What Does Being NDC-Ready Mean?

When American Airlines in December issued its line-in-the-sand announcement that third-party distribution channels needed to be “NDC-ready” by April 2023 or else lose access to up to 40 percent of the carrier’s content in EDIFACT, the business travel industry was jolted.

Most TMC execs acknowledged the benefit of NDC and how it would modernize the traveler’s shopping experience. And was anyone really surprised that a major U.S. airline decided to push forward with NDC? The International Air Transport Association introduced the standard in 2012. Yet by 2022, only a small fraction of carriers in the world had NDC distribution available. The feeling was that it would be scalable … someday. 

That day appears to have arrived as American has not backed down from its April deadline.

Many sources BTN spoke with for this article acknowledged that despite misgivings, they would be ready come April for American’s NDC content. A few were eager for it.

“We were very positive when the announcement came out and were good to go in December,” said Johnny Thorsen, VP of strategy and partnerships for Spotnana, a tech-first TMC that was built from the ground up with direct connects and NDC in mind. “Since our September launch [with American], we have improved and further enhanced our capabilities, so we already have a few examples of features built with American [that are] not even included in their general announcement for April.”

BTN’s TMC Reboot survey showed only about 31 percent of responding TMCs are fully prepared to support increased buyer demand for and airline requirements for NDC content. Another 44 percent would be ready at some point in 2023. Still, one in four said it would take longer to be NDC-ready.

What does NDC-Ready Mean?

“The fact that it’s taken 11 years to get here and it’s still contentious fundamentally shows there are lots of different objectives by different stakeholders in the ecosystem,” Festive Road managing partner Paul Tilstone said.

Some TMCs are excited by the prospect of a changed distribution landscape, but some see threats to the agency business model, which has long relied on volume awards from GDS providers that incentivize bookings through those systems. Diverting bookings from the GDS—which is an expensive channel for airlines and not always able to convey a carrier’s unique content—presents a commercial issue for many TMCs. So the first thing to understand, said Tilstone, is the TMC mindset. 

The second is understanding the rationale of the airlines, e.g., distribution cost savings. Third, with NDC, “airlines have an opportunity to take more control of knowing who the customer is and who wants an offer,” said Tilstone, because NDC inquiries are designed to ping the airline’s proprietary systems and not a third-party fare-filing system. 

American VP of global sales Thomas Rajan offers AA’s point of view with an example of a theoretical $150 fare offered via EDIFACT.

“Tomorrow that fare looks very different in the NDC channel because of the attributes I get to display to the customer … be it seats, or boarding, Wi-Fi, even sustainability,” he said. If a corporate traveler or loyalty member already gets those benefits, they won’t need to pay for them and get reimbursed after the trip. “The ability to see all those things now becomes a benefit.”

Ready … But Not Perfect

An agency’s NDC-readiness starts with content, said Airlines Reporting Corp. CEO Lauri Reishus. 

How agencies get the content will vary. Some will want it through a global distribution system. Some will have a direct connect to the airline, or they may have a platform that has GDS content available, with NDC direct content coming from an airline, Reishus said. There also are online booking tools that have to either be fed through the airline or however that OBT gets its data, which is often a GDS connection, as well as aggregators like Travelfusion, TPConnects or ARC Direct Connect.

“This work has been underway for a number of years,” said Reishus. “While there is a flurry of activity going on right now, from what we are seeing, people will be ready. Will it be perfect? Probably not. But agents are really good with changes and adapting processes and insisting that ecosystem providers—whether it’s their GDS or mid-office system or back-office system—can adapt to the changes.”

Amadeus currently has 17 airlines with NDC content, including American which launched last year. The company is working with agency partners to ensure they are ready, Amadeus senior director of global solution consulting Jay Richmond told BTN. He concurrently expressed that many agencies would have more work to do in terms of servicing and settlement. 

Travelport CEO Greg Webb confirmed with Travel Weekly (a Northstar Travel Group portfolio mate alongside BTN) earlier this month that Travelport Plus has been fully integrated with AA’s NDC content since the second quarter of 2022. “AA’s been a very supportive partner,” Webb told TW. He didn’t address any down-the-line requirements TMCs might need to grapple with.

Sabre started an NDC pilot with American last year and expanded it in January after the carrier’s announcement. “We have been working for quite some time to support American Airlines and [will be] ready to enable this important content,” said Sabre VP for product management and channel delivery Kathy Morgan, but like Richmond she had reservations about down-the-line processes. 

American Express Global Business Travel is part of the Sabre pilot and also is working with Amadeus and Travelport on NDC. Amex GBT VP of strategic sourcing and content strategy John Bukowski looks at three core questions when it comes to how the company will work with airlines on NDC: What impact will it have on improving the traveler experience? Is NDC going to result in program savings for corporate customers? Can it improve the way the GBT supports and services travelers?

