The Pace of Change: Suppliers Make Progress on NDC
By Donna M. Airoldi
Attend any business travel event where New Distribution Capability is mentioned, and eyes will roll. Since American Airlines made its line-in-the-sand statement in December 2022 then began pulling content out of EDIFACT in April 2023, NDC or "modern retailing" as some would prefer to call it, arguably has been the hottest topic in business travel. The subject gets near daily mention by industry insiders on LinkedIn, and there seem to be at least one or two webinars a month related to it.
Yet, with all this attention devoted to airline distribution changes, the needle on NDC has barely moved—at least when you're talking about corporate travel bookings made through the global distribution system NDC channels. Sabre on its most recent earnings call noted that NDC accounts for just 1 percent of its global GDS bookings.
NDC by the Numbers
When looking at Airlines Reporting Corp. data, NDC transactions tallied 5 percent of total corporate transactions in April 2022. That figure dropped to 1 percent in April 2023, then recovered to 3 percent in April 2024. When looking at the full-year numbers, NDC accounted for 4 percent of corporate transactions in 2022, 2 percent for 2023 and 2 percent again for 2024 year-to-date.
Add in direct, aggregator and online travel agency bookings, however, and the story looks a lot different. The share of NDC transactions from all ARC-settled transactions for April 2022 was 5.6 percent. That figure increased to 9.9 percent in April 2023. For this year, it leaped to 19.3 percent. NDC in 2024 currently accounts for 18.2 percent of ARC transactions year-to-date compared with 12.5 percent for all of 2023 and 7.1 percent for 2022.
"There's definitely NDC adoption happening, but it's not in the GDS NDC [channel]. The growth we see is direct channel and aggregator NDC. There's been very little uptake on the GDS API."
Travel technology company Accelya currently is generating 31 billion NDC offers a day from the airlines, up from the 15 billion a day it was generating late last year, Accelya CEO Sam Gilliland said, adding, "We've doubled the number of offers in a very short period of time as we begin making progress in the corporate market." He also said about 18 percent of U.S bookings are NDC bookings at this point.
"There's definitely NDC adoption happening, but it's not in the GDS NDC [channel]," United Airlines managing director of digital sales Anthony Toth said. "The growth we see is direct channel and aggregator NDC. There's been very little uptake on the GDS API."
United's current ticket mix is about 66 percent direct, 23 percent GDS EDIFACT and 10 percent NDC, according to the airline. In the direct channel, 45 percent of tickets are continuously priced.
Still, those GDS NDC figures are likely to increase.
"As a percentage of the total, [NDC] is still relatively small," Sabre VP of product management for distribution experiences Kathy Morgan said. "But the more interesting note is how it is growing. We have more NDC bookings today in 2024 than we had in all of 2023. That is demonstrable progress, and it's around adoption of NDC, more and more agencies operationalizing it. It's an important time in the overall NDC journey and very much a turning point in what we're now seeing as agencies really being able to move forward."
Amadeus, too, is seeing NDC adoption increase. "In the last year, we've seen a fivefold growth of NDC bookings, and that's continuing in the beginning months of 2024," Amadeus senior director of global solution consulting Jay Richmond said, adding that some carriers are seeing 50 percent of their bookings through NDC.
The GDS has 24 airlines currently available in Amadeus NDC X, with several more being piloted. "We expect by the end of this year to add quite a few more to that 24," Richmond said.
Sabre currently has 19 carriers integrated, with an "aggressive plan" to bring on at least 16 more airlines in 2024. "That's more than double, almost triple what we've ever done in a single year," Morgan said.
Varying NDC & Corporate Strategies
One of the challenges of NDC is that each carrier implements it a little differently, and it has enabled airlines to take varying approaches to the corporate market.
Looking at the three largest U.S. carriers, American Airlines has made it clear on its earnings calls—in its removal of EDIFACT content, in its restructuring of its sales team, and in its moves regarding preferred travel agencies and how it will grant loyalty miles or points—that the airline is going to do everything it can to move customers to purchase in a modern retailing channel. The focus largely is on the end traveler and has pivoted away from the corporate partner.
On the other end of the spectrum is Delta Air Lines, which isn't getting into the NDC game until at least late 2024 or early 2025 with testing, and according to its NDC announcement, will train its focus on serving the corporate customer in the booking channels they prefer.
In between is United, which has removed basic economy fares from EDIFACT, but not anything else, according to Toth; however, the carrier has increased its use of continuous pricing, which NDC makes possible.
