Former CWT executive Martin Warner, of late a consultant to various players in corporate travel, knows as well as anyone the impact that distribution changes have on travel management economics. Here he reminds us that’s an unresolved issue with NDC.

The recent article in The Company Dime on “readiness” for NDC was an excellent summary of the technical elements of the issue, but it begged the question on the economic impact within the ecosystem, particularly the global distribution systems, travel management companies and ultimately the corporate client.

The changes driven by the airlines are likely to have a net negative financial implication through the ecosystem. Whilst airlines pitch the advantages of their perception of an improved customer travel retailing experience, they are silent on the ultimate change in the overall cost to a corporate travel program.

Airlines had grown ever more frustrated by paying increasing fees to a GDS for EDIFACT distribution, when the same GDS then shared with the TMCs part of what they received – generally in the range of $3+ per segment for the larger TMCs. Airlines wanted to change the model (i.e., pay less), leaving the GDSs with no room to share revenue with TMCs. Instead, the TMCs would move their relationships with the GDSs from an income source to a technology partner, paying fees for the travel technology services.

With falling GDS revenues overall, and virtually none for NDC channel bookings — or the alternative of surcharges or lack of content access for legacy EDIFACT channel bookings — TMCs are faced with the unpalatable but inevitable consequence of needing to find ways to offset the loss of their traditional GDS source of income.

MW Travel Consultancy’s Martin Warner

Historically, the TMCs largely built their transaction process around and within the GDS. With a need for additional sources to aggregate content and ensure corporate customers were offered all relevant content, TMCs followed different paths. Some defended the EDIFACT channel like King Canute holding back the tide in the 12th Century. Others moved rapidly to rebuild workflows and integrate the new content sources via technology providers outside the GDS. This all comes at a cost, as well as the loss of traditional revenues. Inevitably, most (if not all) TMCs have attempted to impose new fees or increased fees on their corporate customers.

American Airlines’ April 1, 2023, deadline for TMCs and booking tools to be “NDC ready” for the removal of 40 percent of content from the EDIFACT GDS channel is a big move affecting U.S. travel programs. European travel programs are more prepared; European airlines embraced NDC earlier.

In the United States, only now is it likely that the TMCs will fully address the economic implication with their corporate customers. Will this result in a higher overall cost of travel to the corporate travel program? Almost certainly yes. How will it manifest itself? Likely via several scenarios, some of which have been in place for a while, such as American Express Global Business Travel’s “hard to reach content” fees launched way back in 2016 and positioned at $10 per transaction. Whether this fee applied consistently across all contracts and/or was waived in some cases is unknown.

GBT made very open statements about the extra cost incurred for “hard-to-reach content,” arguing that there were inefficiencies when handling non-GDS, non-ARC/BSP or low-cost carrier transactions. Since 2016, those difficult-to-reach transactions evolved and it is not clear if the GBT position has changed; it would be logical for a TMC to now apply such a fee to non-EDIFACT transactions within the GDS — not for the hard-to-reach reason, but because such transactions don’t generate legacy, EDIFACT-type segment revenue for TMCs.

I’m not intending to single out GBT, or to criticize them; other TMCs such as Corporate Travel Management followed suit. Not all were public in their statements about new or increased fees.

Typically, corporate travel buyers don’t readily accept the arguments to support new or increased fees. However, the reality is TMC costs and revenues have changed quite significantly. The big question now is whether the corporate client still believes the traditional model to purchase travel via a TMC is worth the fees. The premium to purchase in the indirect channel versus direct-to-airline is getting ever bigger. Is there a “tipping point” where that premium becomes so great that corporates switch to buying directly from the airlines for some or all of their corporate travel?

This is all about the value proposition of the TMC versus the risk of losing control of the managed travel program if the corporate allows some or all of its tickets to be purchased directly with the airline. As a former TMC executive, I do not think the TMC world has done a good job in articulating the value proposition of the client continuing a fully managed program via the TMC channel rather than considering some or all of the program moving to airline-direct purchasing.

Do buyers understand or recognize the extra value they get whenever they buy in the higher-cost TMC channel? Is the sum of the ticket price plus the TMC fees really a higher total cost of travel? Or, is the comparison shopping offered in the TMC channel a valuable cost management tool to prevent airlines from raising airfares once they have the corporate hooked directly?

It is high time for this subject to be discussed, understood, measured and monitored. TMCs must provide use cases to justify their value proposition, including the real benefits of comparison shopping, interline ticketing, data capture, duty of care, program and account management, defined contact center service levels, etc.

Will corporates consider establishing hybrid programs? That could include shopping, booking and buying directly from airlines for a proportion of their spend, particularly in deep-discount contract or non-competitive markets, and consuming additional services for those transactions such as data, duty of care and emergency service components from the TMC. Some years ago, Siemens and Volkswagen encouraged Lufthansa Group to create such a hybrid. How successful have those programs been? Will the AA move in the United States lead other corporates to trial similar hybrid programs?

What is for sure is there are interesting times ahead!


  1. Excellent article Martin! I agree it is so important we really dig into the value proposition here and identify what buyers truly want from a TMC, what value they place on that service, etc. To me, the focus on fees only rather than service and value (i.e., right product for the best price) will lead to poorly performing programs and dissatisfied travelers/bookers.

  2. Great article Martin,

    Immediately makes me think of the long-standing question about a TMC’s core intention…and whether it is to 1) To sell travel and make money from the travel being sold, or 2) To provide service and be paid for the value of services being delivered (to clients and other channel partners)?

    It also reflects the positioning of the GDS and makes me wonder how much of this is about share of distribution income and fees versus the use of additional GDS tools (by some TMCs) to bias, prioritise or even block certain content … enabling a TMC to promote the preferred content that earns it most revenue. (See core intention #1 above!)

    Maybe the noise around NDC/EDIFACT/GDS will finally bring about greater transparency for everyone.

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