November 28, 2018 | Sourcing Strategy
The adoption of the New Distribution Capability (NDC) protocol by airlines, travel management companies (TMCs) and the global distribution systems (GDSs) is an ongoing process. A key aspect of NDC implementation is to aid airlines in the marketing and sales of their ancillary services to TMCs and customers. Corporate travel managers are, however, not entirely certain as to how the NDC will help them in their efforts to provide the best travel experience to their corporate travelers.
Why Travel Managers Are Skeptical
Travel managers are skeptical of NDC’s potential to assist in saving costs and increasing the functionality of air travel spend. A key concern is that unbundling of services will lead to increased costs for the firm, as travelers will purchase out-of-policy ancillaries from online booking tools (OBTs). The OBTs will have unbundled fares by airlines into components such as Wi-Fi, baggage fees and seat selection. Travel managers are apprehensive that the unbundling will hinder them from gaining complete visibility into their company’s air travel spend. Another concern regarding NDC is that it will clash with the company’s travel policy and lead to non-compliance by company travelers.
How Travel Managers Can Adapt NDC
Travel managers should thoroughly understand the implications of NDC and its impact on airlines and TMCs. They should undergo appropriate training sessions on NDC to gain full clarity on the program, the changes expected and understand facets of NDC that can enable better decision-making for the company’s travel procurement.
Travel procurement professionals need to take proactive steps and hold discussions with TMCs on how the NDC enactment will affect their travel policy. They should collaborate with TMCs while amending their travel policy to benefit from the NDC. Instead of resisting the change, they will do well to take a more open approach and look at the positives of NDC, such as transparency and consistency, in creating value for their firms.
How TMCs Can Address Travel Managers’ Concerns
TMCs view the NDC enactment as a revolution in air travel. It will help them offer an e-commerce-like shopping experience to corporate travelers. With the purchase of many goods and services getting digitized, customers today expect a retail-like experience with air travel procurement. TMCs plan to give their clients’ needs top priority and utilize the NDC in providing a wider choice, improved transparency & consistency, better cost efficiency and seamless services to clients. TMCs propose to actively work with all stakeholders involved to improve travel manager’s confidence when it comes to NDC.
Will the Skepticism Among Travel Managers Abate?
The key concerns of travel managers are loss of transparency, cost inefficiencies and conflict with the existing travel policy. The factual reason behind the launching of NDC by the International Air Transport Association (IATA) was to solve the aforementioned concerns. IATA representatives and TMCs are taking efforts to interact with client travel managers and address their concerns regarding the NDC program and educate them on the prospective benefits of the NDC.
The NDC has no doubt changed the air travel market. At the end of 2017, the NDC registry comprised 100 companies, of which 58 were airlines. Further, the acceptance of NDC by GDSs such as Amadeus and Sabre will propel travel agents to move toward NDC compliance. The switch to NDC is inevitable for air travel service providers and TMCs. Corporate travel managers will therefore do well to adapt and be flexible when it comes to recognizing facets of NDC that can help provide the safest and best travel experience for employees.