Buyers and others in the industry have taken American's moves as a sign that the carrier no longer cares about the corporate market. American executives, however, have disagreed with that assessment.
"They've said corporate is important to them, and I believe that, but what they have done is they've changed the playing field of how corporate buys from them," former global head of corporate sales at American and current industry advisor Hank Benedetti said, giving an example of how luxury retailers sold on sites like Amazon and department stores, but then moved their goods to wholly owned branded stores.
"American is simply following that same strategy where they're saying, 'Your best experience will be booking direct, on aa.com or on a connection that is reflective of a modern retailing experience,' " Benedetti added. "Now, what they have done is they've been much more prescriptive about what you will and won't get when you are booking in different channels. So, I would say American certainly wants corporate business, but they don't want it to the point where it undermines its greater strategy of booking direct and developing direct ties with customers."
What airlines are looking for from corporate buyers also is shifting. Discount programs are still important, but they are less rich overall, and trading market share for discounts is less important than it used to be, Garner Advisory founder Cory Garner said.
Other deliverables could be making sure a carrier’s app is loaded on travelers' phones and is there a frequent flyer number in the reservation, Benedetti said. Loyalty is part of the mix, which in some ways it has been for some time, and in the "not too distant future, it's negotiating payments," he added. “Whether you look at the fact that suppliers view payments as a cost currently, or you also look at many airlines, hotels, who view payments as a strategic asset in terms of their loyalty programs and co-branded credit cards, one or both of those dynamics are going to force a change to come. On top of it, especially for larger companies, that’s usually the first or second largest indirect expense in the entire firm. It’s almost all paid currently on a credit card, so it’s ripe for disruption.”
Garner added that "the greater effect of the NDC trend is there's different content and different channels, the own airline's website included. That puts a lot of buyers in the position of, 'How do I not only ensure that the channel, my main managed channel, is NDC enabled?’ but also for some of them, 'How do I bring supplier websites into my program as well?' … The NDC trend is driving more of the technology conversation and making sure the buyer has all the multiple channels enabled for their program to ensure the broadest access to content."
NDC Supplier Roadmaps
The varying NDC implementations mean there are different servicing issues depending on which carrier and which NDC channel is used. Airlines, GDSs and aggregators all are working to address these concerns.
Finnair, which made its own bold claim to discontinue EDIFACT support by 2025 and currently sells about 70 percent of its tickets through modern retailing channels, is working on issues on a case-by-case basis. The carrier has resolved items like a divided order or previously a split [passenger name record] feature, and disruption handling, Finnair head of sales and distribution development Zoran Radosavljevic said. "We are now working on items like updating order, adding frequent flyer details, contact details, modifying an unpaid order, also name corrections," he said.
The Finnish carrier also is working on something Radosavljevic called a "Smart PNR," where they would be able to combine EDIFACT with NDC, not only for air but also for cars and hotels. "That possibility is coming pretty soon with some of the aggregators we have," he added.
While on the topic of the PNR, BTN asked what happens with servicing in NDC where there isn’t a PNR?
"As you start to build out [accounting order] capabilities, it will over a period of time replace the passenger service systems that are being used by the airlines today."
“In the NDC world, you have an order, which contains the items that have been agreed upon and paid for,” Richmond said, adding that the reality is it’s going to be “for many years” a hybrid environment. “The PNR still exists as the repository for travel details, and we drive synchronization between the order that lives in an airline IT system and the representation of that order in a structured PNR. Because we still have EDIFACT content ... you still have traditional segments for hotel, car and others. We’ve ensured that there is this backwards compatibility where the order can be represented in the PNR on the agency side.”
One of the items Amadeus continues to invest in is the synchronization of the representation of the order in the PNR and the order itself as it lives in the airline system. “As NDC becomes the only distribution methodology or the dominant methodology, we will have orders for air, but we will still need most likely a different structure for everything else that wasn’t part of an airline order,” Richmond said. “So, we’ll have to see how things evolve.”
As for its roadmap, Amadeus in May plans to roll out a "new and improved shopping display" that will allow travel agents to do less scrolling, see upselling options that are part of NDC and compare in a more intuitive way, Richmond said.
Sabre has worked on order change notifications, which is around changes in airline operations that are sent to the GDS. "We have both a reactive and proactive mechanism to support all of that," Morgan said. "Though not all airlines send OCN messages for all changes, which is frustrating. So, for agencies that want to have a full view at all times and a current view, we have built the capability to do a manual order sync. That has been an important part."
