Adopting NDC Requires TMC Tech Overhaul, But Airlines Aren’t Offering Much Time

Airlines have big plans for new distribution capabilities. Whether and when they become reality in corporate travel remain open questions. At the moment, it’s looking like a huge challenge.

British Airways officials said they anticipated a “large chunk” of travel agencies would transition to NDC channels this year. Air France-KLM’s roadmap calls for new products to be made available to TMCs using NDC beginning in the second half of this year — after its surcharge takes effect April 1. American Airlines last year announced an NDC incentive offer available until the end of 2018.

Travelport last month became the first global distribution system provider to certify with the International Air Transport Association for full NDC-compliant distribution. Many travel agencies bought time in their British Airways/Iberia relationships, ostensibly to explore and build what they need.

But travel management companies are looking at months if not years of reprogramming to accommodate what amounts to a reinvention of their tech stacks.

“This touches every area of the TMC. All of its processes. All of its infrastructure. When you start the analysis on what’s impacted, the rabbit hole goes very deep,” said TravelCast Consulting’s Kim Castro, a travel agency tech veteran who spoke on The Company Dime’s December Teleconference. “Very little is understood broadly outside the TMC about the complexity of the infrastructure and what it takes to pivot like this.”

Listen to a recording of the live teleconference.

Moving to NDC-powered connectivity to access new content and other benefits sounds great “in theory,” said Travel and Transport CIO Mike Kubasik on the same call. However, that “requires, in essence, building another GDS, whether through an aggregator or your own APIs, which is not a simple thing.”

During the call, Castro and Kubasik took listeners through the myriad agency processes that would require a rebuild. A truncated list of examples includes mid-office capabilities like ticketing routines, data entry for clean reporting and policy checks; supplier contract management; and every point-of-sale function. Many changes, Castro said, would be needed regardless of whether agencies go direct, use an aggregator or use a GDS for NDC connectivity.

Sabre vice president for product management and strategic initiatives Kathy Morgan reinforced the point during a separate interview: “The focus on NDC has been shopping and booking, and as complicated as that is, it’s the easy part. The standards stop there and we have visibility into the downline process. The hard part is managing that over the lifecycle. Schedule changes, the need for an active reservation so you always know a true picture of the status of that itinerary, the need to feed back-office systems, and then stretching into things like duty of care data. What we don’t know yet is how we can offset those impacts. So, for example, with our automated refund and exchange solution, the answer can’t be, ‘If you book NDC, you need another process.’ ”

TravelCast Consulting principal and owner Kim Castro

Travelport managing director and senior vice president Derek Sharp said NDC distribution even through a GDS would require changes on the TMC side. The GDS company has been establishing pilot programs in order to gather information about the impact.

“We want to provide feedback to the airlines on what this does for the workflow,” said Sharp. “This has to scale and we’re not going to figure out all that ourselves.”

Sharp said Travelport was working with a European agency on “multi-source content,” and putting a red, amber or green rating on each step of the change. “It wasn’t all green,” he said. “If you were to just roll this out, it would hit a brick wall. That’s feedback the airlines were willing to take. Airlines we have had the most success with think the status quo doesn’t work, but they want to gain feedback, which involves economics, as well. That’s different than some airlines that have gone out with a story around NDC which is a transparent commercial strategy.”

Some industry constituents are not willing to give the airlines a pass for seeming to put surcharges ahead of a more thorough understanding of the viability of the alternatives.

“How can BA substantiate the introduction of a surcharge when the alternative technologies were not fit for purpose?” asked one U.K. TMC source who declined to be identified in order to preserve commercial opportunities. “We have queried with BA the functionality of its agent portal or the NDC solution — and the current limitations within those options for business travel — and been told use the GDS for those things! It is my view that this wasn’t about the technology and how great the enhanced information and options would be, because much of that functionality is not there. Wasn’t this more about changing the commercial model and pushing costs back to the client?”

During a Wednesday interview, British Airways chief commercial officer Adam Daniels claimed the transition “from full content to private channel and through to NDC has gone as well as we could have expected it to.”

Adam Daniels and Ian Luck of British Airways

Asked why BA needed the private channel as an extension of its original transition period (May to November of last year), head of distribution Ian Luck said that the airline during 2017 “learned a lot more about what travel agencies need to make it work. It’s easier to sell a ticket than service one; that’s where we have devoted a lot of our time.”

Daniels suggested that agencies had dragged their feet. “A number of agents were not convinced change was coming,” said Daniels. “They had been down this road before.”

Private-channel TMCs by the fourth quarter agreed to reworked distribution economics in order to avoid the BA/Iberia surcharge announced in May. The timeframes for these private-channel agreements ranged from a few months to multiple years for different players. BA officials suggested larger TMCs needed the most time to adjust.

British Airways included “timescales” and “milestones” in associated agreements with agencies to explore NDC. These related to steps along the way like agreeing to specifications and making sure connectivity is working.

“A large number are testing the API,” said Daniels. “Our problem, if we have one in 2018, is we need to make sure we can respond to the demand. I can already see the demand will be significant.”

If agencies are not ready to handle NDC distribution when their private-channel deals expire, would BA extend those deals?

“At the moment, we’re not planning to extend,” said Daniels.


Author: Jay Campbell

Jay Campbell in 2004 created travel business newsletter The Beat, in 2006 co-founded Travel Procurement magazine and in 2010 integrated them with Business Travel News. He served as editorial director until 2013. Jay made his travel industry media debut in 1993 at the Air Travel Journal of Boston while earning his undergraduate degree in journalism at Boston University.