For travelers and travel managers, air travel disruptions are hard enough to handle one at a time, but when the disruptions extend beyond the flight to the entire distribution network – how tickets are shopped, booked and managed – the impact can be much more far-reaching. The ways in which airline bundles, pricing combinations and inventories are presented to travelers and travel buyers makes this as complex a topic as it gets. New Distribution Capabilities, or NDC, in particular has generated its own set of controversies.
In theory, NDC is supposed to simplify the complexity of managing a trip or servicing a disruption. In reality, however, realizing these benefits is still a good way off, leaving many travel buyers frustrated. NDC proponents claim the lack of progress is mostly due to travel management companies’ use of outdated technology, which prevents access to the additional NDC content. “The way inventory was distributed beforehand is inherently limited in terms of price points and personalization,” explains Rich Liu, CEO of Navan Travel. “Many legacy TMCs are unable to support all the inventory options that NDC opens them up to – and that has a real impact on travel costs.”
Furthermore, NDC can be seen as an opportunity to optimize business travel. “In other words, a modern TMC’s power to provide its users with stronger visibility and insights compounded with more robust data provided by NDC can help travel managers fine-tune their programs and answer questions like: When is the right time to travel? When is it cheaper to buy?” Liu notes. “Business travel can be a strategic tool for growth and a function of the finance team. In this way, NDC becomes a tool toward a more modern approach.”
What is NDC Anyway?
In a nutshell, NDC is a vastly upgraded version of the traditional airline distribution system, a travel industry-supported program launched by IATA for the development and market adoption of a new, XML-based data transmission standard. In a perfect world, NDC has the potential to wield transformative power for travel agents, travel buyers, travel management companies, and travelers themselves.
First off, it replaces EDIFACT – Electronic Data Interchange for Administration, Commerce and Transport – a legacy communications protocol created in the 1980s. With NDC, airlines can share more details about flights and ancillary offerings – whether that’s tailored offers or availability of last-minute flights or airline price changes – directly to travel agents, TMC’s and travelers via a “rich content experience” inside a graphical interface. Secondly, it communicates and transmits data in a way that allows airlines to distribute all kinds of content (from free baggage allowances to seat upgrades and meal choices), in real time.
The outstanding benefit to travelers, proponents say, is that by saving information and preferences to travelers’ profiles, it automatically hooks them into a system which customizes their search results. For example, airlines can offer the business traveler free WiFi; but to the leisure traveler, a vacation rental promotional may be pitched instead. By streamlining shopping and booking, NDC also promises to lower the costs of distribution compared to legacy solutions.
On the Slow Track
Despite its capabilities, NDC adoption has been slow, as airlines, travel agencies, consumers, TMCs and technology providers come to grips with this new reality. Perhaps the biggest obstacle to adoption is that NDC implementation can be expensive and time consuming. The task of overhauling legacy interfaces and retrofitting technology platforms and protocols can certainly be perceived as prohibitive by airlines, booking tools and the rest of the travel ecosystem.
Unfortunately, NDC technology isn’t a straightforward plug-and-play solution; its technology infrastructure can look different from airline to airline, and from one organization to the next. On top of that, NDC is an unregulated territory and not mandatory for any airline or travel agency. The complexity of accommodating the new standard is a process in itself, so if and when NDC is adopted, a company must educate and train travel agents, airline staff, and technology service providers about usage and new processes. Thinking about these long-haul changes is enough to give many organizations a headache.
However, as the travel world spins, we know that agility is key. “NDC is a journey and a huge industry ecosystem endeavor. It is one of the biggest and most significant transition projects in our industry, even bigger and more complex than when we went from paper to e-tickets,” cautions Jay Richmond, senior director, solution consulting with Amadeus.
“With still many differences in the way that airlines deliver content via NDC,” Richmond says, “one of our key missions is to ‘normalize’ the standard and streamline the integration of different NDC APIs, flows and data, so that travel sellers can search, book and service different airlines’ NDC and other content in the same way. TMCs are increasingly searching for and booking NDC content as it meets the needs of their corporate customers and their travel programs and routing requirements. There has been good progress towards NDC support across technology providers that have a footprint in the TMC tech stack ecosystem. Where gaps remain for specific providers or functionalities, they are in the process of being closed.”