The GDS also supports voluntary and involuntary exchanges in NDC. "The last piece we are finishing on our roadmap this quarter—what we would call an involuntary change with a reshop," Morgan added, which is when a traveler's schedule has changed and the new flights don't work for them, so they need to shop for new options. "We’re also support using old tickets or old values toward new tickets, and you can shop with using previous tickets. It's really a robust set of capabilities, so I feel like that kind of servicing conversation gets put to bed a little bit."
Aggregator Travelfusion VP of commercial Eytan Biçaçi Baruh said there are some complex scenarios that need to be looked at, such as not allowing a stopover in a certain city, but "other than that, more than 90 percent of the scenarios we are already supporting through our order change notification framework or the voluntary change frameworks that we have," he said. "So, we cover both involuntary and voluntary change scenarios or the cancellations in most of the full-service carriers [with] NDC, if the airline’s API supports them."
Baruh added that Travelfusion continues "to push our airline partners to deliver all the post-booking functionalities in their APIs. We have many carriers that do not even support order change notifications yet" while those who do may do so in different ways. "It's our duty to make it a standard to our customers."
Accelya's Gilliland said that the company is introducing a new product called FLX Select "which is more of a standardized NDC offering" that can get an airline up and running with NDC in 90 days. "It's a more standardized offering, and I think it will be appealing across the travel ecosystem. It should be appealing to the GDSs."
Gilliland added that after flowing all the NDC bookings into orders, the next piece is to have order accounting. "As you start to build out those capabilities, it will over a period of time replace the passenger service systems that are being used by the airlines today," he said. However, he also noted that it took NDC close to 15 years to get where it is today, and moving away from the PSS systems will be another 10- to 15-year journey. He also believes the industry will move away from tickets and ticket numbers to having orders, but that, too, could be 15 years down the road.
"It's going to be a game changer," Gilliland said. "We're partnered with AWS, and if you think about the process of ordering on Amazon, we'll be in a world where it'll feel a lot like how it feels on Amazon. I can go back and look at all my orders. In this case, it could be flights or journeys. I want to buy one of those again, just on a different date, and it'll be simplified, and everything will be in one place."
Corporate Bundles?
What may seem to be missing on the roadmap for some suppliers is the ability to offer bundles. That's because even though many buyers BTN spoke with said they were not getting bundles, they are available in the market—or at least some version of them, according to suppliers and consultants.
Finnair launched corporate bundles in February. “PrioFlex is addressing the key needs that we have heard corporate talk about—priority services from check-in, security, onboarding together, with the flexibility the traveler needs all in one package,” Finnair VP of global sales and channel management Jenni Suomela said. “We are able to offer this to our corporate customers via modern channels only.”
United also offers 30 different bundles, with bundles meaning the ability to display a corporate negotiated fare with an ancillary included in the price point, Toth said. They're available on "any NDC-enabled platform except the GDS." They also are available in Concur and Serko’s Zeno online booking tools via Travelfusion, and from Kayak for Business, Spotnana, Navan and AmTrav via a direct API.
Toth added that there also is standalone merchandise displayed in a “mall format” for corporate customers using one of the merchandise-capable platforms and aggregators. Customers have the choice of either showing United bundles or standalone merchandise, but they generally prefer the latter, he said.
The system can read entitlements for either bundles or standalone merchandise, meaning it understands when a traveler has status, a subscription such as for club access or Wi-Fi, Corporate Preferred Elite benefits, “and soon we will add Jetstream permissions,” Toth said. Ancillaries that a customer is already supposed to receive are not offered in the “mall” display. He added that the customer profile lives with the carrier in two places: its frequent flyer database and its B2B corporate ecosystem.
Buyers are now taking the company benefits and entitled benefits and having conversations about how they want to buy travel at United Airlines, Toth said. "That's the next level of API that's happening right now, and we're really excited about it because it's what NDC was intended for,” he added. “It's about getting rich content in front of buyers that allow them to create the exact experience they want for their travelers when they're flying on business."
Toth also noted that buyers need to consider merchandising their travel policy “because absent doing it, your travelers are going to buy it,” he said. “If you’re going to start to get into NDC, in order to expose content that includes merchandise, you have to decide what’s going to be in company policy and what’s not.”
United has some buyers that provide certain benefits whether or not a traveler has status, Toth said. There also are some that don’t allow or reimburse for any merchandise. "In order to avoid friction with travelers, let's show it,” he said. “Let’s make it crystal clear that they have to tender their own credit card for [ancillaries]. So that discussion needs to occur before a buyer flips on NDC.”
Built with Shorthand