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