IATA’s New Distribution Capability (NDC) has, of late, become a frequent word on the lips of travel managers, airline companies, TMCs and GDSs alike. It has proven its ability to have a profound effect on all layers of the corporate, and commercial travel ecosystem. What we want to know is how it affects the day-to-day operation in a corporate travel programme both now and in the future.
What is NDC?
NDC is a brand new airline industry standard introduced by IATA first in 2012 but has, of late, become adopted and put into action. It is an XML-based data transmission data standard.
Its a method by which an airline can use to communicate information about flight seat availability, booking management to a travel agency, travel management company or any other interested party. This communication goes through either a GDS or through direct connection.
Before NDC was introduced, this data transmission format was unregulated which meant that the structure of content shown to the traveller was different across each channel of communication or booking. In most cases, the airline website had the richer content, with less ancillaries and options on offer for those who book through TMCs and OTAs.
With NDC this format is standardised, allowing all booking channels to have the same rich content. Additional priority options, luggage, seats and many more options can now be communicated and aggregators or others wishing to display rich content will have a single standard for that communication, greatly simplifying the task and making it much easier for airlines to more widely market ancillary content to travellers.
Why should we be concerned?
NDC provides more options to travellers. Travel managers are mostly concerned that they don’t currently regulate how their travellers purchase ancillary content, and this allows the carriers to potentially upsell to their travellers in an unregulated manner – increasing overall spend. NDC has the power to impact three key areas of travel management: booking, duty of care and overall contract management.
NDC and booking
NDC simply gives the traveller more transparency into the options which have always been available whenever they have booked a flight: increased options regarding seats, class, priority and ancillaries like extra luggage will now be made available in any booking channel. This rich content is set to become even more diverse, with travellers given access to more images and information of course, but also videos, traveller reviews and even VR are all becoming a reality. Not only fares are displayed, but also bundles of services – all personalised according to the traveller and the trip.
Just as the improved shopping experience on Amazon results in the tendency to spend more, the same will now apply when booking travel. It is no wonder that this phenomenon has become the primary cause of worry amongst travel managers.
There are ways in which to overcome this feat. NDC can also, potentially lead to sourcing negotiations where there will be a “package” made available to your travellers. In this “package” favourable and attractive ancillaries can be included – guiding your travellers to a better deal for both them and travel programme policy. At the moment, however, this is limited to seat purchases.
If travel managers want to be proactive regarding NDC, the best step forward is to negotiate with your TMC provider to ensure they are making use of the new format in a way in which you can benefit from.
NDC and Duty of Care
NDC creates a significant change in the way in which a ticket is processed. In the United States, the GDS is and most likely will continue to be the primary link between agency and airline. When processing a ticket, we know there are primary rules for exchanges, returns, voids and settlements. As both TMC’s and GDS’s have to change to adopt the NDC format, their processes are most likely to change as well. Brushing up on all changes by working closely with the TMC will allow travel managers to handle the situation at the minimum possible cost without compromising the traveller in the process.
NDC and Contract Management
Your supplier relationship with your airlines will undergo major changes. With increased ancillaries available, the need for individual contract agreements with each airline will become more important than it originally was. If we want to simplify this process, travel managers can also choose to implement a hybrid model of GDS transactions in conjunction with any direct connections or simply decrease the list of approved airline suppliers so more detailed negotiations can take place.
NDC and Data Management
NDC has implications for travel data. It involves a new format which means that all supplier data has to change to match the format. Companies using an external data analytics provider need to ensure the analysts have access to the correct industry expertise so this format can be adopted and standardised within all travel-related data. Rules applied to normalising, cleansing and matching the data need to be changed so the new format is incorporated.
The good news is that the standardisation of NDC will potentially allow more visibility into the way in which their contracts are working. This is currently very opaque for a lot of people and the carriers do their best to keep it that way. Data solutions, including PredictX, have to be committed to gaining visibility into contract management. PredictX and our Air Contract Management module allow for this to take place. Together we can handle the NDC revolution.
Are we there yet?
The short answer is yes. Both airlines and leading TMC providers are busy getting in to gear to facilitate the change.
At the time of publication, some 100 companies are designated as either NDC Certified or Capable. According to IATA, more than 75% of major airlines have committed to adopt NDC although many of these are at the very early stages. The number of airlines signed up includes British Airways, Lufthansa and American Airlines.
What does it mean to be signed up? An NDC certified airline makes their content available through an API that can be understood and used by TMCs and other data aggregators. IT providers that are servicing these airlines are defined a NDC capable as well. Even when NDC compliant – there are three levels of compliance where one is the least and three is the most NDC Capable level.
While airlines and TMCs need to do most of the heavy-lifting in terms of changing existing formats, having a clear strategy to deal with these upcoming changes is highly recommended.
NDC presents both a change and an opportunity. No longer will travellers and travel programmes be subject to a slapdash one size fits all approach when it comes to choosing their suppliers, and flights. Content tailormade to the specific programme and business needs is now possible. While this offers more choice and possibly more spend, through enhanced communication, it could also result in improved supplier contracts, happier travellers and a healthier programme.