Adrian Parkes, Focus Travel Partnership chairman, assesses developments in new distribution capability (NDC)
Travel management companies (TMCs) are acutely aware of Iata’s New Distribution Capability (NDC). The aviation distribution and retail revolution has long been in development, deployment and debate.
In my role at Focus Travel Partnership, I wanted to take the temperature and measure sentiment in a virtual roundtable discussion with TMC partners, airlines, GDSs and technology suppliers.
Airlines are using enhanced digital capabilities to improve customers’ buying experience in indirect channels, to sell additional products and to cut distribution costs, mirroring the capabilities of their direct-to-consumer channels.
Has the pandemic slowed the pace of change or accelerated developments and where are TMCs and GDSs in their thinking?
NDC will clearly be part of the new normal and it is becoming clear that if the pandemic arrested progression, it will only be temporary.
Private channel deals
Will Owen Hughes, Travelport head of customer strategy, reported that despite Covid, Travelport has doubled its investment in NDC and expanded the teams working on NDC developments.
He noted some airlines had paused NDC programmes during the Covid downturn, but a growing number such as Singapore Airlines, Air France-KLM and IAG have continued. Some like Qantas paused the live NDC environment but continued adding NDC capabilities ready for the restart. Importantly, as we edge out of crisis mode, airlines are beginning to increase their progression with NDC once again.
While many airlines are looking to introduce new products for travellers booking via NDC, Will said a handful have introduced changes in the economic model, with the advent of private channel deals. He suggested additional airlines may want to try new models. But he pointed out one GDS connection can drive 70,000 agency connections and bring huge efficiencies of scale.
Travelport believes it is progressing and is technically ready for the next steps. Will said Travelport would provide a robust service proposition to match airlines’ different approaches to NDC in terms of dynamic commission, bundles and personalisation.
A breakthrough year for NDC?
British Airways, which as part of IAG has given Amadeus-connected agents and corporates access to NDC content from the second half of 2021, provided an update on its in-house solution. This includes a disruption-handling functionality which helped deal with cancellations during the initial stages of the pandemic.
Rogier Van Enk, head of distribution and payments at BA, suggested 2021 would be a breakthrough year for IAG and NDC.
He described how BA had enticed agents to connect with its systems and provided additional price points, reporting that half the airline’s bookings now come through an NDC connection. Van Enk noted a shift in balance from corporate to leisure bookings and said BA is working closely with the GDS sector on NDC.
Rogier provided an insight on the retail capabilities of NDC, reporting that in 2019 customers were 100 times more likely to book an ancillary through an NDC channel as through a traditional GDS channel.
It was clear BA feels it is more beneficial to sell through direct connect/NDC.
Not all Focus Travel Partner TMCs are working with GDSs when it comes to NDC. Paul Cronje of Clyde Travel said he took a sharply different direction after Iata pitched the proposition of NDC to TMCs.
He was concerned NDC would exclude the TMC and decided to develop the company’s own platforms and work with airlines direct.
As Clyde Travel sells a large proportion of airline tickets through one airline, Paul assessed they had the talent, capacity and funds to develop their own system. He described the airline as having been super helpful and said the technology worked for them across other airlines and travel products – making the GDS, while still part of their strategy, no longer the cornerstone it was.
However, Paul highlighted an important issue: NDC does not provide as much detail on the PNR (passenger name record) as GDSs do. His response was to redesign his own system with space for this data.
Is NDC commercially viable?
Clearly, the technology environment has become more complex, but customers want and need the booking process to be simple, so it is important for TMCs to assess how best to navigate the environment.
At Focus Travel Partnership we have a technology panel providing intelligence, know-how and access to solutions for partners so they can make the right business decisions.
It’s clear that while TMCs have the technical ability to deliver NDC, the question is whether it’s commercially viable?
David Chappell, UK country director of travel technology group Midoco, suggested it is commercially viable but NDC still has some distance to go to rival the content GDS platforms can provide.
He argued the pandemic provided breathing space for airlines to develop and suggested 2021 would be a critical year with developments gathering apace. Chappell advised TMCs to enlist the capabilities of APIs to speed up their digital transformation. He presented a case for companies which do not have the capacities or business mix of a Clyde Travel to use middle-office services to streamline workflows and enable businesses to connect to different channels.
Travelogix chief executive Chris Lewis outlined how important data and intelligence are in 2021. He pointed out bookings through GDSs have been standardised, but each airline inputs data differently through its own NDC, complicating data organisation and making it difficult to aggregate intelligence.
Lewis believes the next step for NDC would be to normalise data from aggregation platforms. While NDC does not provide enough granular data per booking, GDSs are moving to provide structured data.
The fly in the ointment here is that airlines such as BA are set against ‘normalisation’. It wants its products to be differentiated.
We need to find a new balance
It is a collective headache for the industry to make the process look simple.
The TMCs’ unique selling points include providing value and duty of care, as well as addressing sustainability and responsibility.
Corporates have been reassessing how they trade with the world during the pandemic and TMCs are playing a waiting game to see how consumers and airlines behave post-pandemic.
NDC has received a great deal of funding. It is progressing, the speed of development will accumulate and adoption will become faster. We are close to a tipping point, but perhaps not quite there yet.
The likes of Travelogix see a need for caution and some airlines are preoccupied with business pressures from the pandemic.
Post-pandemic, airlines will also have a greater need to build close working relationships with TMCs to fulfil the demands of the corporate sector.
We need to find a new balance. I have been heartened by the developments from airlines to connect with NDC partners more quickly and by IAG’s commitment to support TMCs through the recovery.
NDC is a complex conversation and Focus Travel Partnership comes into its own by having a dedicated technology steering group and a highly effective team working out what is relevant for its partners and how they can best assist.
Adrian Parkes is non-executive chairman of the Focus Travel Partnership and former chief executive of the Business Travel Association.