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So-called New Distribution Capability is purported to make the process of booking business travel more efficient, letting travelers book directly with airlines, and giving them greater access to deals and amenities. The International Air Transport Association (IATA) has slowly been coming out with new standards for the distribution technology, in order to establish a system that works for all parties involved.
However, the majority of developments surrounding the new technology have been on the retail, or customer-facing side. Travel management companies have made big changes to implement New Distribution Capability, but so far much of the old infrastructure still remains in place.
Now, the International Air Transport Association has developed a new system for managing payments between travelers and airlines, doing away with the more time-consuming parts of the payment process, allowing travel management companies to set up automatic payments. Called Settlement with Orders, the system builds off of new distribution technology, and will be piloted by British Airways and UK-based travel management company Click Travel.
“With New Distribution Capability, a lot of the improvements around the industry have been really focused on the traveler and retail,” said Robin Smith, chief product engineer at Click Travel. “Behind the scenes, the reality is, a lot of these changes still have to be mapped back to the traditional, original IT systems that the airline industry has been operating off of for decades.”
In 2018, the International Air Transport Association launched the One Order program, which assigned each booking made through new distribution technology a single reference number, rather than multiple ones each time something was changed or added, as had been the case previously. Despite this improvement, travel management companies have still been operating off the legacy payment system, meaning they have to manually cross-reference different order numbers.
Settlement with Orders upgrades the payment system for travel management companies, bringing them up to date with some of the improvements in the industry, and allowing for further integration of new distribution technology. It allows them to now automate payments, facilitating a faster processing of settlements, including refunds and exchanges. An offline pilot is set to take place in October and November, with a live trial to launch in 2020.
“Currently we have very, very manual processes where, at the end of the month, the settlements come in,” said Smith. “For the most part, we try to automate that as much as possible. But because there isn’t a single order reference at the moment, we end up with a huge manual task, so we can reconcile all of our travel management charges and all of our airline costs back to the correct booking. This move will allow us to completely automate that process.”
Click Travel was one of the first travel management companies to become authorized by the International Air Travel Association for New Distribution Capability, and has been implementing it for roughly three years now. In 2017, the company partnered with British Airlines to use the distribution technology, and also has a partnership with Lufthansa. Smith said Click Travel is currently in talks with two more airlines.
“The pioneering work we did with IATA on NDC meant we were perfectly positioned to assist with this trial. We have our own engineering team and booking platform, so we’re ready and able to adapt our systems in support of innovative plans like this,” said Smith.
British Airways has been one of the most aggressive proponents of changing the distribution model for airlines. The airline has been implementing new distribution technology for years, but in 2017 it announced it would add a fee to tickets booked through third-party global distribution systems, such as Sabre, Amadeus, or Travelport. Many have criticized New Distribution Capability as simply being a way for airlines to gain more control of the booking process, at the expense of other parties involved.
“Settlement with Orders will improve the billing and settlement process for both airlines and travel management companies,” Ian Luck, head of distribution at British Airways. “It will simplify the IT infrastructure, remove process duplication, and enable automatic reconciliation. We are pleased to be working on this pilot with Click Travel and IATA.”