New Distribution Capability, or NDC, is a new set of technology standards allowing airlines to distribute their “rich content,” i.e. their ancillary products and services, to their largest traveling population: business travelers. These new channels offer direct, or otherwise nontraditional, booking options for your corporate travelers, potentially shaking up how the business of corporate travel functions.
It may sound like your corporate travel program is heading into the Wild West, where travelers will have a whole open range of options, presented to them and accessible in unprecedented ways. For individuals managing or overseeing a corporate travel program, new distribution capability may raise tons of questions and concerns, among them:
- Will my costs go up?
- Will my travelers start buying ancillary products and services that are out of policy?
- How can we manage bookings that are not done through managed or approved channels?
NDC focuses on customizing and personalizing the airline offers that their corporate travelers see. The algorithms behind this customization remain undisclosed, though possible factors include historical patterns, corporate affiliation/policy, personal demographics, and known preferences. The technology used to distribute content in this manner is not ubiquitous, and today, all of the GDS’ have varying levels of capability and certification. If your travel program uses an agent team booking via GDS, the question raised is whether this NDC functionality would be accessible therein – and to what extent. Similarly, if using an OBT, how does the NDC content translate there?
The presentation of NDC you may be most familiar with already are surcharges implemented for GDS bookings: airlines have been developing their own portals, or non-GDS-based systems, for merchandising their content. However, the portals are not user-friendly. Most TMCs have responded to surcharge implementations by certain airlines by booking code shares or the more expensive flights, where appropriate.
Airlines have also begun removing content in part or in full from various sources: limiting access through traditional channels is the potential industry disruptor NDC represents. GDS contracts represent a significant revenue source for most TMCs, and non-GDS bookings have to be added as passive segments to a record in the GDS—taking more of an agent’s time. TMCs have maintained these disparate booking sources negatively impact their efficiencies, and many have rolled out or increased existing non-GDS fees. Some airline partners are offering TMCs special agreements from airline partners reducing, or outright eliminating, those surcharges… but that creates another relationship with behind-the-scenes impact on your travel program.
Understanding NDC in 2019
As we move further into 2019, understanding and awareness of NDC is especially key: Airlines have committed to distributing 20% of their content through NDC channels by 2020.
How to approach this unexplored territory? To briefly pull in the reins:
While the NDC name and movement has been gaining traction, more than in any past instance, the concept itself is not new – past attempts, under different names and taglines, have been attempted, and have failed. Current new distribution capabilities are progressing, but the future and timeline, beyond that 2020 commitment, remain unclear.
KesselRun can help navigate your questions and offer guidance moving forward. We sit on airline advisory boards and groups, and engage at the highest levels with all industry associations and key TMC executives to stay at the forefront of the ever-changing dynamic between GDS’, airlines, and TMCs.
Beyond the instinctive concerns of change and the unknown—NDC does also offer new opportunity. With NDC, we can negotiate ancillary products and services, like seats, WiFi, lounge access, checked bags, in-flight meals, right into our vendor contracts like never before. Building in those perks may not only improve the corporate travel experience but result in significant ancillary savings down the line.
Best Practices for NDC
As we look forward to a changing landscape, with the extent of the change of NDC still to be seen, KesselRun would like to remind you of the following best practices:
1. Stay in regular communication with your TMC and Airline accounts representatives
2. Understand the operational details of your travel program:
- Know exactly how your TMC books offline and processes online reservations
- Know your booking patterns and current travel policy compliance.
- Know how your airline contracts are structured, their current value/net effective savings, and how airline partnerships work or effect your program
3. Stay informed via an array of industry publications on the latest NDC news in order to ask the right questions and prepare for any significant changes.
Should you need help answering a question about NDC or determining what your program needs to ask, remember as well: you can always reach out to KesselRun, to help you find your travel solutions.