NDC SHIFTS LIABILITY
IATA’S NDC PROMISES INNOVATION IN AIR FARE DISTRIBUTION BUT COULD RESULT IN AN INCREASED RISK OF A SHIFT IN FRAUD LIABILITY, WARNS STUART BARWOOD OF FRAUD PREVENTION SPECIALIST FORTER
businesses to meet and exchange ideas, giving us the freedom to be almost anywhere within a day or two. As a result, the world seems smaller
A
and more accessible. Over the years, the airline industry
has faced and continues to face many challenges: safety, environmental pressures, rampant price-shopping, revenue compression, and increased expectations from travellers. It goes without saying that in 2020,
the passenger experience will be front-of-mind for everyone. And predictions for the industry are positive. According to Iata, overall revenues are forecast to reach $872 billion (up 4% on $838 billion in 2019) and passenger numbers are expected to reach 4.72 billion (up 4% from 4.54 billion in 2019).
NDC TRANSITION This year, Iata’s New Distribution Capability (NDC) will be a key focus and we can expect the international airline body to push industry take-up. Set to deliver greater flexibility and
to enable airlines to get closer to their customers, NDC is a set of new technical communication standards for distributing airlines’ fares and services, aimed at streamlining the distribution
irlines bring people together – loved ones, friends and colleagues. They enable
airlines from legacy distribution to NDC. This transition will take time.
FRAUD LIABILITY SHIFT What will happen once an airline fully adopts NDC, depending on the payment model it adopts, is a shift in fraud liability from OTA to the airline. In the most-integrated payment
STUART BARWOOD
model, the airline will become responsible for undertaking any fraud checks, whereas previously this responsibility sat with the OTA. In the past, this meant that if there
process. It has been developed to create direct connections between airlines and third-party distributors. Launched by Iata, NDC will enable
airlines to differentiate and sell their products via third-party intermediaries (like GDSs, aggregators and travel management companies) or direct to consumers, and this in turn gives customers more choice. NDC will be less complicated than
the current outdated model and less expensive – a win-win for all. However, it is an evolution, not a
revolution. NDC has been around since 2010 and is constantly evolving. And it is not mandatory, which means it won’t be adopted overnight, and there is no silver bullet that will instantly transition
was a problem, the airline could go back to the OTA with a fraud chargeback, issuing an agency debit memo (ADM). Under full adoption of NDC payment
flows, the OTA will be responsible only for passing the airline the required passenger details in the correct format. This shift, of course, depends on the
model adopted and the extent to which the airline incorporates the NDC framework with regards to its payment and settlement processes. If it opts for a hybrid approach and
keeps some of the checks and balances in place, it may be able to stick with the current Billing Settlement Plan-based ADM process; but by the same token, this means it won’t realise all the benefits of a fully adopted NDC payment framework. The optimal route is full adoption of
16 — FEBRUARY 2020 —
TRAVOLUTION.CO.UK
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