The Buyer Journey:
NDC Upends Programs, Still Holds Promise
By Donna M. Airoldi
After American Airlines made good on its plans to pull content from EDIFACT channels just over a year ago, the airline industry is largely following its lead, with some lessons learned. United has removed certain content from EDIFACT and turned on continuous pricing made possible by NDC. Delta in April announced it, too, would introduce NDC, likely by the end of this year, in testing environment. There's no doubt the industry is in a transformative state.
In Part 3 of BTN’s “The Buyer Journey” conversation, senior transportation editor Donna Airoldi continues her conversation with buyers and key consultants about airlines’ changing strategies and why NDC or direct booking models are the beginning—not the end—of redefining how corporate relationships deliver value to airlines.
Responses have been edited for clarity.
In case you missed them...
Part 1: The Fallout
Part 2: Rising Complexity, Limited Value
BTN: BTN has reported on some larger impacts of NDC, specifically how travel buyers engage with airline partners and how airlines want to position corporate business in their overall mix today. What has your negotiation experience been like?
Suzanne Boyan
Dorian Stonie
Cory Garner
Kim Hamer
Suzanne Boyan, travel and meetings manager, ZS Associates:
It's interesting because I am in a negotiation right now with one of our major two [carriers], and they've put a lot less emphasis on NDC and a lot more emphasis on direct and how can we build that, which probably indicates which airline it is. I think it comes back to the economics. What makes the most sense for them is direct, not NDC. NDC is a way to play nice in the sandbox, but American is dismantling the sandbox entirely. But yeah, the negotiation thus far has been painful.
Dorian Stonie, senior director global travel, Salesforce:
[For] the technology and the next gen platform, that's been a separate discussion item for us. The [request for proposal] discussions and negotiations, those have remained the same, but we have a continuous dialogue. It's not only once a year or semi-annually. We have a continuous dialogue with our airline suppliers around NDC and content. And I'll even expand this not only with the airlines, but it's with the TMC and the OBT, because they are also integral parts of the solution for us.
Cory Garner, founder, Garner Advisory:
Airline buyer negotiations are turning away from share for discounts. The discounts are fairly standardized across the board, and there's potentially a conversation about soft-dollar benefits. So United, for example, has been very forthright about their strategy in this area, and they put out a portal where a corporate travel manager can go and make trade-offs live of, 'Here's what I can do with my discounts, here are the soft-dollar benefits that get unlocked when I agree to discounts that are lower than I used to have.' That's a good picture of the types of conversations that are happening in the market. How does NDC overlap with all that? NDC is really driving more of the technology conversation and making sure that the buyer has the multiple channels enabled for their program to ensure the broadest access to content.
Kim Hamer, partner, Results Plus Consulting:
What I've seen and heard from buyers, they're definitely looked at differently. Deals are being recalibrated, and [the channels the program uses] to access content can play a part in the overall structure of the deal. Loyalty is also a piece of it. But buyers in general, when you look at sourcing, the way savings is going to be managed going forward or measured going forward, is going to be different. It's going to be more value-based and value-driven than it is just hard-dollar savings, especially for those programs that are pretty mature. Just incremental savings is going to be very difficult for very mature programs moving forward. So you have to look at the other value drivers. How are you going to manage the traveler experience?
What other value internally and externally are you giving to each other? How are you partnering together? Is this a strategic partner for you, or is this just very tactical? Those are some of the decisions that buyers are evaluating or procurement professionals are taking a look at. And how do you manage these deals moving forward where you've got suppliers that are looking at loyalty? They know some travelers they're going to have regardless. So how do they attract the ones that maybe they don't have to today. Can you as a buyer help solve for that. And what value should your program get out of it as a result?
BTN: Are you looking for a new TMC or OBT?
Boyan:
We're actually out to bid. NDC is a big part of it. For the TMC and OBT, we want to see clear roadmaps. We want to see technology that can be agile. And we are aware that this is the beginning. This is not the end of change in the travel industry. I firmly believe that the industry is going to look very different in the next three years.
Rebecca Jeffries, travel services manager, Toyota Motor North America:
If you had asked me this in October, I would have said, 'yes.' But now we are so close that I would say, 'no.' I did start having some meetings and talking to some other suppliers, then realized by the time I do any of those things, we will already have this with the relationships I have, and I love the relationships that I have. It was just I would get a little frustrated with the speed. Then I talk to everybody else and everyone else is in the same boat. So, unless you're going with a Spotnana or Navan or one of these that are built specifically for this—but they're not without their challenges.
Suzanne Boyan
Rebecca Jeffries
BTN: What is the next step for NDC, or after it, for your company or the industry?
Kim Hamer
Cory Garner
Dorian Stonie
Hamer:
I think it's a combination of things: continuous pricing, dynamic pricing, recalibration of deals, how content is going to be accessed, how much content is going to be available in an EDIFACT channel versus a direct channel versus an aggregator channel. I think there's going to be different levels. … You really have to evaluate and understand what's available to you, what your TMC will partner with you on, and then what additional options you have. Multi-channel is not necessarily right for everyone, but there is a value to be had from it.
Garner:
Payment as part of corporate negotiations is going to become a more important issue. It's pretty early days, and there might not be a whole lot of corporate travel managers having these kind of conversations with airlines, but in a world in which airlines are also trying to maximize the value of their loyalty programs and the uptake on their co-brand cards and things like that, the airlines have a preference for what forms of payment are used when a traveler flies with their airline.
Stonie:
My goal is that we're looking to get T2 released to the rest of world by the end of this year, which then will allow us to start activating NDC in our other markets outside of the U.S. That will allow us to accelerate the integration into NDC, and my own personal goal is to try to get as much of our content and most of our airline partners that we can over to NDC by the end of the year as we're going to be focusing in on other major issues, on things like AI and blockchain and payments for 2025 and beyond.
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