Meg Salter

As someone with a keen interest in the travel industry & clients in just about every sector of it, it’s clear to me that few Travel Agents realise just how much NDC is going to change everything.

NDC is a hot topic. Actually – it is THE hot topic in the industry right now, but do you fully understand why?

Here’s a breakdown of how it’ll affect you and the questions you need to be asking:

 

FIRST: WHAT EXACTLY IS NDC?

Put simply, it’s actually just a data and communication standard. What it’s not is new software or hardware provided by airlines, it’s up to you to ensure you have the facility to connect.

It’s also important to note that this is a worldwide IATA regulated initiative. It’s the entire aviation industry attempting to revolutionise the way their content is distributed to their end consumers (ie. your clients).

They’re inviting you to come along for the ride.

 

WHY ARE AIRLINES DOING THIS?

The benefits to the airlines are huge. HUGE.

Firstly, creating a direct connect environment to consumers and agents that bypass the GDS inventory and fare load system will result in a significant reduction in their cost of distribution.

Distribution has represented a huge cost to airlines over the last 60 years – how else do you think GDS’s been able to pay you rebates and still make millions? And with fuel and other business expenses ever increasing while fares have not, this was low hanging fruit. It’s been in the pipeline for many years. You could argue that GDS’s may well have shot themselves in the foot by continuing to charge such high fees.

A subtler benefit – but with massive medium and long-term implications – is knowledge and control. Rolling out NDC puts the control squarely in the airline’s hands.

Gone are the days of loading their inventory and fares into a GDS and then eventually finding out who travelled, when and for how much.

This is the era of big data – they will know minute by minute what is being shopped and by whom. They can create bespoke offers knowing if your client has already received a quote from another agency (assuming client data was input), what status frequent flyer they are, when they last travelled, if they like aisle seats – the list is endless.

This allows them to create a far richer shopping and booking profile for each of your clients. That’s right – your clients.

 

AT SOURCE COMMISSION

At source or BSP commission has long been accepted as payment to agents for facilitating customer bookings for travel on a given airline – it’s a mutually beneficial arrangement and we’ve been lucky in the Australian market to have held onto this for so long. You could argue that the value an airline places on agents is somewhat reflected in the level of at source commission they pay. (But that’s another can of worms!)

The advent of NDC means airlines can dynamically control the commission they offer, there is no longer a ‘market standard’. The official write up hints at higher commission offerings for flights or routes that need help.

The very obvious flip side to this is no commission when they feel they don’t need the help. Think peak season and peak travel times. To quote a famous ad, “it won’t happen overnight, but it will happen”.

 

WHAT ARE MY BENEFITS?

The idea is that you receive rich content allowing for a better experience for both you and your customers – think pretty pictures and far easier ancillary attachment (another airline benefit!).

The promise of unique offerings is also painted in glowing light however as we’ve just discussed, that pendulum swings both ways.

 

IS THIS THE END OF GDS’s OR EVEN AGENTS?

After 60-odd years of having a stranglehold over the travel industry, you would be forgiven for thinking this is the beginning of the end for GDS’s. However, I wouldn’t count them out yet.

NDC is certainly a disruptor but is essentially a direct-connect, and as each airline rolls out their own offering you will still need an aggregator of some description. To this end, the GDS’s are hard at work building an NDC solution into their existing technology.

It’s this important factor that is actually the value that both GDS’ and agents still represent in this equation: a variety of choice. Even more powerful for agents: recommendations, opinions and expertise.

In Australia, Qantas is the first cab off the rank but signing up to the Qantas Channel is not the end of the story. It’s really just the beginning of what you need to be considering.

 

SO, WHAT THE HELL DO WE NEED TO BE CONSIDERING THEN?

I don’t necessarily know the answer to these and it could be different for each agency depending on whether you’re part of a chain or buying group, a lone ranger, a self-ticketer, loyal to one consolidator or a regular shop-arounder.

I’ve also no doubt these aren’t the only things you will need to consider, but it’s a start.

  • How far along is my GDS with providing an NDC solution?
  • Can I somehow leverage my loss of GDS rebate with the airline knowing that they are the direct beneficiary of this?
  • Can I claim material changes to my business in order to renegotiate my GDS targets?
  • What happens when the next airline rolls out their NDC? And the next?
  • As NDC sectors increase, what is my GDS willing to offer me to stay with them?
  • How will I receive a ticket and financial information?
  • Is my mid office system configured to receive a ticket and financial information in a new format?
  • How can I keep a track of dynamic ticketing time limits now that offers are bespoke and may not have standard fare rules?
  • How can I maintain my margin with dynamic commission rates (if/when that happens)?
  • How can I reconcile dynamic commission rates?
  • How do I easily compare offers between consolidators?
  • How long will that offer last?
  • How will the consolidator let me know about a dynamic commission?
  • If I shop anonymously, will my offer change once I’ve accepted and entered the client’s details?

 

WHAT HAPPENS IF I STAY OUT OF THIS MINEFIELD?

In the short term, quite possibly nothing.  Aside from paying a surcharge on bookings for airlines who have rolled out an NDC alternative and possibly not having access to tactical fares, you may have enough influence with your clients to steer them away from airlines utilising this tactic.

However, NDC is not going anywhere. Airlines in North America and Europe are preparing their own rollout, and there are more airlines in our own market who are no doubt already well advanced with plans of their own.