Mike Premo On What NDC Means For Corporate Travel Managers

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.

Mike Premo ARC
ARC president and CEO Mike Premo

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.

Communicate, Cooperate

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.


Related

• Attendees See IATA/Travel Management Company Meeting As A Good, If Belated, Start
• Little-Known WTMC Doggedly Charts NDC Path With American Airlines, British Airways
• United Prepares NDC Launch
• American Airlines Is Helping Sabre Build For NDC
• Amadeus Forms Dedicated NDC Unit
• As TMCs Praise AA Reveal, Some Question NDC Plan’s Practicality
• Teleconference 8: NDC In Corporate Travel

Author: Mike Premo

As president and CEO since 2011, Mike Premo plans and leads the execution of ARC's overall corporate strategy. With the help of the executive team, he also oversees the company's operations in support of revenue growth and customer satisfaction. Mike previously served as ARC vice president of business development. Before joining ARC in 2006, Mike served as senior vice president global network for TQ3 Travel Solutions and held senior executive positions at TQ3 parent Navigant International. He also served as president and CEO of SatoTravel from 1990 to 1999. Mike began his industry career at Northwest Airlines before entering the agency business at Gelco Travel. Find him on LinkedIn.
newest oldest
Notify of
Kim Castro
Subscriber
Kim Castro

Thanks for this, Mike. You are quite right that NDC brings about much opportunity and a whole lot of change management for the supplier (in this case a TMC) but also a buyer. Buyers will need to examine their policies as you state, as existing definitions of “out of policy” will be impacted by personalized offers and bundled/fare families. This will affect policy but also existing approval and other adjunct processes that may exist. I do think we will see impacts within North America alot sooner that the next few years. Air Canada has already announced that their basic fares… Read more »

Michael Strauss
Subscriber

Hey Mike,

Nice overview, thanks! Do you have any answers to the challenges of NDC? Examples include every TMC or corporate needing its own agreement with an airline (as well as possibly with that airline’s NDC provider), questions about who will pay for the establishment and maintenance of all the technical and commercial connections, and the lack of interlining.

Thanks,
Michael

David Bishop
Subscriber
David Bishop

Kim, with you totally on your comments re TMC impacts. I believe the real impact of NDC will come when the smart airlines start designing fare families with distinct price points and more importantly bundled ancillaries either for the TMC, for a vertical market, a corporate or if you want to be really cool, for a cohort within a corporate. The airlines can then market to TMCs, verticals and clients/decision makers on poles other than price. The airlines have so many powerful benefits to bring into play that will effect the negotiating process. With net profitability per seat at a… Read more »