Everything you need to know about NDC and business travel
Confused by all the buzz about NDC in the business travel world? And even more so, why should you care? Research from Business Travel Show reveals that one in five travel buyers (18%) believe that New Distribution Capability (NDC) offers more transparency with pricing. That’s good news for travel budgets! And a good enough reason to educate yourself on the topic. Ready?
There are plenty more benefits to NDC than price saving, but before we go there, we need to go back in history a bit and get to grips with GDS (Global Distribution System):
Think of a GDS as the backbone of the travel industry. It's a worldwide reservation system that acts as a bridge between travel bookers and suppliers. Its massive database contains information about available flights for air travel, hotel rooms, car rentals, and other travel products. Travel agents and online booking sites use this database to check prices, availability, and make reservations on behalf of travellers.
GDS systems have been around since the 1960s. Before GDS, travel agents had to call airline booking centres manually to check availability and make bookings - a time-consuming and inefficient process.
Enter NDC (New Distribution Capability)
Now, let's talk about the new kid on the block - NDC. Developed by the International Air Transport Association (IATA), NDC can be explained as “a modern data transmission standard designed to enhance the way airlines distribute their products and services.”
Why this shift? It works alongside traditional GDS but offers several advantages that address some limitations of GDS.
Let's break down the NDC process:
- Offer creation: An airline uses NDC to create a tailored offer, including flight, seat selection, baggage allowance, and other ancillaries.
- Transmission: The offer is transmitted using the NDC XML standard to various distribution channels such as Sabre, Amadeus, and Travelport.
- Aggregation: NDC aggregators collect these exclusive offers from multiple airlines, combining them into a single, user-friendly platform.
- Display: The offers are presented to the traveller or travel booker through their preferred booking channel.
- Booking: When a selection is made, the booking is created directly with the airline using NDC protocols.
- Servicing: Post-booking changes and updates can also be managed through the NDC channel.
NDC for dummies
For fun, let’s break that down in simpler terms.
Imagine you're hungry and want to order pizza. You don't call every single pizza place in town to see who has what. Instead, you use an app like Uber Eats. This app shows you menus from lots of different pizza places all in one spot.
A data distribution system in business travel is like that app but for flights, hotels, and rental cars. Instead of pizza places, you have airlines, hotels, and car rental companies. Instead of food delivery apps, you have big computer systems called Global Distribution Systems (GDS). These GDSs connect all these travel companies together, so travel agents and websites can show you options from lots of different places at once.
So, how does it work?
- Travel companies (airlines, hotels, etc.) put their information (like flights, rooms, cars) into the GDS.
- Travel managers and websites connect to the GDS to see what's available.
- You go to a travel manager or website and search for your trip.
- The website or travel manager looks at the GDS and shows you all the options.
- You pick what you want and book it.
Okay, let's talk about NDC. Remember our pizza app? It was great for finding pizza, but it didn't let you customise your pizza exactly how you wanted. You could choose different toppings, but you couldn't pick the exact type of cheese or the thickness of the crust.
NDC is like a new, fancier pizza app. It lets you design your own pizza exactly how you want it. You can pick any topping, any cheese, any crust, and even special requests like extra sauce.
So, how is NDC different from the old pizza app (GDS)?
- More choices: NDC gives you more options for your travel, like specific seat choices, baggage allowances, and even meal preferences.
- Direct order: Instead of going through a middleman (like the pizza app), you can order your pizza (flight) directly from the pizza place (airline).
- Faster delivery: NDC can be faster because there's less back and forth between the pizza place and the app.
But, there's a catch. Not all pizza places (airlines) offer this fancy new app yet. So, you might still need to use the old app (GDS) for some pizzas (flights).
How will New Distribution Capability benefit corporate travel?
Now that we understand what NDC is and how it works, let's explore its potential benefits for your corporate travel programme:
1. Access to exclusive deals
Airlines may offer special deals exclusively through NDC channels, potentially at lower prices than traditional channels.
Example: An airline might offer a business class fare that includes lounge access and extra baggage, exclusively via NDC.
2. Dynamic pricing models
NDC allows for real-time fare adjustments, often leading to better deals, especially for last-minute bookings.
Example: If a flight is undersold 24 hours before departure, the airline might lower the price to attract business travellers with flexible schedules.
