Dis­tri­bu­tion

De­vel­op­ments around NDC are gath­er­ing pace, but there’s still plenty of hur­dles to over­come, says Linda Fox

The Business Travel Magazine - - Contents -

Blink and you wouldn’t be blamed for miss­ing the lat­est de­vel­op­ments in the air­line dis­tri­bu­tion space.

Over a pe­riod of about six weeks late last year, Bri­tish Air­ways and Ibe­ria be­gan im­ple­ment­ing a new sur­charge on book­ings made via the GDS sys­tems, orig­i­nally an­nounced in May.

At the same time, Air France-klm re­vealed it would be also be mov­ing down the fees route with more de­tails to come this year. Mean­while, HRG, Sabre and Trav­el­port made an­nounce­ments about their achieve­ments as re­gards NDC.

Trav­el­port also re­vealed it had reached an agree­ment with Bri­tish Air­ways for part­ners to avoid the Ba/ibe­ria sur­charge if they have ‘pri­vate chan­nel’ agree­ments with the air­lines. And more of the larger travel man­age­ment com­pa­nies, such as Clar­ity and FCM, con­firmed their clients would avoid the sur­charge fol­low­ing dis­cus­sions with BA and re­vealed how they are work­ing with the air­line and tech­nol­ogy part­ners to al­low con­tin­ued ac­cess to content.

The travel man­age­ment com­mu­nity hasn’t re­ally had time to draw breath, de­ci­pher what these de­vel­op­ments re­ally mean and where it will all end. What it knows is that the land­scape is rapidly chang­ing.

If we start with NDC and the var­i­ous lev­els achieved by IT play­ers and ag­gre­ga­tors, or both in the case of com­pa­nies such as Trav­el­port and Sabre. Sim­ply put, the lev­els rep­re­sent the tech­no­log­i­cal readi­ness of the com­pa­nies to im­ple­ment cer­tain ar­eas of the New Dis­tri­bu­tion Ca­pa­bil­ity stan­dard.

Trav­el­port gain­ing cer­ti­fi­ca­tion from IATA as a Level 3 cer­ti­fi­ca­tion ag­gre­ga­tor means it has de­vel­oped what’s needed for the of­fer and or­der man­age­ment el­e­ments of the stan­dard. The ex­cit­ing bit for Trav­el­port is that it’s first and it made a lot of progress in 2017, hav­ing only achieved Level 1 in late Fe­bru­ary. More­over, the com­pany – along­side tech­nol­ogy part­ner Farel­ogix – says it will an­nounce im­ple­men­ta­tion with a large global air­line soon.

As a point of com­par­i­son, Sabre says it plans to achieve Level 3 ag­gre­ga­tor some time in 2018. It an­nounced in De­cem­ber that it had achieved Level 2 as an IT provider. What’s more im­por­tant is the dis­tri­bu­tion gi­ant’s pub­lic state­ments about NDC in re­cent months. Chief Ex­ec­u­tive Sean Menke said in early Oc­to­ber that the com­pany wanted to be the in­dus­try’s leader in the devel­op­ment and dis­tri­bu­tion of tech­nol­ogy us­ing the NDC stan­dard.

More in­ter­est­ing in all of these de­vel­op­ments, how­ever, is the lan­guage be­ing used. When you com­pare it with the orig­i­nal feed­back from GDS – when NDC was an­nounced in Oc­to­ber 2012 and it was seen as a sort of GDS by­pass – the tune has changed to be­ing far more con­cil­ia­tory, with the GDS com­pa­nies now seen as busi­ness part­ners on NDC.

The air­line-gds lan­guage also seems to be chang­ing. In early Novem­ber, Trav­el­port Chief Ex­ec­u­tive Gor­don Wil­son was quoted in the busi­ness press de­scrib­ing the de­vel­op­ments around fees and NDC as not Gds-air­line change but “broader dis­tri­bu­tion in­dus­try change.”

He added that NDC is play­ing into the hands of the dis­tri­bu­tion gi­ants in many ways be­cause it high­lights their value as travel content ag­gre­ga­tors.

Many travel man­age­ment com­pa­nies, large and small, have added their voice in this, with CWT declar­ing in mid-oc­to­ber: “There is no content dis­tri­bu­tion al­ter­na­tive which of­fers the depth and breadth of the GDS that will al­low us to pro­vide the value and ef­fi­ciency we do for our clients and our air­line part­ners to­day.”

Amer­i­can Ex­press Global Busi­ness Travel also sup­ports this view, say­ing the GDS pro­vide “a highly ef­fi­cient and trans­par­ent book­ing en­vi­ron­ment.”

Travel buy­ers are also hav­ing their say

and air­ing their con­cerns. Like TMCS, they  high­light the im­pact on the end trav­eller, the el­e­ment which has been sorely lack­ing in much of the de­bate so far.

This is some­thing that also con­cerns buy­ers. Mark Cuschieri, who heads up global travel man­age­ment at UBS, de­scribes all the changes as “chal­leng­ing, con­fus­ing and frus­trat­ing.”

