New Distribution Capability (NDC) has become the most common acronym in the travel industry since, well, GDS (global distribution system), but NDC (a technology that enables a richer airline shopping experience for buyers) was even more prominently in the trade news recently when American Airlines set a deadline for distribution channels to be able to connect to it.
Several major industry organizations and other parties protested the deadline but American persisted with the change.
But what does all this mean for travel advisors and the airlines whose tickets they sell? While tickets sold through NDC channels remain a small percentage of all transactions, according to Paige Blunt, senior manager of Direct Connect and ONE Order at Airlines Reporting Corporation (ARC), that number is growing steadily and has already changed the way airlines and advisors do business.
ARC plays two primary roles in the purchase of air travel. One is to be the storehouse for all the data around an airline ticket purchase, collecting that data and analyzing it for many data products. The second, and more prominent role, is being responsible for agency accreditation and settlement so that when a ticket is paid, ARC initiates billing and/or cash settlement on behalf of the airline. All told, ARC serves as an intermediary between almost 300 airlines and 11,000 travel agency offices. It settles airline ticket sales for agencies based in the U.S. and American territories – for flights worldwide.
The kind of resistance around the American Airlines ultimatum, said Blunt, is part of what will be a long process because this is a significant change in the way travel sellers have been doing business for many years. From ARC’s perspective, she said, “We want to support all stakeholders and facilitate them doing business in the way they would like to.”
After several years of existence, said Blunt, NDC in its purest form has become a brand name like Kleenex tissues where everybody uses the term, but it means different things to different providers. Although the technology is standard, implementation can be different depending on the supplier.
Paige Blunt, senior manager of Direct Connect and ONE Order at Airlines Reporting Corporation. (Photo Credit: ARC)
While advisors have been working through the three big global distribution systems (GDSs) for many years, they can still work through them if they want to access NDC because all three now offer it. In ARC’s case, around 90 percent of sales continue to be through traditional GDS channels while 10 percent comes through NDC via their Direct Connect solution. That volume still represents a significant amount of money. Advisors, said Blunt, “now have the capability of using the same system in different ways.”
The positives of NDC revolve around its ability to customize and personalize sales – by allowing travel sellers to book the seat, as well as premium seating, airport lounge passes, vegetarian meals and more on a central platform.
What does it mean for an advisor to be NDC-ready? According to Blunt, it means they have the ability to service bookings through NDC. This requires a relationship with one or many aggregators to access and service these NDC transactions. That might mean changing seats, managing a schedule change and duty of care responsibilities, among other options. For the airline, being NDC- ready means they have the capability of offering NDC content through direct connections with the agency.
With all the talk about NDC, said Blunt, “we are still very much in a hybrid world. While the landscape is beginning to shift. It will be a hybrid world for quite a while – how long is hard to project.” ARC now has 24 airlines on board via Direct Connect with 12 more in the pipeline.
The good news for advisors is that ARC will continue to perform in the way it always has – serving as the clearinghouse for airline sales. No matter the booking source, said Blunt, ARC will provide a way to settle transactions using its trusted platform and agencies will know what they are looking for. Output files remain the same as is the list of transactions settled that week. No matter how the distribution is done, she said, ARC will enable the transaction to be settled in the same way it always been.
And as the intermediary between buyers and sellers, said Blunt, ARC is also working to educate advisors in the new landscape – creating webinars on its own and in partnership with distribution systems.
In addition, new companies have emerged with the new technology – including Duffel, Atriis and Travelfusion and they serve as NDC-capable aggregators of airline products.
In the end, and despite the challenges, Blunt believes there is a lot of value in what the airlines are trying to accomplish. The goal, she said, is to help agents create a more customized experience for travelers. If an advisor knows that a traveler always likes a window seat, wants a lounge pass and vegetarian meal, the advisor can offer that to the customer in a much more streamlined fashion.
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