< PrevNext > Trend: New Distribution Capability NDC – Opportunity or Inconvenience? By DRCT Managing Partner Viktor Nekrylov / January 26, 2022 Share Credit: Viktor Nekrylov, Managing Partner, DRCT New year, renewed effort with NDC? I’m optimistic, but hurdles remain and there are a few things the managed travel community should look out for this year. There was talk from International Air Transport Association early in 2021 of an update—a sort of master version of the New Distribution Capability—that would help solve the challenges created by the different interpretations of NDC by airlines. As this has not materialized, interpretation challenges remain one of the barriers to implementing the ‘standard’ and they will continue creating additional work for stakeholders in 2022. However, travel sellers shouldn’t sit still. They need to monitor updates from airlines and aggregators, instead of those from IATA and global distribution systems. Doing so will raise awareness of NDC among the travel management community as well as enable individual players to assess how they might best adopt and implement the technology. In terms of specifics, watch out for American Airlines announcements about its corporate experience or more news of the servicing elements from Qantas. The Delta-Sabre relationship is another to keep a close eye on, with a move away from the traditional GDS economic model so that the fee paid is based on the value of the offer. Barriers to Adoption To date, adopting the standard has not been easy for several reasons. Commercial agreements between airlines and travel management companies are a sticking point. TMCs are devoting time and effort in striking NDC agreements with each airline, leading them to question the value of the overall transformation. Travel buyers and retailers want to see bundled offers and be able to personalize content and access more elements, all integrated into their workflows. The current discounted and promo fares won’t cut it anymore. TMCs and travel managers were scathing about NDC in a recentreport from the Business Travel Association. Respondents to a study from the UK-based trade body felt “consistently penalized” by NDC and said promises from airlines had not been met. The travel management community also said the lack of functionality, which I mentioned above, is a barrier to working with the standard and they added that the online booking tools were unprepared to offer the content. With so many downsides, you might ask why I’m optimistic. Well, the industry needs to see progress. Airlines don’t want to lose high-value corporate customers. Many have made significant investments in NDC, although the financial benefit to partners is not obvious. While travel sellers receive incentives (read kickbacks from GDS partners), NDC does not imply such direct income. The lack of understanding in how to leverage NDC to increase sales and improve customer satisfaction has slowed adoption. However, I believe this is temporary. To date, several airlines have provided incentive programs for selling via NDC, which can counter the costs agencies incur to access this content and could potentially increase their incomes, even as travel sellers learn to optimize the real opportunities. Leveraging NDC for Travel ProgramsImplementing NDC content into TMC workflows presents a minefield for corporate travel managers, but wider adoption of the standard across the airline industry will mean that travel managers not working with NDC-enabled providers will increasingly find they are not offering full content to their end-users. With all major airlines providing discounted NDC fares, there needs to be a more efficient way for these savings to be passed on for business travel bookings. If a current provider isn’t offering NDC content, it may be time for the corporate travel buyer look elsewhere. TMCs have their own role to play in encouraging the adoption of the NDC standard and driving change. A hybrid world of traditional airline distribution methods and NDC-driven channels is likely to exist for some time. But there has been much talk recently of greater collaboration in the travel industry as we work toward post-Covid recovery. In 2022 we will see whether that is just hot air or demonstrates a real desire to work smarter. It’s time to move on from talking about industry nuts and bolts to offering and selling content to business travelers, in an efficient and profitable way that best fits their needs.