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ACCORDING TO AMON AMON COHEN Let’s see the elephant


Airlines must urgently show how buyers will benefit from NDC; right now only the downside is evident


ALWAYS, A BRIDE, never a bridesmaid,” the joke used to


go about Elizabeth Taylor, who enjoyed/endured no fewer than eight marriages. Just as Ms Taylor seemed unsure who she wanted in her matrimonial bed, I keep flip-flopping over whether I believe New Distribution Capability (NDC) is good or bad for travel buyers. Currently, I’m swinging back towards the latter.


NDC is innocuous enough technology in itself. It is a set of web-based standards for airlines to sell seats and ancillary offerings through indirect channels (such as TMCs) as they do via their own websites.


NDC allows carriers to control


their offers to customers much more precisely than before. But, in Europe, the three biggest airline groups have tied NDC to reworking the economics of who pays whom how much in the distribution chain. And that’s where this gets problematic.


An executive at one of those


groups is reputed to have told TMCs that NDC is like a juggernaut whose handbrake airlines have released at the top of a hill without being sure where it will end up or what havoc it might wreak on the way down. Some of that havoc is becoming apparent now for buyers. And that’s even though NDC-channelled transactions to date remain minute: we await a widespread adoption that never seems to come. Here are three adverse effects to consider. First, the big airlines no longer distribute all their fares via the GDSs through which nearly all corporate travel is booked.


46 BBT July/August 2018


Amon Cohen is a specialist business travel writer,


conference moderator and media trainer.


In particular, Lufthansa Group airlines have started selling some European return fares at a £17 discount through direct and NDC channels. So now we have the content fragmentation buyers long feared, requiring different fares to be booked in different places. The big three airline groups also now surcharge agents (who pass the cost on to clients) for booking through GDSs, making the disparity in total cost between GDS and NDC bookings even greater in the case of Lufthansa.


Lufthansa needs distinguishing further from British Airways/Iberia and Air France-KLM because the other two have waived GDS surcharges for many TMCs that have committed to adopting NDC distribution. But here comes the next problem for buyers. Major multinational TMCs American Express Global Business Travel, BCD Travel and Carlson Wagonlit Travel have all introduced an option to surcharge clients for bookings NOT made through GDSs. That means clients potentially face having to pay an airline surcharge if their booking goes via GDS, but a direct TMC surcharge if booked via NDC. Either way they lose.


The mega-TMCs argue non- GDS channels are inefficient and expensive for them, and here’s the last NDC problem. NDC doesn’t yet enable all the vital tasks GDSs do for TMCs’ corporate clients, such as generating management information. Until that’s fixed, NDC remains highly challenging for industrial-strength corporate travel booking and management. The GDSs themselves are building NDC pipes for distributing


airline content, which could at least solve the fragmentation and TMC surcharge problems. But it’s this challenge of forwarding an NDC booking record into their back office processes that is delaying finding a workable solution.


TMCs: TOO DEPENDENT ON GDSs? This isn’t simply a case of nasty airlines on one side and victimised clients and their heroic TMC defenders on the other. Many of the current difficulties result from TMCs over-relying on GDSs, both for profitability (in the form of incentives) and technology. TMCs should shift to more open management systems for post- booking services anyway because so much content booked by their clients no longer comes through a GDS. Airbnb is just one example. Major change often involves things getting worse before they get better. What I can’t decide right now is whether the fragmentation, added cost and process inefficiency currently associated with NDC are part of an unavoidable transitional phase to something better, or simply prove NDC really is bad for buyers. The supposed advantage for corporate clients is highly customised fare and ancillary packages. But few examples of such benefits are evident so far – only the bad stuff. It reminds me of a trek my family went on in Kerala, looking for elephants. The guides could only find the animals’ copious droppings. “Don’t show me the dung – show me the elephant!” shouted one exasperated punter from Delhi. Right now, the airlines need to show us less dung and a lot more elephant.


BUYINGBUSINESSTRAVEL.COM


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