A decade on from its launch, current developments point to a breakthrough year for NDC in 2023

Recent announcements by American Airlines, SAS and the GDSs have made many in the travel industry feel that IATA’s often divisive New Distribution Capability (NDC) is firmly back on the table after the challenges of Covid. Some feel it never went away.

“At the beginning of Covid when we began to revise our priorities to better serve our members who had short-term operational challenges, they said ‘do not pause NDC’,” IATA’s director of distribution Yanik Hoyles told BTN Europe.

Ian Luck, president of distribution with aviation consultancy T2RL, says there was “a lot of preparation and planning” around NDC during Covid.

“As we come out of Covid, airlines really want to accelerate change whether for commercial cost negotiation reasons or because they want to push retailing and ancillary sales. A lot of airlines are relaunching their recovery strategies and distribution is one of the aspects,” he says.

There is certainly evidence of greater activity. BTN Europe reported in September 2021 how Finnair planned to move entirely to NDC by the end of 2025, for example. Since then, American Airlines has announced it will be live with NDC content in all three major GDSs early in the second quarter of 2023. And then it went a step further at the beginning of December, alerting travel agencies that they need to be connected to the carrier's NDC technology by April 2023 to ensure access to its full range of content from third parties.

The carrier’s managing director for airline retailing, Neil Geurin, says that there will be more announcements in the coming months on a full content plan but this would include bundled products including ancillary products such as seats and its carbon offset product with Cool Effect.

He adds, “This is not a cost-saving endeavour for American and in fact we will pay more – it is an investment in the customer. There is a day coming where we will be fully NDC and this will give us more flexibility to put rich offers in customers’ hands.”

From 1 March 2023, SAS will introduce a new ‘wholesale’ distribution model based on NDC. It will see agencies in Scandinavia being paid a commission of €1 per fare component for Go Smart fares and €2.50 for Plus/Business fares; no commission will be paid on Go light fares.

The new structure incentivises NDC as bookings made via the airline’s NDC API or booking portal will not be charged. The carrier will claw back any fees up to €12 per segment via airline debit memo it is charged by technology partners and GDS for bookings outside these channels.

T2RL’s Luck says the SAS model is “very interesting” because of the more direct relationship between airline and agency. “It could apply on top of almost any type of contract, so it is commercially very flexible.”

Others do not think it is sustainable. Jerrin Jos, founder and CEO of Verteil, which has NDC partnerships with more than 30 airlines, including BA and Lufthansa, says: “If you look at transformative technologies like Uber or [Indian food delivery company] Zomato, to get early adoption they put carrots on the table. A few years down the line you don’t get carrots anymore.”

John Bukowski, vice president, strategic sourcing and content strategy at American Express Global Business Travel, believes the wholesale model will increase costs for customers. “There is a cost transfer of distribution costs to the customers and removing content – light fares – from their marketplace. Adding cost and removing content is not good for customers,” he says.

For the corporate market, getting NDC to work in the GDS space is crucial. Sam Abdou, executive vice president of airline distribution and online tech at Amadeus, says the GDS has now activated global market coverage of 94 per cent for NDC bookings.

“This represents around 105 markets with more than 21,000 agencies. On the airline side, we have ten airlines active today, meaning all their offers are available to travel sellers to shop, sell and service, the latest ones being Finnair and Iberia.”
Sam Abdou, executive vice president of airline distribution, Amadeus

Much of that coverage is in the leisure space and Verteil’s Jos believes that the slow adoption in corporates is partly down to the GDSs who are also tech providers to the airline industry. “Airlines have been able to reduce their dependency on GDS [through NDC] but they still have big dependencies on passenger service systems (PSSs) and have to distribute to Atpco. It takes a long time to change and I believe there is gamesmanship from PSS providers to slow it down.”

Hoyles says IATA continues to work with corporates through its Travel Manager Advisory Group. In recent months, buyers have said there are a number of priorities they want from NDC: the ability to shop and compare fares with or without ancillaries easily, being able to shop through an online booking tool, and for corporate travellers to be recognised and be offered something special, such as fast track security access.

Handling servicing requests is also a big barrier for wider adoption in the corporate travel sector. “We are having positive engagement with some of the airlines and with online booking tools but the servicing and corporate use cases were overlooked at the start. We are seeing that start to change and we have crowdsourced requirements from our customers so we are not degrading the experience when we switch on,” says Amex GBT’s Bukowski.

Amadeus’ Abdou says, “We have gone through the difficulties of the pandemic, when flights were cancelled, which caused massive disruption. Servicing customers in a seamless manner is a competitive advantage. Leveraging the servicing capabilities of NDC in conjunction with airlines will be a gamechanger.”

“All the GDSs talk about full servicing solutions coming very soon if not by the end of this year. BA announced in early 2022, that servicing would be a mandatory requirement for aggregators. They were effectively saying you couldn’t go live with just shopping and booking, you had to enable servicing.”
Ian Luck, President of Distribution, T2RL

The other issue is making NDC work in online booking tools. “Corporate customers who make a booking in their online booking tool have to look for another tool to book a seat,” says GBT’s Bukowski. “Another thing that is overlooked is the display of content, whether traditional or NDC, to allow travellers to see what is in the fare. We have led the charge with Egencia and Neo on user experience and we are working with partners like Concur and Cytric. It is not a simple flick of a switch. It needs work.”

Is 2023 the year when NDC will finally take off? “There is no doubt numbers will increase in 2023 because GDSs will be in mass production,” says IATA’s Hoyles, “and business travel is top of the agenda.”