If you’re involved in any aspect of travel management, it’s likely you’ve heard the words ‘New Distribution Capability’ (NDC) for some time now – it’s one of the biggest changes to take place in the travel retailing industry in years.
Yet what value will it bring to the corporate travel manager and their role within their organisations? And, ultimately, how will it significantly improve how business travellers travel?
What is NDC?
Launched by IATA – the trade association for the world’s airlines – NDC is a ‘travel industry supported programme for the development and market adoption of a new XML-based data transmission standard, enabling the travel industry to transform the way air products are retailed’.
In short, the programme is designed so that anyone who distributes content – such as air fares and seat options – to travellers, can offer customers more personalised and wide-ranging content in their search for flights.
What’s the difference between GDS and NDC?
For decades, both corporate travel management and leisure travel agents have successfully used Global Distribution Systems (GDS) to book and manage airline tickets from hundreds of airlines. However, a GDS is restricted in what it can do and the implementation of NDC is designed to bring greater choice to the traveller.
Within a GDS, fares only exist in 26 fare ‘ladders’ – based around the letters of the alphabet – on price and set conditions. This means that price isn’t personalised to the travellers’ needs.
“For example, if you’re booking a first-class ticket from London to New York, there are only two ‘fare ladders’ for first class, ‘A’ and ‘F’. If the last ‘A’ seat is sold at £8,000 and then the next ‘F’ seat available within first class immediately jumps to £12,000, that price jump doesn’t make sense from a customer or airline perspective. NDC gets rid of this huge leap and introduces a gradual fare increase instead, known as continuous pricing,” Reed & Mackay Director, Air Partnerships EMEA Richard Lindsay explains.
“The GDS can offer travel consultants at TMCs lower fares and different fare conditions, but not those that are specifically focused on the individual. So NDC will find travellers a price that’s both appropriate and dynamic, and you’re not constrained by those letters of the alphabet. From both customer and airline perspective there are big benefits in increasing and decreasing the fares at the right time.”
What are the benefits of NDC to the travel manager?
First, it will generate cost-savings, by giving travel managers and bookers, via their TMCs, access to better, more tailored fares that are based on their travellers’ needs.
“The simple benefit is the evolution of the GDS letter-based fare ladder,” Lindsay says. “The more exciting part of NDC, which GDS’ have struggled to deliver historically, is about unique fare content and fare bundling.
“Via NDC, we’re moving towards a world where fares can be based on individual membership status or tailored for a specific customer. For example, NDC may be able to personalise the ticket offer to the needs of the traveller. If your travellers normally fly in premium economy, and are loyal travellers to a particular airline, every time they fly premium economy, that airline may provide them with a lounge pass.”
Overall, NDC will provide better personalisation to the traveller. Which should lead to better outcomes for traveller wellbeing.
Will NDC affect loyalty programmes?
No; NDC is designed to give airlines more scope to offer unique value adds for their travellers.
Is NDC ready across the board?
Airlines are introducing NDC at different speeds. “The movement was generally started by the European carriers and, from there, it has moved swiftly, and now all the major carriers are on that journey,” Lindsay says.
“It’s only in the last year or so that airlines’ technology has become ready to take these bookings from TMCs. There are some still certain types of airfares and routes that can’t yet be booked via NDC – such as for the marine industry, where much more information is required for the purchase of tickets – but it will get there.”
Where is Reed & Mackay on the NDC journey?
This year, clients will have access to integrated British Airways NDC across Reed & Mackay’s technology ecosystem. Later in 2023, Reed & Mackay will enable multiple additional airlines’ NDC content. With airlines at different stages in their NDC journey, Reed & Mackay will turn on that content as and when it’s ready, ensuring clients continue to have the best booking experience.