UK travel management company Click Travel announced this week that it was the first TMC in the world to implement an NDC-based direct connect solution for British Airways and Iberia content.
Click's clients will now not incur the £8 per booking distribution charge which BA will be levying from 1 November on any booking made via a GDS.
Click Travel's executive chairman Simon McLean announced this saying, "Travel suppliers now have the ability to connect to our platform directly, in return for which we are offering them zero cost of distribution — no commission, no booking fees, nothing."
The world view from Click is that direct connects are good — well, free of cost — for both clients/buyers and suppliers. Click's comments, admittedly brief as they are within a press release, are framed only in terms of ease and lack of fees. They neglect to cite any potential indirect advantages of booking via an NDC channel rather than a GDS for either buyer or supplier such as the extra content on offer. Ancillaries such as seat selection and checked baggage can now be included at time of booking. For suppliers this is not only a case of no fees; it's a case of potentially more revenue.
So if it's to everyone's advantage, why isn't there a rush to sign up? It's not even a case of slow acceptance. A large number of industry organisations and TMCs are outwardly hostile.
NDC is an IATA initiative but it is by no means universal. Of IATA's 275 members, some 39 have an NDC strategy of some kind at some point of development (see here for latest list). Of the 39 only 15 — Aer Lingus, British Airways, Brussels Airlines, Condor, Finnair, Flybe, Iberia, Iberia Express, Lufthansa, Olympic Air, S7, Swiss, Thomas Cook, Thomas Cook Belgium, and Turkish Airlines — are European carriers.
The TMC climate is similarly fragmented. Click is happy with direct connects. Maybe it's because some would describe Click as a technology company operating in travel whereas many of the more traditional TMCs subscribe to the view espoused by the GTMC's, the UK TMC trade association, former head Paul Wait that suppliers following this rate "choose to transfer the cost to the customer of booking via a GDS." He continues, "Whilst making the claim that the GDS is more expensive we would like to see robust evidence from BA to prove that point when all factors such as technology development and marketing costs, revenue and average ticket price are taken into consideration."
Wait quite rightly points out that there is a wider picture, that costs are more than one fee and that revenue can vary by channel. However, he doesn't highlight that he's not comparing like with like and that NDC is not identical to the traditional GDS
There are two issues: (1) suppliers in general — hotels as well as carriers — are furiously scrutinising costs and the GDS fees are directly in their firing line; and (2) both buyers and suppliers want more from the booking experience than a transaction at a certain fare.
Click is able to run a business model seemingly at odds with that of traditional travel companies because it is a relatively young company. If you were to evaluate the GDS by asking travel companies the question "Would you install the same system today?", the answer would probably be "no".
The GDS is basically the same system that it was when introduced more than half a century ago. It has been remarkably effective but expectations, behaviour and business models have all changed.
It's also worth reminding ourselves that Click is a single location UK TMC. Many large corporate programmes use multinational TMCs. It's worth musing as to why no multinational has yet to embrace direct connects.
Bear both points in mind.