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The world of corporate travel has finally united to bring a better air booking experience to clients, even if no one is quite sure what form this will take going forward.
Over the summer, the various big dogs of travel management and distribution announced a variety of partnerships to finally figure out how to bring airline merchandising and packaging into the corporate travel space. While IATA’s New Distribution Capability standards have existed since 2012, adoption by airlines has been scattershot. Not much has emerged from existing partnerships in corporate travel, although industry experts believe the latest round of partnerships and trials will be much more fruitful.
“It’s certainly true that one-off initiatives haven’t been great but we are seeing an emerging critical mass around NDC,” said Robert Albert, CEO of Routehappy by ATPCO, which has led the way on bringing rich content to air shopping. “But the real issues are beyond the question of which pipes are being used to transact and manage a given itinerary. What airlines and travelers both need is a rich, comparable shopping experience. In other words, what is the traveler being offered at a given price point? That answer needs to include easy-to-understand fare features and restrictions, an indication of compliance, and, of course, full understanding of what the experience going to be like.”
The challenges faced by travel management companies in adopting these standards reflects a deeper issue, though.
It’s one thing to connect to an airline or global distribution system and let an agent or traveler book a flight. It’s another to bring that booking into an itinerary with a variety of elements and the various back-end systems that actually comprise the travel management part of travel management companies.
“No one [travel management company] is going to solve this, and no one booking engine is going to solve this,” said Thane Jackson, vice president of global distribution and channel strategy for BCD Travel. “You have to consider we aggregate content from not just IATA airlines, but non-IATA airlines, GDS-based airlines, hotels, car rentals, ground transport. NDC right now doesn’t touch outside the IATA airlines group, so it’s a very long-term metamorphosis taking place… stuff has been fragmented for years and it’s inevitably going to flow-through because what people are looking for is a retail-based model where you are able to present your offer. That retail model, you see it out there with Amazon and many other operators, it will flow out in the travel industry over time.”
So, we are really talking about a comprehensive shift in how travel management companies operate and serve their clients. Furthermore, clients are now more educated about how airline merchandising and packages can improve their travel program or potentially hurt it if not addressed. Buyers spend a ton of money on travel and their priorities help to shape the sector.
The risk of falling behind is finally so severe that corporate travel has moved in unison to address the issue. There’s also the reality that selling airline packages that are more lucrative the airlines likely means travel management companies and distribution platforms will be able to charge more in commissions to sell those fares. It will also enhance whatever sort of personalized offers travel management companies inevitably push to travelers.
After years of ignoring new distribution capability, the global distribution systems used by travel agencies are finally playing ball as well. Rather than becoming disintermediated by travel agencies booking directly with airlines, they too are working to build a new itinerary management layer and embracing rich content to keep agencies in the fold.
“If you think about what is necessary, we need expertise and continuous evolution of the standards and between us and our travel agency customers,” said Ilia Kostov, senior vice president of global accounts and business travel Americas at Amadeus IT Group. “It needs to be end-to-end, meaning not just focused on ‘shop, order, pay’ only which has been so far the goal of the NDC certification. In fact, you need a lot more than that in order to make NDC a reality including post-booking services, like handling multiple forms of payments and the ability to make changes, so a lot more work needs to be done on the standards as an industry.”
Various executives said they expect IATA to introduce a new round of standards in coming years based on the learnings from this period, but standards are just standards and no one is required to use them.
Asking around, the major players in the sector insist progress is being made. Most of the big travel management companies are currently experimenting with clients to figure out the best way to bring airline merchandising into the travel shopping space, either bringing fares and package to agents or passing the fares through to booking tools for travelers.
“Throughout 2018, there’s been a lot of progress; when we look at distribution, NDC is one component of that,” said John Bukowski, director of global content and distribution strategy at American Express Global Business Travel. “It’s part of a wider merchandising and shopping improvement effort. Some clients want to have an enhanced shopping environment, whether it’s branded fares or ancillaries, and some clients don’t, they have policies they want to adhere to on certain routes and want to see a certain set of content. Step one is to get the information into the point-of-sale when customers are shopping. Various airlines, their business class and economy class are going to have different elements that they want to differentiate. That will enable travel managers to have these conversations about having these perks included in a fare.”
Corporate travel has a technology problem that is going to end up fixed one way or another. The small and midsized agencies across North America tend to operate technology stacks that have been cobbled together over the years to fit their needs. Changes across the ecosystem will put pressure on these companies, and they will have to adapt.
“It’s going to require an upheaval of their tech stacks in order to stand the test of time and manage all the different sources of bookings they’re going to have to work with,” said Mary Ellen George-Hess, head of North America for Tramada Systems, which provides back-end automation tools for travel agencies. “They’re starting to realize that, but have been slow to adopt change because they are set in their ways… can they keep layering their tools and scripts on top of the GDS, and hold it up? At some point, it’s going to become exhausting, they’re not going to be able to do it.”
Next year will be pivotal for travel management companies. As long as the demand for better service from their customers persist, though, those who embrace this wave of change will be best positioned for the future.
“What makes the agencies change is the travel buyers driving it,” said George-Hess. “That’s probably what will happen in this space. There will become a niche for the management of travel bookings. You either build it yourself, or cobble it together, or wait for the GDSs, which will take a longer time because they’re primary concern is that you get the content. What you do with the content post-booking, they aren’t as concerned about; they aren’t following the data all the way to the back-office systems.”