This week a GDS — Travelport — was effectively licensed by IATA to use NDC (New Distribution Capability).
So Travelport agencies should now be able to see and book content in the way in which suppliers are presenting and pricing it. And business travellers should experience the same convenience and choice when booking work travel as they do when they book their leisure travel.
(Sabre and Amadeus both have some NDC capability but Level 2 "requires a more extensive use" of NDC-based shopping. Level 3, the highest level, would include the ability also to take on booking, payment and ticketing.)
This is the culmination of five years' work by IATA to develop NDC. One might well wonder, however, why, if this is something that apparently benefits both customers and suppliers, it took so long? The clue lies in the fact that this has been developed by the airlines' trade association. The answer is money.
Suppliers such as airlines feel they pay unnecessarily high fees to GDSs to distribute their content while their competitors that are not on the GDS have much lower distribution costs.
Some have been exploring alternatives such as direct connects but airlines do not want to squander access to so many potential customers and GDSs do not want to lose such a large source of revenue.
Buyers and intermediaries functioned for years in a no man's land between their travellers and suppliers where business travel was a commodity and travel policies would dictate which suppliers were to be used. But a cocktail of industry trends such as traveller centricity, customisation and fare unbundling have put pressure on the dominance of legacy systems.
It is no wonder that "Is the GDS obsolete?" has become one of the stock business travel conference topics for the times. The GDS provided mass content interconnectivity before the internet was born but since its inception the internet has been enabling alternative, slick distribution channels while the GDSs have suffered from a lack of investment.
Technology developments have enabled suppliers increasingly to personalise their offerings and target travellers directly. At the same time suppliers have been unbundling their products so that a fare might no longer represent the total cost of all the services that a traveller might want as part of the flight.
The historic GDS was built around the understanding that its customers were buying air transport between two points and the screens therefore show the different times and prices for just that. Airline marketing teams were meanwhile spending vast amounts to create brands which meant different expectations about different carriers' service, whether from the seat and AV system to the food and wine. More importantly, the success of the LCCs has seen supplementary fees levied on many items from seat assignments to checked baggage which have become optional extras. But this is not consistent across brands so what comprises a fare on one carrier may not be the same as on another. The lack of transparency and inability to collect data from a single source has been frustrating for buyers.
IATA maintains that in NDC it has taken a collaborative, cross-industry approach to develop a distribution capability that meets changing needs. Travelport's release seems to agree: "Travelport has always made it clear that it recognises and fully supports the industry need to transform the way air products are retailed." Consolidated data, traveller centricity, transparency — all the things that managers are looking for appear to be within NDC.
Pressure has been on GDSs to take steps to justify the high fees they charge suppliers. Despite the GDS's limitations many buyers have resisted any adjustment to their business model because of fears that the result could be higher costs for corporates. It shouldn't.