TMCs Face 'Rough Seas' But Report Strides After AA Jolt

There's no question that American Airlines' strategy around New Distribution Capability lit a fire under U.S.-focused travel management companies. What remains to be seen is whether that fire is attached to a rocket booster or a dynamite fuse.

In the Global Business Travel Association's recent survey of 815 travel professionals, fielded in April, buyers in the survey—about half of the respondent pool—were slightly more sympathetic to rather than frustrated with their TMCs regarding NDC. Thirty-seven percent of buyers in the survey said intermediaries, including TMCs, have had ample time to be ready for NDC and thus should be prepared to work with it. A larger 42 percent, however, said airlines are moving too fast and have not given intermediaries sufficient time to prepare.

Insufficient time might seem like an odd charge, given how long NDC has been a topic of conversation—though, to be fair, TMCs weren’t the first considerations when the standard was developed. Regardless, while TMCs are at varying levels of readiness in grappling with NDC, they are reporting progress in the past year that might not be happening had American not been as aggressive with their policy, some industry leaders say.

Progress Report

American Express Global Business Travel has continued its methodical approach to NDC, with its Minimum Marketable Product framework featuring 162 use cases that airlines, global distribution systems and online booking tools must fulfill in order to bring NDC content into its marketplace. And that has required a lot of work, said Amex GBT VP of strategic sourcing and content strategy John Bukowski.

"For some airlines, only 20 percent were new use cases; for others, 90 percent were new use cases," he said. "For the most part, this is not an easy plug it in, flip the switch and everything's gold."

For implementation, Amex GBT is working with airlines in a three-phased approach, with more than 20 airlines currently in that process, according to Bukowski. Most are still in the initial "discovery" phase, which is followed by a pilot phase and then an expansion phase. American Airlines and Air France/KLM are among those in the "expansion" phase, according to the TMC.

Airline response has been positive, with carriers "embracing" the framework, he said.

"We haven't had any airline say, 'No, we aren't going to work with you,'" said. "Effort levels have been high, and it's helping move things forward, with problems in NDC getting smaller and smaller."

Currently, Amex GBT is doing "quite a lot" of NDC bookings at scale, with hundreds of thousands of NDC bookings in its marketplace, he said.

For BCD, the move meant a change in focus and resource allocation—in part because NDC resources had been focused on Europe and Asia, where the bulk on NDC action had been happening—but the TMC was ready as of last April’s removal of American Airlines fares from EDIFACT channels, Jackson said. "We could offer a solution both online and offline through the GDS, Sabre being our main GDS in the marketplace," he said. "Not surprisingly, we could offer a solution of sorts through GetThere as well."

The OBTs in general, however, were a different story at the time, Jackson said. That has changed a bit over the past year as well, which Flight Centre's Ping said was one of the key changes over the past year.

"The online booking tools have finally got their act together," she said. "All of them [specifically Concur, Cytric and Serko] are technically ready for NDC."

That will ease a major stumbling block in NDC adoption, she said. FCM has its own booking tool, but it is not a global tool, so most large multinational clients rely on global third-party platforms.

If customers wanted NDC content through an OBT, they had opted into that content being available in Travelfusion, which Ping said is "great but driven as a low-cost carrier solution." That meant the bookings had limitations on some form of payment and had to be instant ticketed, which interferes with approval process. Proper GDS integration of NDC content into booking tools improves the customer experience, she said.

Among the milestones over the past year, SAP Concur unveiled its long-anticipated new booking experience, and Sabre in February announced it was the first GDS to provide NDC content through the platform. More recently, Sabre announced it has begun providing NDC content through Serko's Zeno platform.

The lack of NDC content in OBTs has been a key reason GDSs have reported that NDC bookings have been a quite small portion of total bookings to date. With the OBT connections, that number is now "low but rapidly growing," Sabre GM and head of product Brett Dowling said at the Tech Talk event.

As that gets sorted out, TMCs say they are demonstrating another value in terms of being a consultant in helping clients determine their own NDC strategy rather than push them to quick adoption.

