In the rapidly evolving world of airline distribution, staying ahead of technology and market trends is crucial for travel industry leaders. Recognizing this need, Cornerstone Information Systems and DataArt recently hosted an exclusive New Distribution Capability (NDC) workshop.
The workshop was a dynamic, action-focused discussion with over 20 leaders from top Travel Management Companies (TMCs), travel agencies, and suppliers discussing specific, real-world topics related to NDC. Real levels of fare differentials, economics, and fees, along with customer reactions
- Operational impacts, key pain points, and current strategies in NDC adoption.
- Reevaluation of relationships with Global Distribution Systems (GDS) and consideration of direct connect strategies.
This collaborative session provided a platform for participants to share experiences, challenges, and strategies, fostering a rich environment for collective learning and advancement.
NDC Adoption
Participants were polled about the level of NDC penetration in their current business. NDC adoption is currently low but plans are being put in place to increase participation. Specifically:
- About 75% of participants reported that NDC is less than 10% of their transactions
- Approximately 45% of the participants indicated plans to initiate or expand their NDC transactions beyond traditional GDS systems within the next six months, either through direct connections or by leveraging aggregators.
Airlines’ NDC Maturity
Tye Radcliffe of Accelya provided valuable insights into the airlines’ maturity level in implementing NDC. Although significant advancements have been made in the retailing aspects of NDC, post-ticketing servicing remains challenging and presents a critical area for further development. The slow pace of GDSs in enhancing their capabilities further widens the servicing gaps, complicating the seamless adoption of NDC across the board.
Each airline is developing its NDC approach and priorities independently. That includes how they implement the NDC standards, and which areas they are focusing on for improved post-order servicing. Participants highlighted the lack of a unified approach by the airlines as a major pain point.
Servicing productivity was another area of concern. One participant remarked that it took 40% longer to make an NDC booking. Post-ticketing service times were also highlighted since any servicing requires direct airline communication. Tye responded that over time this gap would close and that eventually the EDIFACT and PNR structure would sunset.
Response from Travel Managers
The TMC participants highlighted that most corporate travel managers and operators are advocating a slow and deliberate approach due to concerns about servicing, duty of care, and refundability. Despite these reservations, there is mounting pressure to modernize systems to keep pace with industry innovations. In discussing the costs and time required to implement NDC, travel managers and operators emphasized that the increased costs associated with NDC servicing might require fee increases.”
Challenges with Fare Differentials
A recent study claimed that NDC fares are cheaper approximately 52% of the time. Participants expressed skepticism, noting that comparisons often do not match on an apples-to-apples basis, particularly when basic economy fares are considered. The complexity introduced by continuous pricing models makes these comparisons even more challenging..
Servicing Challenges Remain Daunting
The biggest concern voiced in the workshop was the lack of clear understanding about what is currently feasible with NDC. This uncertainty hampers the ability to effectively set strategy and tackle specific operational challenges including:
- Book and hold: It is an NDC capability and can be done in Amadeus and NDCX as well as Sabre Web Service, but with some details and limitations that should be considered (Cornerstone can help).
- Order change notification: Some progress has been made among North American major carriers, with better visibility into the transactions, but progress is not uniform.
- Reporting: This was a particular area of concern, especially for duty of care. The lack of reporting continues to be a large blocker preventing some from adopting NDC.
- Unused ticket credits. These do work for United and American, others are slowly making them available.
Moving Forward
There was a clear interest in continuing with a structured exchange of knowledge and strategies. This initiative would ideally focus on clarifying what is currently possible with NDC, starting with the top issues and setting the stage for more targeted problem-solving in future sessions.
As the airline distribution landscape continues to evolve, we feel that forums like this workshop provide a platform for industry leaders to share insights, address challenges collectively, and drive meaningful advancements in travel technology.
If you would like to be included in future workshops, please reach out to your Cornerstone representative or email sales@ciswired.com.