From a travel man­age­ment per­spec­tive he, like all buy­ers, just wants ac­cess to all content but it has to be in a user-friendly way for book­ers and trav­ellers. Cuschieri feels the in­dus­try has been guilty of only con­sid­er­ing what’s right for it­self and over­look­ing con­sumers in the process.

Like CWT and other TMCS, he sees value in the GDS and be­lieves they will con­tinue to play an im­por­tant role in shap­ing dis­tri­bu­tion. He’s also an ad­vo­cate of NDC but says it has been too slow to market.

“The ben­e­fits of NDC have been clouded by the topic of sur­charg­ing, which I be­lieve is mis­guided by us­ing both in the same con­text. In­dus­try col­lab­o­ra­tion needs to go beyond sim­ply part­ner­ships and con­trac­tual re­la­tion­ships – dis­tri­bu­tion busi­ness mod­els need to evolve,” he says.

At the ACTE-CAPA event in Lon­don last Oc­to­ber, Trav­el­port's Global Head of Prod­uct and Mar­ket­ing, Ian Hey­wood, said some air­lines were “hid­ing be­hind NDC to force on the market their com­mer­cial changes”.

As part of his pre­sen­ta­tion he high­lighted the tech­nol­ogy jour­ney air­lines them­selves have to go on in terms of de­vel­op­ing APIS to im­ple­ment NDC. Hey­wood also stressed the “col­lab­o­ra­tive ef­fort” needed across the in­dus­try.

Fight­ing the air­line cor­ner at the same event, IATA’S Direc­tor of NDC, Yanik Hoyle said: “What we’re see­ing is that air­lines un­der­stand what API dis­tri­bu­tion is now. NDC is noth­ing more than a stan­dard for air­lines to move as flex­i­bly as the low-cost car­ri­ers.”

In ad­di­tion to con­cerns of con­sumers be­ing over­looked, Cuschieri also high­lights the devel­op­ment work re­quired by the travel man­age­ment com­mu­nity to in­cor­po­rate changes in dis­tri­bu­tion and the re­lated cost which will in­evitably be passed on to the con­sumer. That said, he’s op­ti­mistic that NDC as a stan­dard will ad­vance in 2018 es­pe­cially with the GDS now firmly on board. Trav­el­port has also stressed the costs in­volved to air­lines and TMCS say­ing: “NDC is not a cost­less panacea for agents or air­lines look­ing to avoid costs or rev­o­lu­tionise the cur­rent model. In­deed, in an in­de­pen­dent report pub­lished in Oc­to­ber 2017, econ­o­mists found that the costs of direct dis­tri­bu­tion for air­lines are in fact the same as through a GDS, when tak­ing into con­sid­er­a­tion ad­ver­tis­ing, mar­ket­ing, cus­tomer sup­port and pay­ment fees, as well as the sig­nif­i­cant re­sources needed for on­line cus­tomer ac­qui­si­tion.”

And there’s a fur­ther is­sue likely to cause a headache in the travel man­age­ment com­mu­nity as it strives to en­sure ef­fi­cient ac­cess to all content. There are more than 600 air­lines in the world and many of them don’t have NDC on their radar. Only about 250 are mem­bers of IATA so that leaves a whole lot more content to be ag­gre­gated by GDS and/or other ex­ist­ing mech­a­nisms.

In many ways the on­go­ing de­bate around air­line dis­tri­bu­tion has put de­vel­op­ments in other seg­ments of travel in the shade – chat­bots, the po­ten­tial for voice and the role of ar­ti­fi­cial in­tel­li­gence, in par­tic­u­lar.

Ap­ple, Face­book and Google have made sig­nif­i­cant ac­qui­si­tions in AI and travel com­pa­nies would be fool­ish not to keep an eye on de­vel­op­ments there. Trav­el­port be­lieves use of AI plat­forms in travel will ex­plode in 2018 as the quest to analyse con­sumer in­tent and tai­lor re­sults ac­cord­ingly, con­tin­ues. Think, for ex­am­ple, how chat­bots driven by data and ar­ti­fi­cial in­tel­li­gence, might turn the ho­tel search ex­pe­ri­ence on its head.

Cuschieri sums up how it will in­evitably spill into the cor­po­rate world, say­ing: “The use of mo­bile de­vices, big data and ar­ti­fi­cial in­tel­li­gence is rev­o­lu­tion­is­ing the con­sumer ex­pe­ri­ence al­ready.

“We see this in the re­tail space, so why should we think that the cor­po­rate travel in­dus­try should be any dif­fer­ent? Is the way we've booked/sourced travel in the past re­ally the sin­gle and only way to do so?”

The use of ar­ti­fi­cial in­tel­li­gence is rev­o­lu­tion­is­ing the con­sumer ex­pe­ri­ence al­ready. Why should we think that the cor­po­rate travel in­dus­try will be any dif­fer­ent?”

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