Corporate buyers grapple with NDC over price discrepancy and post-sale servicing

At the first Business Travel Trends and Forecasts Asia Pacific event, organized by BTN in Singapore early this week, the topic of NDC and how IATA’s New Distribution Capability would impact everyone in the value chain was top and foremost on the agenda.

When asked why American Airlines had taken such a strong position on NDC distribution, Hank Benedetti, global head of corporate sales at American Airlines, called it “unfortunate” that “our position is characterized as strong.”

“We have been trying to collaborate and convince the marketplace to adopt NDC since 2010 and after 12-13 years of attempting to get buy-in, we had to put the line in the sand. We would have preferred to get collaboration.”

He pointed out that in markets such as Singapore, Australia, Latin America and the Nordic, airlines had taken a stronger stance with NDC and “we came to that conclusion as well.”

Explaining its position to an audience of more than the 80 gathered at this inaugural BTN event in Asia, he said that in the world of B2C services, “very few allow the sale of their goods and services on an anonymous basis – you cannot buy something from Amazon without an account, Netflix or Grab requires you to have an account. NDC allows that for airlines. In EDIFACT days, our most profitable customer could shop without us knowing who the customer was.”

He added, “Personalization, recognition and a host of other things are moving the distribution of airline content forward, slightly. It’s nowhere near where we want it to be, but it’s a bit forward.”

Commenting on the polarized reactions to American Airlines’ move to offer its best available third-party public channel content only through NDC connections since April 3, he said, “At the middle of the last decade, five to six years into the journey, all buyers and suppliers came with one unifying message – they were interested in it but could not do it unless we distributed through the GDS. We took that message seriously. We came out on the other side of Covid with NDC connections through all three GDSs.”

Yet, he said, the industry wasn’t happy – “that’s when we thought of drawing a line in the sand.”

Now that the line has been drawn, Benedetti said early results showed that while content was still being distributed through EDIFACT, more content was going through NDC. “We have seen a doubling of NDC transactions through our NDC partners, and this will continue to grow. Just having the TMC is not enough though, we need booking tools too – we have to wait for that chain to catch up,” he said.

NDC journey likened to automobiles moving from fossil fuel to electric

Eugene Tan, general manager of Asia sales and clients value management at CTM Asia, was of the view that TMCs had no excuse not to implement NDC distribution. “There are a lot of providers in the market now. It’s a question of right sizing your program and looking at the content that matters and you choose the right content.”

However, he said, it’s early days and agreed that the differentiated content available today through NDC is not compelling enough to travelers or buyers. “It is not doing everything we want it to do,” he said.

Indeed, speaking to corporate buyers, price discrepancy was their main concern – seeing different prices for the same flights on different channels did not give them confidence. “There’s a lot of pressure on us to satisfy the different stakeholders,” said one corporate buyer.

Srinivas Rao, head of global TMC engagement for APAC at Amadeus, said, “It’s a work in progress. We have 22 carriers live with NDC and we are starting to see some unique content from airlines, for example, ancillaries and bundling can come through NDC.”

He said that NDC is a collaborative journey that needs partnerships. Putting the onus on one sector will not make it a success. He likened it to the automobile industry’s move from fossil fuel to electric. “That’s been a 10-year journey and that can only happen due to close collaboration – government regulators, industry bodies. Only when all of us come together and agree on common standards can it succeed.”

Rao said that actually “a lot is happening out there, but the conversations are not happening. There are lots of carriers out there, corporate negotiated fares on NDC, airlines doing surcharges, fare differentials, ancillaries. You’ll be surprised how far it’s come.

“Eventually, everything in EDIFACT should be available in NDC. Seventy-five percent of travelers demand personalized solutions. These can only be available in modern retail channels like NDC. Eventually we have to say goodbye to EDIFACT and move on.”

Benedetti commented that it was unfair to put the full burden on TMCs. “Each of the players in the value chain have their own tech challenges to adapt their systems. They have to spend money on infrastructure and tech development. We have invested and we expect the tech chain to invest as well,” he said.

Steve Lawson, vice president of global sales at Cathay Pacific, said the airline was in the early testing phase of NDC implementation and that it was doing lots of tests. “We want to fix the issues before we move ahead,” he said.

Challenges facing the TMC – from legacy systems to after sales

Tan said CTM’s NDC journey started in 2018. “We did a pilot project and developed direct connectivity with Qantas on domestic content. Today, we have five carriers with direct connectivity, including with Cathay. We are taking a hybrid approach. There is no way we can be connected direct with all the carriers, so we use aggregators. The GDSs coming in, that’s a good move.

“The challenges are availability and comprehensiveness of NDC content. There are more than 80 carriers with NDC content at different levels of certification. It’s not just about the TMC but the GDS as well – GDS technology is 60 years old. It’s a mature ecosystem and TMCs use it as a platform to manage clients. We have built around this ecosystem and our buyers are piped into it. The first challenge is how do we retrofit, engage our platform to receive this new content to service our clients.

“TMCs enable the whole journey, pre-trip, on-trip to post-trip. There’s a data pass through that’s handled within this ecosystem. When you go through NDC, with different carriers at different points of the journey, there are lots of moving pieces.”

And then comes the thorny issue of post-sales servicing, which TMCs spend a lot of time on. Said Tan, “How do we help our corporates support the after sales?  Corporate travel is focused a lot on after sales – incidents like the recent flooding in Korea, evacuations. When I have an NDC carrier booking, how do I connect into the old ecosystem?”

Another challenge is the fragmentation of the market. Tan noted that today, there are close to 220 tech providers, claiming NDC capabilities. “There’s a mini ecosystem of airlines developing NDC capabilities. We do not have a standardized TMC desktop to get all the content I need, whether it’s NDC or EDIFACT. GDSs coming in is a good thing, that will give us full comprehensive content.”

Srinivas said that Amadeus’ strategy is building NDC on top of the airlines’ PSS – and with 130 airlines using Amadeus’ Altea and Navitaire systems – “we will be able to harmonize the content into one screen”.

“You will have EDIFACT, NDC and direct API on one screen.”

He urged the corporate buyers in the room, “You need to try NDC, maybe not for complex trips, but point to point. Give it a chance, explore.”

The reality too is that corporates have to deal with another pressing issue – that of elevated costs – and it becomes a question of priorities. Indeed, sustainability seems to have been dropped in priority for the moment according to surveys by BTN in both Europe and the U.S. Placed number one last year, it’s dropped to third and fifth place in both markets, respectively.

In his opening remarks, Varun Mehra, senior consultant at CWT Solutions Group, said, “Corporate travel is seeing more changes now than in the last 15 years. Let that not be a distraction from the key issue of sustainability. It’s not just about carbon and sustainability but travel overall. There’s no RFP without sustainability in the program. There is ambiguity around methodologies. Even if we choose one, what do we do about it? But let’s take that first step.”

And that could be as simple as using a tool such as Amadeus’ Cytric tool where “if you have people going to New York for a conference, it can tell you who’s landing around the same time, and you can share a taxi. Or within the chat, you can be alerted about who’s coming to New York and ask for face-to-face meetings – it’s all about making trips far more meaningful,” said Srinivas.

One corporate buyer in the audience shared the example of how his company has moved at least five to 10% of flights on the Singapore-Kuala Lumpur route to ground transport.

However, the observation was made that, thus far, no correlation has been found between flights that are purchased and emissions of those flights. “For now, whether it’s B2B or B2C, the option to save carbon is traveling or not traveling or more use of rail,” remarked one audience member.

*This article originally appeared in Web in Travel.