This week British Airways, United Airlines, Delta Air Lines, Finnair and the LATAM Group joined Air Canada in signing up to NDC Exchange.
Please don't stop reading if you've had enough of NDC in your travel industry alphabet soup. NDC and NDC Exchange are not the same thing.
NDC (New Distribution Capability) is the travel industry-supported programme which was launched by IATA for the development and market adoption of a new, XML-based data transmission standard (NDC Standard).
NDC Exchange is a NDC Level 3-accredited platform, developed by SITA and ATPCO, to help drive adoption of that NDC Standard via API connections between airlines and travel sellers such as GDSs and travel agents. It describes itself as a "trusted bridge between IATA's NDC and traditional distribution methods".
In other words the rich content that buyers want and suppliers want to sell will be available via a combined direct connect which allows shopping, booking, selling and exchanging messages regardless of format both between airline and seller as well as among airlines.
Airlines will be able to sell ancillary services to each other as well as each other's ancillaries to intermediaries and sellers such as TMCs and online booking tools, without them having to invest in building a bespoke interface to each carrier's version of NDC.
The launch announcement is also reassuring about any potential regulatory issues. It says that "NDC is a standard, developed and implemented in accordance with applicable laws, which is aimed at enabling the travel industry to transform the way services are retailed to leisure and business travellers. It supports greater product differentiation, access to full and rich content, and delivers a more transparent shopping experience."
Airlines have long been frustrated that the millions they spend on differentiating their product offerings with individual service enhancements from seating to in-air WiFi are not communicated to buyers through the traditional GDS which focuses on schedules and fares. Buyers are frustrated that fares are no longer the complete cost of the flight and that booking a flight through a TMC, which offers content from a GDS, means they might need to consolidate data from different sources to get the transparency they need from full data.
GDSs and some carriers have been working to incorporate the NDC option. But what does the NDC Exchange "trusted bridge" mean for travel buyers?
IATA's travel manager advisory group (TMAG) wrote a letter to what it called the 'Business Travel Value Chain' detailing its NDC wish list. In a recent Analysis BTiQ exhorted travel managers to remember that if they did "ask questions [about NDC/API/distribution options] in their RFPs", they should be along the lines of..."I want X, who is going to pay for it?".
The impetus for airlines to find an alternative method of distribution is rooted in a deeply-held acceptance that distribution is a cost of sale that any producer of goods or services clearly must bear but that, for a long time, the GDS fee has been too onerous.
TMCs could use NDC Exchange to offer buyers the content they want but will SITA and ATPCO be able to pay them to use this consolidated platform in the same way that the GDSs have always rewarded TMCs for GDS transactions?
We know what's on offer. Do we know the cost?