capability (NDC), and as before, we’ll all need to adapt to thrive in the new era. 

 

Currently, the technology that enables airlines to deliver and receive rudimentary data such as prices and availability of information to and from GDSs and other third parties is a basic data exchange. NDC is a technology standard based on XML which transforms this data exchange through API (Application Programming Interface) to allow for data, such as passenger booking information, to be transferred in a common way between all parts of the travel provider ecosystem, over the internet. 

 

NDC was introduced by IATA in response to what airlines felt were shortcomings in the ways they were able to distribute their products, improving product differentiation and time-to-market and access to full and rich air content for all travellers. 

 

NDC provides airlines with opportunities to move beyond current product distribution limitations to a new era of travel retail. NDC will deliver flexible new ways of unbundling services, selling fares and ancillaries through menu style pricing and tailoring offers to specific customers. In doing so, it will provide new opportunities for TMCs to build more direct relationships with agencies, travellers, and corporate customers. 

 

With ancillary airline revenue reaching $82.2bn in 2017, the ability for airlines to sell ancillary products like lounge access, pre-checked bags, onboard food and drinks and more, is a major attraction of distribution using NDC. Another reason NDC is so appealing to airlines is that it provides them with the opportunity to offer a differentiated customer experience at every touch point. Imagine two airlines flying to the same destination – NDC technology enables each to clearly highlight differences in their overall respective offerings.

 

For corporate travel managers and buyers, NDC offers the potential to negotiate deals that deliver significant added value. This will help deliver a more personalised journey experience according to individual or group requirements and the ability to pre-apply the parameters of a defined corporate travel policy. By enabling the distribution of highly personalised content, corporate travel managers and buyers should be better equipped to prevent out-of-policy travel bookings. As business travellers start to see their trips becoming personalised to their own preferences, complying with policy becomes the default, enabling TMCs to ensure and fulfil duty of care obligations.

 

While NDC technology provides opportunities for all parts of our industry, there are still a number of challenges for both airlines and TMCs as they implement new NDC technology as standard.  

 

•NDC does not equate to ‘free distribution’. There is still a cost, whether that might be in customer acquisition, back office and customer support or technology investment.

•What will future commercial relationships look like? Airlines need to find common ground with travel sellers and clearly establish who their customer is.

•Currently, airlines distribute fares; in the future, they will create and distribute offers, packaged to meet the exact, known needs of a traveller. This will change the roles of sales, marketing and revenue management teams who will need to adapt to this new method of travel retailing.

•Airlines are at very different stages of NDC implementation. IATA’s industry goal is for a subset of airlines to distribute 20% of their global sales via NDC technology by 2020.

 

•NDC does not reduce the complexity of the travel distribution landscape. There will still be a number of suppliers to connect to and work with.

•Back office workflow management including automation, agency robotics, change management, integrated itineraries, duty of care, invoicing and business analytics will also remain complex.

•Agents and intermediaries need access to multiple carriers and their content as well as a range of other suppliers so that they can aggregate itineraries for their customers. Not everybody is going to implement NDC in the same way, which could create challenges.

•The speed and consistency of NDC booking needs to be as good, if not better, than the systems corporate travel managers currently work with. As some parts of the NDC itinerary will be managed in airline systems, this could have an impact on speed. 

•NDC could make it more challenging for travel managers to compare fares in a transparent way as airlines have more flexibility in bundling and unbundling services. To make informed buying decisions, travel managers need to ensure they are comparing like-with-like airline offers.

 

We’re at a hugely exciting moment in the ongoing evolution of traveling and travel retailing and see this latest change in the way content is distributed across the travel ecosystem as the natural evolution of the drive towards tailored, rich content. We’ve been leading in rich content for years, and over 260 airlines currently benefit from Travelport’s Rich Content and Branding merchandising. This provides agencies and travel bookers with a graphically rich experience when searching for and booking branded fares and ancillaries. We want to continue to help ensure TMCs are NDC ready and well positioned to exploit new business opportunities.

 

Travelport was the first GDS operator to achieve NDC Level 3 certification as an aggregator. We are already working with a small number of our customers, both on the airline and the agency side, to pilot NDC solutions. Travelport is integrated into Qantas’ recently announced NDC platform, the Qantas Distribution Platform (QDP) to improve the flexibility of content distribution, as the airline becomes one of the first to deploy NDC content later this year. As an early adopter, Travelport is well-positioned to understand the complexities and shape the way the industry will eventually deploy this new way of travel retailing.

 

Travelport will focus on providing full end-to-end process management, content aggregation and back office support, consistent with today’s levels of service. These solutions will make NDC implementation easier and offer a value proposition which is much more compelling than developing custom solutions to connect individual airlines and aggregate content.

 

Our desktop solution will also provide access to NDC alongside traditional GDS content, and will be available later this year. Work is already underway for fully-aggregated search, booking and management functionality, with both NDC and traditional content in the same workflow, delivered using the latest API technology. We expect this to be available in 2019.

 

By working together with TMCs in the pilot phase of our NDC roadmap, we can ensure the new retailing environment looks and feels familiar while providing the best choice of content delivered intelligently where and when needed to best serve your customers.