It has been hailed as “the most significant thing affecting travel for the past 40 years.” Yet for most travel managers, New Distribution Capability (NDC) sounds like an abstract technology concept happening at some point in the distance.
If you haven’t been paying close attention to NDC, now is the time to take a deeper look, as it has the potential for either giving travel managers greater control over your corporate travel policies or losing out altogether as corporate travellers take the reins.
NDC is a new set of technology standards (essentially an API framework), which were developed by IATA, to facilitate rich communication between airlines and travel agents or corporate booking tools that will ultimately impact travel buyers and travellers as well so it’s time to take notice.
What this means, in essence, is that airlines will have the ability to provide a rich, personalised experience the way they do through their websites, but through third party channels. Airlines are looking eagerly towards NDC as a way to better merchandise their seats and offers in a way they haven't been able to through traditional distribution channels, differentiating their product offering and maximising potential for ancillary fees.
And it’s happening right now.
What does this mean for the travel buyer?
Travel buyers can, with the help of NDC-enabled corporate online booking tools, enhance the level of service to their corporate travellers and negotiate airline agreements that are customised to their needs.
This will free up the travel buyer to develop commercial agreements that personalise the airline's offering to their corporate needs and optimise airfare inclusions to the needs of the individual, rather than developing travel programs that fit the masses.
Most critically, NDC brings airline extras, like priority seating and baggage, directly into the booking process. By bringing extras into the managed travel program it will be easier to determine the total cost of air travel, and to develop and apply travel policies that encompass total air travel spend.
The 3 key benefits of NDC for corporate travel programs:
- Travel buyers get visibility around the true cost of airline travel, providing greater insight and negotiation power with their air suppliers.
- Travel buyers get control over this spend, enabling them to apply policy controls around what can and can’t be purchased.
- Corporates can negotiate customised airfares or inclusions with airlines to accommodate project needs (e.g. extra baggage) or traveller requirements (e.g. valet parking)
Ultimately, NDC gives travel buyers greater control and visibility over airline ancillaries, which is a big deal give the spend globally is about $100 billion annually (nearly $3 billion in Australia, averaging about $50 per traveller per sector) .
Seeing NDC in action
Consider a frequent traveller who needs to book an upcoming long-haul trip. Because this traveller is a VIP as defined by their company’s travel policy, she is entitled to certain travel benefits.
First, she is entitled to purchase premium seat selection. Second, she is entitled to pay for access to the airline lounge prior to departure, and the arrival lounge at destination. Third, the travel policy allows her to purchase priority boarding so she can secure overhead space and get settled for the long flight as well as an additional baggage allowance.
In today’s GDS booking environment the traveller would book the airline trip via the company’s online booking tool or directly with one of the company’s travel agents.
Following the completion of the booking the traveller would likely go online to the airline website to login and purchase premium seating, lounge access, premium boarding and the additional baggage allowance. In addition to the time spent doing this, our traveller will pay the full “rack rate” for each of these additional services and have to submit multiple expense items.
Using the Zeno online booking tool in conjunction with NDC, our traveller would be able to bundle their airline booking, lounge access, enhanced boarding, and preferred seat in a single seamless transaction. There is no need to contact the airline directly, no need to spend additional time logging into the airline website, no need to be concerned about capturing more than one item for the expense report. In addition, the bundled pricing can be negotiated with the airline by the travel buyer, so the company ultimately stands to save money.
What can travel managers do to prepare for NDC?
Taking advantage of the enhancements that NDC will bring is a fairly straightforward process. However, ensure you have taken, or are taking, the following steps:
- Be informed – Identify what level of spend you believe is going on ancillaries, even if it is happening
outside your managed program, so you understand how much is at stake for your organisation
- Start to develop policies around ancillaries - Speak to your travellers about their needs, and use this to inform an ancillary policy framework for your organisation. How much baggage allowance is appropriate for short haul vs long haul? Can they purchase exit row or premium seating for longer economy flights? Can they use their own points to upgrade? Once your policy is developed it can then be applied in your online booking tool so your people don’t need to second guess whether an option is appropriate.
- Communicate, communicate, communicate - Let your travellers and travel bookers know about the changes that are coming with NDC (there are useful resources for this regularly added to zeno.travel). Then, once you have developed your ancillary policy framework, communicate this well in advance of the NDC changeover for relevant carriers so travellers and travel bookers have clarity on what they can and can’t do. If you’re taking an agile approach to develop policy based around organisational behaviour post-NDC then again, let them know so they’re across what’s happening.
- Ask your TMC partner what plans they have to take advantage of the benefits of the new NDC standard and how those benefits will be shared.
- Talk to your airline partners – ask them what they can do to allow you and your travellers to benefit from the NDC standard. This could include negotiated rates for extras or bundling in features such as lounge access or seat select for all fares.