Insight
Is your travel program making the most of NDC?
The last 15 months have brought some significant changes to the travel industry, including the growth of New Distribution Capability (NDC).
A term that has gained a lot of traction over the years — NDC refers to the development and market adoption of a new, XML-based data transmission standard that enhances the capability of communications between airlines and travel agents. In other words, NDC serves a means to deliver better and richer content when booking travel.
Over the past year, we’ve seen NDC gain momentum with never seen before milestones, including new deals between airlines and GDSs, as well as an increase in airlines launching NDC content. This growth will continue to transform the way in which air products are accessed and travel is booked.
Speaking with FCM Consulting’s Air Practice Lead, Florian Mueller, we’re taking a look at the latest trends and developments happening within the NDC space.
Q. In your own words, how would you define NDC?
A. NDC is a new messaging standard that enables a B2C shopping experience within your B2B environment.
Q. How is NDC beneficial to travel programs?
A. Travel managers, travelers, TMCs, airlines and other stakeholders alike benefit from NDC.
For travelers, there is a consumer-grade user experience: all air content, including ancillaries, plus rich content, leads to better transparency by enabling comparison shopping and more informed decisions for travelers. For example, rich content shows you images and videos and provides information of the seat pitch an airline offers.
Another benefit for travel programs is reduced leakage. Travelers are lead back to their preferred corporate booking channels and away from an airline’s websites, increasing policy adoption.
Cost savings are also a major benefit due to customized bundles that are generally cheaper than adding ancillaries separately and more dynamic price points thanks to continuous pricing.
Overall, NDC provides the opportunity for programs to harness more creative corporate deals with airlines.
Q. How do TMCs access NDC content?
A. Historically, most airlines distributed all of their content in the GDSs, and that is how the TMC accessed it. This is no longer the case.
Airlines now distribute some content only through their own website and their NDC channels, which often times doesn’t include all GDSs, if any at all. Currently, there is no single source (GDS or NDC aggregator) that provides all content, so it’s important to understand a TMC’s strategy on how to overcome this challenge.
Some TMCs use a so-called direct connect relationship plugging “directly” into the airline’s API, while others believe in working with aggregators. Given the ever-growing number of airlines with NDC content, building and maintaining these direct connects will be challenging. And keep in mind, NDC is not yet the perfect solution for all travel needs, depending on your travel patterns you need access to content that goes beyond NDC, such as complex itineraries with interlining, etc.
Q. How do OBTs access NDC content?
A. This is complex, similar to how a TMC accesses NDC content. OBTs use aggregators to get their content while some also function as aggregators themselves working with airlines using direct connects in which case, a client can choose the content source for each airline.
Not all OBTs are technically ready to consume NDC content though, let alone service NDC bookings. Some OBTs only allow a single source of content for an airline, so you must choose between GDS and non-GDS (i.e. API, NDC) content. And this content could be different to your offline (TMC) content.
Q. Is there a price difference or extra charge for NDC content?
A. In most cases, yes, there are commercial effects with NDC. An airline might charge a GDS fee for consuming content through the GDS rather than via other aggregators or APIs (between $10-30 USD / ticket). The airline may waive those fees for your TMC.
In addition, many airlines have NDC-only content, which often features (lower) fares not available in the GDS. Plus, NDC enables continuous pricing which can offer up to unlimited price points, removing the restriction of 26 price points that exist in the GDS (EDIFACT standard). The TMC might charge you a non-GDS fee as accessing content that is not available in the GDS is less efficient and requires additional resourcing. And the OBT may also charge a fee.
While there are many different aspects to consider, the right TMC and OBT will ensure you are receiving the best possible offer.
Q. How do travel managers know if their TMC is taking full advantage of NDC’s benefits?
A. It is very clear that NDC has its benefits, but that doesn’t come without some potential pitfalls. It really depends on your travel program’s priorities and objectives. For example, if an airline or OBT does not support proper servicing, reporting and duty of care of NDC content — that may outweigh the benefits of NDC.
We suggest asking your TMC if they are “NDC-live”. This ensures there is actual experience in handling NDC processes and potential pitfalls. If so, which countries and which airlines are live? We recommend reviewing your TMC’s strategy by airline and country, your OBT’s strategy by airline and country and your airline’s strategy by country, TMC, OBT and partner airline.
Our goal at FCM Consulting is to ensure our clients always have access to the latest developments within the NDC space. We achieve this by continuing our collaboration with key stakeholders in the industry, including major GDSs, payment providers, online booking tools and leading airlines. Check out our latest white paper for more on our strategic approach to NDC.