"The clients are confused, too, so for us, it's that ability to be that consultative approach," Reed & Mackay North America CEO John Keichline said. "We can help you understand what does this mean for you, and here's what you may not get, and here's what you may get."

Of course, some TMCs focus more on direct connects with airlines for NDC content. Navan saw American's move as a reason to "continue to double down" on its "journey of embracing NDC," COO Nina Herold said. The company today has NDC integrations with 15 airlines but also has the approach of "meeting the airlines where they are" and sourcing NDC content via third parties when necessary. NDC accounted for more than 20 percent of its global flight bookings in March and April, Herold said. By comparison, in March 2023, prior to American's NDC cutover, NDC comprised just 3 percent of flight bookings, according to Navan.

AmTrav has been one of the leading proponents of the direct connect strategy and worked with American to improve some of its issues with NDC. In what AmTrav CEO Jeff Klee sees as an absence of any aggregator that is able to immediately deliver capabilities offered by airlines, that will continue to grow.

"If you had asked me a year ago, I would have said that we need to direct connect to the top four airlines in the U.S. and use GDS or aggregators for the long tail," Klee said.

"Now we feel we need way more than four. I'd love to be able to direct connect to 15 or 20. We have four in place, and we'll be able to double that by the end of the year, and we'll still want to keep going."

Who Will Survive?

The ability to solve for NDC bookings will be an existential issue for TMCs, as their relevance depends on delivering booking tools to offer the same level of speed and service as airline apps, Klee said. For those that don't, he offered a prediction.

"There will be a lot less TMCs five years from now than there are right now," Klee said.

Ownership of their own technology will be a key factor in that, and TMCs are taking a variety of routes to that end. Amex GBT over the years has acquired KDS and its Neo platform as well as Egencia, and it is continually reporting success in migrating customers to those platforms. Flight Centre has made numerous investments, among the most notable in aggregator TPConnects, which offers connection to NDC content via an API and an agency portal. Encore has built its own platform, Zii, and has managed to migrate most of its clients to that platform.

Navan, of course, is an exemplar of ownership of its own technology, doubling as a booking tool and TMC. Herold said its ability to provide content amid the NDC fragmentation has been one the key drivers of client growth in recent years.

In terms of emergent technology, Spotnana has risen as a platform disruptor in the industry, reporting the capability to do NDC connections in terms of days—rather than weeks or months required for TMCs dependent on legacy mid- and back-office technology. In addition to working directly with corporate partners, it also has made significant inroads in being offered as a technology option by other TMCs. Solutions Travel launched as a TMC based on the Spotnana stack, and JTB Business Travel recently announced a partnership with Spotnana to offer its booking platform and to integrate its core infrastructure with its partner Goodwings.

CWT last year also announced a strategic partnership with Spotnana, offering a technology solution to customers based on that infrastructure. Whether that relationship endures as it moves toward its acquisition by Amex GBT later this year remains to be seen. On that, an Amex GBT spokesperson said only that "for now, we [Amex GBT and CWT] remain competitors, and it is business as usual."

On emergent technology, BCD's Jackson said it still remains a massive undertaking to create a truly global distribution system, capable of accessing the hundreds of airlines, multitude of hotels and ground and rail content around the world.

"If you're building something from scratch, it's probably quicker and easier, because the technology's more available to do that than it used to be," he said. "Ultimately, I think you then are still faced with some of the longer-term challenges."

In light of recent progress, Jackson had his own prediction.

"In the coming 18 months to two years, we'll see adoption really go in the right direction. Some of it might be because of airline strategies—a little bit forced, and some of it might be because airlines are encouraging it—and some of it will just be because the whole technology infrastructure is going to become more mature and capable of delivering it."

Wratten had a succinct and optimistic long-term prediction as well, despite the current "rough seas" for TMCs building for the new distribution future.

"We're going to come out of it stronger, but it's tough at the moment," he said.