3. Easier comparison of bundled offers
NDC enables clear display of what's included in each fare type, making comparisons easier.
Example: Compare a basic economy fare with no frills to a slightly more expensive fare that includes seat selection, baggage, and flexibility.
4. Wider range of options
NDC allows airlines to offer a broader array of products and services.
Example: Instead of just economy and business class, you might see multiple tiers with varying levels of service and amenities.
5. Tailored flight suggestions
Based on past trips, preferences, and company policies.
Example: Frequent morning flights with extra legroom might be prioritised in search results.
6. Policy-aligned offers
NDC can align with your travel policy, highlighting compliant options.
Example: If your policy allows business class for flights over 6 hours, NDC will automatically filter or highlight these flights.
7. Personalised add-ons
Offers tailored to the traveller's frequent flyer status or past purchasing behaviour.
Example: A traveller who often purchases Wi-Fi might receive a discounted Wi-Fi package offer.
8. Improved loyalty programme integration
Faster point accrual or better upgrade opportunities.
Example: Real-time calculation of points for each booking option through NDC.
9. Detailed ticket information
Transparent details of what's included in each fare.
Example: "Flexible Business Fare: 2 bags, lounge access, free changes.”
10. Rich media content
Visual representations of the product being purchased.
Example: 360-degree virtual tours of different seat types or aircraft cabins.
11. Comprehensive comparisons
Understandable display of different options, including ancillaries.
Example: Side-by-side comparison tables showing exactly what's included in each fare type across multiple airlines.
12. E-commerce-like interface
User-friendly and intuitive booking process.
Example: A shopping cart experience where travellers can easily add or remove ancillaries before purchase so only pay for what you want.
13. Immediate access to new products
Airlines can quickly introduce and distribute new offerings.
Example: A new "business plus" fare type could be immediately available across all NDC-enabled channels.
14. Upfront information
More details provided at the time of booking to reduce surprises.
Example: Clear display of change fees, baggage policies, and seat selection charges before purchase.
15. Improved duty of care
Better access to real-time flight information for duty of care.
Example: Immediate notifications of flight changes or disruptions, integrated with traveller tracking systems.
Will you still need a TMC?
Despite NDC, business travellers still benefit from the services of a travel management company for several reasons:
- A travel management company manages cancellations and rebookings, which can be complex with NDC.
- They track expenses and find the best deals, avoiding hidden NDC costs.
- TMCs ensure bookings follow company travel policies.
- They provide support during emergencies and disruptions.
- TMCs offer detailed travel spend reports.
- They give tailored travel advice and manage complex itineraries.
- TMCs integrate services like hotels and car rentals, which NDC may not handle seamlessly.
How FCM is leveraging NDC for you
Bonnie Smith, GM of FCM, explains how FCM is investing in NDC for our corporate travel clients. "At FCM, we view NDC as a significant opportunity to add to the value we deliver to our corporate clients. Our NDC implementation approach ensures that when we offer NDC content, it's been vetted to add real value to your travel programme, whether through cost savings & value, improved traveller experience, or enhanced data insights,” says Smith.
Why not all airlines use NDC
NDC sounds great, but not every airline is jumping on board. There are a few key reasons for this.
First, implementing NDC is expensive, and low cost carriers might not be able to afford it. It's also complicated, requiring big changes to airline systems.
Additionally, NDC shakes up the old way of doing things, changing how airlines, travel agencies, and booking systems work together. This has some companies worried about how it will affect their business.
Given these challenges, many airlines are being cautious. Not all tickets are booked through NDC yet, and airlines want to be sure it's worth the investment before going all-in.
What does NDC mean for your travel programme?
So what does this mean for your travel programme? “Looking at the big picture, expect a mix of NDC and traditional booking options for a while. The benefits of NDC, like personalised offers, will increase gradually as more airlines adopt it. To navigate these changes, it's important to stay flexible. Your travel policies might need to adapt to work with both NDC and traditional bookings,” advises Smith.
In short, NDC is promising but it's not everywhere yet. The key is to stay flexible, keep informed, and work closely with your TMC as NDC adoption gains traction. They can help you get the best value as NDC continues to grow and impact the travel industry and corporate travel solutions.
Learn more about FCM's adoption of the New Distribution Capability here.