Steady progress for NDC, but what are the next hurdles to overcome?

The raft of recent New Distribution Capability-related announcements might make you think a flood of bookings using the standard are about to open.

The reality is, inevitably, somewhat different.

Large travel management companies such as American Express Global Business Travel, CWT and FCM have talked about their live tests and bookings being made with global distribution systems and airlines.

More notable ones include Travelport handling its first booking for Qantas via NDC technology through its Smartpoint agency tool and Amex GBT's new release of online booking tool Neo, which connects to Amadeus and Sabre for online NDC content.

The issues are whether any of these announcements really mean anything and, more importantly, what real progress is being made?

During a presentation at the CAPA conference in Australia earlier this year, Travelport's global head of new distribution, Ian Heywood, said that confusion continues and that technically NDC isn’t there yet, although it is coming.

While IATA maintains that the target of 21 airlines having 20% of sales via an NDC API by the end of 2020 is on track, 2020 is less than two months away and it seems there are still many wrinkles to iron out.

Getting technical

The technical side of things remains a big part of the puzzle, and although there is progress, the servicing elements from a travel agency point of view are still not there.

TravelPerk's country manager in the United Kingdom, Richard Viner, says: “This year we’re finally seeing progress in content offerings and can now share those benefits with our customers, which is super exciting!

“Previously, NDC progress was playing catch-up to the standard ways of distribution. While it continues to progress, airlines aren’t yet able to deliver the same level of functionality. But as with other technologies, we are expecting to see an exponential progress in the coming years.”

One big issue, however, is the different flavors of NDC that airlines seem to be developing from what was meant to be a "standard."

David Chappell, technology director at U.K. agency Fello Travel, says: “The problem is more around the investment for suppliers, as each versional change (say changing from 17.2 to 18.1 - just one iteration later) incurs costs.

"Airlines will not be willing to keep investing in every new version launched, instead making step changes in standard when there are commercial advantages to the enhanced functionality in the later versions. This means we will end up with a myriad of different versions - and therefore capabilities - in the marketplace for some time.”

Simon Bennett, head of commercial business travel commercial and innovation for U.K. consortium Advantage Travel Partnership, agrees: “There is no standard for NDC, airlines are developing against different versions of the NDC releases and the fact that the standard irrespective of the version is not enforced.”

He adds: “Booking is working - servicing is not - some members have examples of it taking 10 times longer to service a booking via NDC than the traditional GDSs, due to elements such as changes and cancellations.”

Many Advantage members such as Click Travel and Meon Travel were first out of the blocks when it comes to NDC bookings.

They see themselves as agile and able to implement new technology more quickly and see announcements from larger players as them playing "catch up."

Click Travel chief product engineer Robin Smith says that it has about 90% NDC bookings with its partner airlines and is hoping to shift that up to 100%.

“There are a lot of vanity announcements being made that may show progress for those companies, but in reality most are about two years behind where they should be," he says.

And, according to Travelport’s Heywood, most of the bookings being made using the NDC standard are still low yield/cheapest fares for the airlines.

He says that because the airlines are making significant investment in NDC, they will take time to test and learn from the various new capabilities as they come on stream.

Commercial roadblocks

Technical issues aside, there’s also a growing sense that there’s a greater challenge coming.

Fello Travel's Chappell says: “As an industry we are evolving at such a pace that we have not yet been able to settle either the future distribution strategy or perhaps equally as importantly, the true commercial impact and future commercial models to support this new world.

He points to the inability of the GDSs to bring NDC to their front ends from a commercial standpoint, adding: “One has been in 'commercial discussion' with a major airline regarding distributing NDC content for well over two years without reaching agreement. In all honesty, it likely suits the airlines investing in NDC for this to be the case.

"This is because it will drive buyers out of the GDS 'paid-to-book' model into newer 'pay-to-book' aggregators (AirGateway, Farelogix, etc.) as the market demands access to the lower NDC-only fares (or more accurately the unsurcharged GDS fares currently available through NDC).”

Chappell adds that this “interplay of capabilities, commercials and efficiencies” is getting in the way of progress with various stakeholders reluctant to invest if they don’t know how it is all going to end up.

Increasingly, many no longer see technology as the inhibitor but, instead, there are other factors.

Click Travel’s Smith says: “It’s people, money and politics that are the inhibitors. I would counter that blaming old technology for an inability to utilize a new technology just shows a lack of forethought, investment or willingness to evolve and innovate.”

Next steps

So while announcements come thick and fast about test bookings and other developments, best guesses put what many describe as the so-called plumbing work will continue into the second half of next year.

Heywood says that having that technical phase in place allows talk of the commercial angle to continue around it - something, he adds, that will be followed by carriers working out how to best use the capabilities the NDC standard gives them.

There are also a number of other interesting questions emerging, such as what smaller airlines will do once they’ve seen larger carriers have some success.

Heywood also believes there’s a question over how scalable the technical solutions might be for them.

There’s also a strong belief that carriers might be inclined to use the stick approach to get agencies to adopt the technology, especially in home markets for carriers.

Chappell says: “Airlines have made huge investments to streamline their distribution into a single stack (which is one of the primary goals of NDC) and to cut their distribution costs, it seems likely that the disincentives to use certain channels (i.e., GDS) will increase. The airlines need to illustrate their ROI and so will look to impose ways to make agents use these new channels.”

He adds however that incentives will come into play, too.

“It is likely that agencies will be incentivized to use the new distribution channels too. We may even see the return of commission (you heard it here first!).

"After all, if it costs an airline £x to distribute through a GDS, then why not incentive an agency with £x/2 to use a channel that costs the airline nothing to distribute through, it’s then a win for the airline and agency and would help lessen the reluctance to use NDC content because of the loss of GDS segment revenue.”