Playing the Waiting Game
Along the path to adoption, various airlines as well as TMCs are at different junctures in their technological journey. “Airlines are continuing to evolve their pricing and bundling strategies for NDC,” continues Richmond. At the end of 2023, Richmond points out that of the 23 airlines that were live with NDC-sourced content on Amadeus Travel Platform, 80 percent had dynamic or continuous pricing, 70 percent had NDC-exclusive ancillary services, 50 percent had NDC-exclusive bundles, and 30 percent had special fares/offers/discounts for NDC. “Airlines are continuing to evolve and refine their move to ‘offer/order,’ and we should see more unique value from the NDC technology as they progress,” he predicts.
“With NDC, the intention is for buyers to benefit from access to more competitive offers from airlines, more personalization, and better merchandising. Some airlines are really using NDC to their full potential by offering consumers the same suite of products whether they buy direct or indirect,” comments Damian Hickey, global head of travel partners at Travelport. “However, other airlines appear to be using NDC as a means to drive customers to owned channels and away from third parties like the GDS, travel agents, corporate booking tools, and OTAs.
Unfortunately, this approach adds more layers to travel’s technical complexity challenge, making it even more complicated for buyers and end travelers to compare options,” Hickey says.
“We all want to offer the best choice of content that is relevant to our customers and deliver it cost effectively and seamlessly so that it doesn’t cause friction or servicing issues,” adds Jamie Pherous, founder and managing director of Corporate Travel Management. “The challenge is that while NDC may be a ‘standard,’ airlines are currently applying NDC standards differently and without fully understanding the complexity of how the corporate customer buys travel. Some airlines have used loyalty benefits and short-term pricing tactics to push for direct bookings, causing friction between business travelers and their employers when bookings are made outside of policy and corporate booking channels. This causes program leakage, reduces visibility of travel spend, diminishes buying power, and increases risk to traveler safety due to decentralized booking data.”
Prime Value: The User Experience
Despite the ongoing trial and error, the point of NDC is to create a better user experience and provide savings, which can potentially be unlocked through the availability of more price points and exclusive fares, resulting in significantly lower travel costs – even up to six-digit savings for larger programs, according to Navan.
When it comes to user experience, the opinions vary. Ideally, “NDC content is optimized to ensure that travelers benefit from the same self-serve capabilities expected from GDS bookings, such as flight changes, cancellations and more. All of which is available online, without the need for additional agent support,” Liu says. “As a result, travel buyers benefit from increased savings, from increased personalization, additional price points and continuous pricing.”
However, travel buyers may see it differently. For many of them, frustration arises from the slew of NDC content coming through multiple channels (alongside that, their travelers remain confused about what differences may exist currently in NDC versus non-NDC content).
“It’s an interesting question as to whether or not a traveler needs to know the source of the content which was booked,” Richmond says. “For the TMC, being able to effectively search and compare the available offers and then meet service expectations for all content they present to the corporate traveler is an imperative. Many TMCs are working to communicate clearly to their corporate travel managers where there might be service differences for content sourced through NDC vs content sourced through other means, such as EDIFACT.”
Most business travelers don’t know what NDC is, or how it differs from EDIFACT, Hickey maintains. “Consumers care about things like prices, flight times, bags, WiFi, and whether they get a free toothbrush – not the distribution mechanism,” he says. “Because NDC is implemented differently by every airline, to travelers, NDC looks like different options available on different sites, seemingly arbitrary rules for flight changes, or random system incompatibilities.”
To NDC or Not to NDC?
The world of NDC, while seeing some progress, is still murky. “In our long journey with NDC, we’ve learned that most modern travel managers understand that the best solutions are dynamic, with the ability to flex and customize a program that best fits their organization’s specific needs. While the promise of NDC is that data is centralized, there is still room for this process to mature, which results in some challenges,” says Navan’s Liu.
Legacy TMCs seem to be getting the brunt of the blame when it comes to catching up with NDC technology. “In the end, TMCs should have the ability to mirror supplier-direct offers more consistently, while still providing superior shopping and servicing experience for corporate travelers,” says CTM’s Pherous. “Despite all the hype around NDC, it all comes down to content, commercials and serviceability, and it’s about getting this equation right so we, the TMC, and the airlines can best serve our mutual customers.”
While airlines implement their own NDC strategies, and TMCs determine their path forward, Travelport’s Hickey advises, it is incredibly important that the consumer and the agent are top of mind. “Let’s not forget the business traveler that needs to book a flight for work and compare options that fits within policy or the travel manager that needs to find an alternative option when the unexpected happens,” he says. “If those driving NDC strategies in the industry will remember to prioritize the customer first, then NDC certainly has the potential to drive the travel industry to a future of seamless, personalized retailing experiences for customers.”