At the time Bukowski spoke with BTN, the answers to all three questions as they related to American’s NDC offering were uncertain. What American’s enhanced content would entail was not 100 percent clear, and he wasn’t sure if the widely discussed “40 percent” was just for corporate or was across leisure and corporate. If the content pulled from EDIFACT is more than just basic economy fares, “then customers may have an impact,” he said. Potential program savings still were to be determined, and the servicing side remained to be worked out.

“We need to make sure it’s coming through the right channels so travelers can shop and compare different offers from different airlines,” Bukowski said. “We also need to make sure the technology is working within the service element.”

Morgan agreed that the biggest hurdles are around downline integration and servicing. “We feel good about the upfront work, the ability to shop, book and pay,” she said. “But where we see some challenges is the right information hitting the back-office system, the mid-office solutions. A lot of these historical solutions work off [passenger name record] data and need to be read off order data.”

Raymond added that Amadeus offers an end-to-end solution for the airlines, but not every company solves the problems the same way. “It’s fair to say some TMCs are at different stages thinking about that operational change.”

Short Lead-Time

“The deadline is coming quickly, and it’s pretty clear that most of the value chain isn’t ready today, and I don’t see that it’s going to change significantly between now and early April,” said Microsoft senior manager of global air and ground programs Diane Lundeen Smith in early March. “It’s poised to put a strain on corporate programs.”

There are online tool considerations, agents and sales training, Gant Travel CEO Patrick Linnihan said. TMCs must make sure the back-office is ready and that they can access all these fares. “It touches nearly every single section of the company,” he said, while emphasizing that he’s supportive of NDC, but the timeline has presented a heavy lift. “For most TMCs,” he wagered, “It’s not going to happen. I know TMCs that aren’t even planning for it to happen.”

“We’re going to let the chips fall and then see, because I think American can’t execute this,” said Executive Travel chairman and CEO Steve Glenn. He’s additionally banking on the targeted fares—identified by American as the “value” category—having little effect on his TMC or the TMC world at all. “We have zero customers in the low-fare bucket,” he said.

But AA’s Rajan told BTN that the 40 percent of content withdrawn from EDIFACT wouldn’t be just the cheapest fares. There also would be “fares today that corporates book that fall as part of that value category that will now be only NDC-enabled.” 

That said, Rajan stressed that NDC-readiness is not binary. “For something as critical as this, we should not view it as either you are ready or not,” he said, adding that American had TMCs reach out with a list of about 161 servicing elements asking if the carrier could do those things with NDC.

“When we looked at those items, 98 percent of them could be addressed with the NDC capability we had in the fall. That testifies to the fact we were more than ready for this discussion,” he said.

And while AA’s gambit has forced a strategy change for some TMCs, Rajan continued, “They will be in some form of readiness in April, [and] … our survey across the spectrum shows that most if not all will have a significant level of readiness if not 100 percent by the third quarter or the beginning of the fourth quarter this year. Which is remarkable.”

Rajan characterized April as “but one milestone on this journey” and confirmed AA’s path “is for 100 percent of our content to be channeled through NDC-enabled channels, because the value proposition is just too high for the customer for us to ignore that.”

Preparing for Impact

CWT earlier this month outlined in a memo obtained by BTN portfolio mate The Beat numerous avenues to access and book NDC content, and the tradeoffs associated with each. 

“The vast majority of distribution will be offline. If you look at the whole picture and break it down online and offline … the industry is still not ready to transact in a non-EDIFACT pipe as efficiently as it transacts in an EDIFACT pipe,” CWT SVP of global supply chain partners Vince Chirico told BTN, citing online booking tools as one major example of an ecosystem partner that would struggle to deliver.

Indeed, online booking giant Concur acknowledged in February that its GDS NDC connections might not be active by April. It is largely relying on Travelfusion content to pipe in AA NDC content. 

The CWT memo summarized the tradeoffs that an aggregator channel like Travelfusion could present to clients: “They include the inability to hold bookings before purchase, to mix carriers, to make changes online and to apply unused ticket credits,” according to The Beat.

Gant’s Linnihan said he is putting additional agents in place to fill gaps in a booking and service environment that may largely have to move offline for the short term as technology modifications and training continue. “That will be our biggest cost,” he said.

Surcharges for NDC bookings are definitely part of the industry conversation given the increased human intervention expected. 

CWT outlined a number of other options for clients, including a shift to Concur’s TripLink to enable direct bookings on AA or a shift to offline bookings with Sabre’s NDC connections, the latter of which again brings more costly human servicing into the picture.

For corporates that choose to continue to transact in the GDS path, CWT acknowledged there would be content and fare discrepancies—and potentially a lot of explaining to do to travelers. That’s what may worry buyers the most.

“One of the biggest issues we have is credibility, making sure that our travelers feel like they can come through our channel and find what they need,” Lundeen Smith said. “What concerns me most is that we could see a significant reduction in content that will be very apparent to the user.”

Lundeen Smith added, however, that she believes the switch to NDC eventually will pay off. “Down the road it will be enhancements … [with] recognizing somebody’s frequent flyer status in the booking process and understanding what that could bring them and how they might purchase differently knowing those benefits,” she said. 

Additional reporting by Elizabeth West and Michael B. Baker.