The introduction of NDC to the corporate travel ecosystem has its share of supporters and detractors, but the one thing they can all agree on is the distribution model needs overhauled.
What precisely that looks like (is it NDC? Is it something else?) is still up for debate, and - based on a fiery exchange among executives at The Beat Live in New York last week - the topic isn’t about to die down any time soon.
During the session Distribution Economics in the NDC Era, a panel of airlines (American Airlines’ Cory Garner and Lufthansa Group’s Xavier Lagardère) and travel management companies (American Express GBT’s Michael Qualantone and AmTrav’s Jeff Klee) went head-to-head over airline economics and channel remuneration with moderator Caroline Strachan of Festive Road fielding questions from impassioned audience members as well.
While competing priorities abounded, participants had one clear target for airing their frustrations: the GDSs.
So, what is the role of NDC in the corporate channel?
According to Garner, who is vice president of sales and distribution strategy at American, NDC and retailing in the corporate space is the simplification of the traveler’s experience.
“Let’s say you’re a buyer that says, ‘I’ll pay for your preferred seat, your Wi-Fi, your bag.’ In today’s world, the traveler buys their fare here, their bag there. Why can’t that all be wrapped up in one bundle and sold at the point of sale for the corporate traveler?
“It eliminates expense report nightmares. That’s what NDC and retailing looks like, at least from my perspective … the simplicity and seamlessness of service,” Garner says.
On the other hand, Qualantone, executive vice president of supplier relations at Amex GBT, calls efforts around unbundling and service charges “foolish.”
The distribution model is broken, and airlines are signing GDS contracts pretty much with a gun to their head.
Jeff Klee - AmTrav
“The [distribution cost] is in the fare. It’s paid for. If you get gas, is there a distribution cost? Is it in the price you pay? Of course. But do I see a separate distribution line? No.”
He continues: “Why remove content? What are we hiding in this industry? If you have fares, offer them. If not, why? What are you hiding? You don’t want me to price your product? You don’t want me to have transparency?”
AmTrav CEO Klee says NDC is a tech standard, and the focus should be on capabilities the TMC need to deliver to customers. “The more we confuse the issue by talking the way we tend to talk about this, I think we do a disservice to what we’re trying to achieve,” he says.
Qualantone says customers simply want access to content. “Our role is to use our size and influence to talk to GDSs, get them to the table, to airlines about how do we move forward.”
Says Klee: “The distribution model is broken, and airlines are signing GDS contracts pretty much with a gun to their head, and I don’t think that’s a healthy or sustainable way.
“I would love to see the model change radically. I’m hypocritical and guilty that I love GDS incentives, I’m addicted to them,” he continues.
“But the longer we cling to this old model that’s been around forever and doesn’t work … it’s the airline’s product, it’s up to them what they want to distribute and on what terms. I just want the content somehow.”
Blame the GDSs
The consensus among panelists was that the GDSs have been slow to advance the technology needed to help airlines achieve their distribution goals with NDC.
“Is the elephant in the room the GDSs? Yes,” says Qualantone. “They’ve been very slow to advance their technology. When NDC becomes a commercial issue, that’s not what [NDC] is.
“I don’t think it’s the economics [of the model] as much as the technology,” he continues. “GDSs are realizing, you better catch up or you’re going to be in trouble.”
Garner says the industry on the whole has been slow to meet the needs of the end traveler, and it’s up to those in the industry to scrutinize whatever is blocking that path.
However, the pace of technological change for GDSs is unusually slow, he continues.
From the audience, Jeff Lobl, Delta's managing director of global distribution strategy, adds: “The marketplace has changed, and the model has not kept pace. It’s all about the customer at the end of the day. All carriers have invested. It’s extremely frustrating to see how poorly merchandized in the indirect channel.
“What are the bottlenecks to getting that changed? One of them has to be the idea that if you’re an agency being asked to change the way products are merchandized, yet … the GDS doesn’t acknowledge products, it’s hard to build.
“Everyone has value, including the GDSs. Everyone has a role to play, and we can get there from here, we don’t have to turn it completely upside down. The customer is suffering. There are products created for their benefit they cannot see and cannot buy.”
The GDS perspective
Also from the audience, Simon Ferguson, president and managing director at Travelport, defended the GDSs by saying he believes Travelport has the same goals, and its job is to provide industrial scale to the experience all throughout the value chain.
“It’s not just about shopping, not just about selection – it’s about the whole process and the investment we have to make into a platform to do that,” he says.
“Anyone who thinks we’re sitting on this commercial model enjoying the benefits … it’s a tough business to provide that capability at scale.”
Ferguson says he agrees there has been slowness to adapt on the GDS side but claims it’s not intentional, rather a result of the complexity of the product.
“We have to do it in a way where the whole process can be effectively managed for the traveler/buyer. Different suppliers are going at different paces. What we don’t want is an inconsistent experience for the end customer.
“I do honestly think we want to provide the same thing, which is choice, product bundles. … In our context, it’s around content and commercial. It’s a partnership if we approach this as how can we provide more revenue-generating services.”
He goes on to say NDC is not a standard, even though it’s been marketed as such. With airlines having different capabilities and services and moving at different speeds, and the GDS having to do individual implementation for each, it becomes more complicated.
“If new players come in and try to replicate what we do at scale … there’s a reason it’s taking a long time. I think the airlines are still deciding what the incarnation of NDC is going to be for them. That means we have to do extra, additional development to make that possible,” he says.
Ferguson’s comments were met with a cry of, “That’s total bullshit” from EAB’s Steven Mandelbaum, also in the audience.
“You did shit across the last decade. The GDS playbook for the past 10 years was, ‘What if we sit here and do nothing and see if it goes away?’ Now airlines have some success, and now your hand is forced. You had ample time to do it.”
Now what?
Despite accusations against the GDSs, airlines still have a lot of work ahead of them.
“I don’t want to be known as a GDS apologist, but NDC is not ready to be deployed at scale yet,” says Klee.
“Even if [the GDSs] did everything they could, I don’t think any airline would be ready.”