Sitting at the nexus of travel agencies and airlines, ARC is well-positioned to understand the needs of both sides. Today’s advisor, ARC president and CEO Mike Premo, advocates collaboration on the changes facilitated by IATA’s New Distribution Capability (NDC). That’s because while there’s a lot to sort out when it comes to air travel booking, servicing and contract management, there’s also a lot to gain.
For decades, airline distribution has been a relatively stable environment. Processes were universal, partnerships were straightforward and buyers knew exactly what to expect when purchasing air travel.
Now, things are changing — for the better. Our industry’s legacy processes are transforming, and the future of air travel is customizable, flexible and full of opportunity.
In recent years, it became clear to us at ARC that it was time to lead the charge to support a wide range of airline distribution models, including New Distribution Capability. Just last month we enhanced our settlement platform, which is now live. British Airways was our testing partner.
As a travel manager, you’ve likely seen distribution in travel news headlines, at events you attend and maybe even in conversations with suppliers. But, you may still be wondering what NDC exactly is and how it will affect your travel program.
What is NDC? NDC is an XML schema. It’s one method an airline can use to communicate information about a flight to a travel agency, either via a global distribution system or through a direct connection. In airline distribution, NDC is a means to an end: it enables airlines to deliver richer, more transparent information about travelers’ purchasing options for a flight.
Previously, airlines were limited in the information they could transmit to an agency, usually via GDSs. The NDC standard enables airlines to communicate to travel agencies and, ultimately, the traveler, rich content — including images, details about the aircraft and cabin amenities, food and beverage options, inflight Wi-Fi and more.
How Will NDC Impact Corporate Travel?
The way airlines sell tickets is already changing. As more travel industry players begin to adopt alternative distribution methods utilizing NDC, business travelers will see increased transparency and further options to customize their travel experiences.
Some airlines are pursuing partnerships with key travel agencies, utilizing NDC to execute a more flexible distribution strategy. For travel agencies in the United States, this creates a huge change to existing ticketing processes, but ARC has taken steps to ensure our services enable a wide range of distribution strategies and airline-agency partnership models.
Booking: As airlines’ offerings broaden, corporate travel policies will need to evolve. Enhanced airline distribution — including NDC — gives the business traveler more transparency, allowing them to better compare seats and flights, as well as choose the options that will meet their needs and boost productivity. With more options comes the need for clear, well-communicated travel policies. NDC is also expected to enable negotiation and delivery of tailored bundles of services for corporate travelers, i.e., ABC corporation’s special rate with XYZ airlines includes a bag and priority boarding whereas the “general public” fare does not.
The extent to which NDC will impact your program depends on how you purchase air travel. If you book through a TMC, you’ll need to work with it closely. Clearly communicate your program priorities to ensure your roadmaps are aligned and reflected in your contracts.
In the United States, it’s likely that the majority of agency-airline partnerships will continue to operate primarily through a GDS for the next few years at least, unless a major disruption takes place in the meantime.
Servicing: Bilateral airline-travel agency agreements result in individualized contracts, which can enable more customized offers for your travel program, but it will likely create a substantial change in processes.
Keep in mind that servicing a ticket through a GDS involves specific rules for exchanges, refunds, voids and settlement. If your program moves to a direct airline connection (or an NDC-enabled connection via a GDS), those rules and processes may change — and they can vary from airline to airline, depending on how many direct connections you have. You’ll want to ensure your continued ability to deliver duty of care to your travelers, so it’s important to clarify how you will service a ticket after purchase, especially during “irregular operations” such as inclement weather or emergencies. Your TMC is likely a good source for details.
Contract management: The biggest contract changes would occur with any bilateral agreements you make, such as a direct connection with an airline. This would mean either creating individual contract agreements (and booking processes/platforms) with one or more airlines; implementing a hybrid model of GDS transactions in conjunction with any direct connections; or limiting travelers’ options to a select few airlines.
Travel managers will have to make it their mission to keep up with these trends, ensure policies are clear and up to date, and examine any effects on duty of care. Additionally, if you work closely with a TMC, you’ll need to clearly communicate your priorities to ensure your future plans are in sync.
We are in the very early stages of implementation, and there is plenty of opportunity on the horizon. The promise of NDC for corporate buyers is to end one-size-fits-all purchases and enable delivery of content and offers specific to your business needs. For travelers, this will result in a richer, more tailored experience. We’ll get there through collaboration.
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