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The airline technology standard called New Distribution Capability was developed to allow airlines to sell rich content and ancillaries directly to customers. There were growing pains, as it initially angered global distribution systems which were being bypassed — most airlines thought they were charging them too much for distribution. The travel agencies were meanwhile forced to create workarounds to keep this new type of booking data in their systems for their corporate clients.

There’s been more collaboration, with mutual benefits, in the past few years though an emerging tier of startups now stepping in to decode the standard into a simple application programming interface for travel sellers to plug in to.

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Despite some wangling about commercial models, it’s a dream scenario for global trade body the International Air Transportation Association, which concocted the idea back in 2012.

The global airline body was so confident of its success that at its World Passenger Symposium in October 2017, it predicted a “leaderboard” of airlines would see 20% of their sales powered by NDC in 2020.

Then came coronavirus. The airlines have been grounded, but has the same applied to New Distribution Capability? And with the pause leading to a lot reflecting on the travel ecosystem, what role will the standard have in the post-coronavirus era?

Skift talked to some of the key players to take stock, and to gauge the technology’s future path.

PLUGGING IN

A couple of years ago the industry reached a tipping point of airlines adopting the standard, with the Lufthansa group, IAG and Air France-KLM leading the charge. In early 2019, the list of certified deployments stood at some 65 carriers.

The momentum gave rise to a new generation of start-ups that spotted an opportunity: rather than thousands of agencies developing individual connections to each of the airlines, why not create a platform that feeds in multiple airline connections, offering agencies a “plug and play” approach to pick the airlines they want. On the frontline are Duffel, Kyte and AirGateway, which have based their business models on the success of the airline standard.

Duffel, which launched last year, has corporate travel agencies in its sights, and enables them to search, book, and manage flights across 20 airlines.

“The interfaces are working, bookings are still coming through. Looking at the long term, the status quo hasn’t changed,” said Steve Domin, its founder and CEO.

He believes airlines will remain committed to the technology, as they have already invested a significant amount of time and money. When airlines return to a normal level of activity, he predicts they’ll look again at where their expenses are coming from, and how they can offer a better experience to their customers.

With a renewed focus, the “New Distribution Capability” name may even disappear, Domin said. “Even though at this point it’s not going to be called ‘NDC’ anymore, it will end up in the same place: dynamic pricing, that direct relationship with the customers, these are all things airlines are going to want.”

NDC 1.0

The dynamic pricing element appeals to some travel managers. Airlines can be more agile and offer personalized corporate bundles, giving business travelers a range of ancillaries packaged into a single fare. If the airline doesn’t offer fast-track, then a package can bring in the airport’s fast track service. The standard allows them to offer choices that aren’t always available in the global distribution systems.

London-based Kyte, for example, is the only platform that has full access to easyJet’s ancillary services, helped by the fact the low-cost carrier is also an investor.

“They do have another New Distribution Capability player, which is Travelfusion,” said CEO Alice Ferrari, “but we’re the only one that supports their ancillaries in a way where we replicate exactly the seat map, which is important for them, and all of the types of bags that they would sell on their direct website.

“Airlines are no longer relying on fares, because fares are so low. All the profits are made on additional products. The reason easyJet is so protective of their third-party channels is because they can’t maximize revenue in terms of ancillaries, they don’t have control to upsell things.”

Ferrari said the current downtime will lead to a surge in take-up of the standard. “Airlines have had time to rethink their internal strategy, about costs and efficiency. One of our partner airlines, Jet2, said this is a great time because we’ve been growing so much for the past three years, we’ve never had time to just think about our distribution strategy. New Distribution Capability today is very much at 1.0, and it’s down to companies like us to create a better layer to help airlines realise their potential”.

Yanik Hoyles, director, industry distribution programs at the International Air Transportation Association, agrees: “Unfortunately many employees from airlines and other players across the value chain have been furloughed or laid off, however in some cases some players have decided to spend time on their ‘plumbing’ and their channel strategies. As an example, we have seen interest from certain carriers in organizing New Distribution Capability training with their sales teams. And in the area of standards, we continue to maintain essential work on the 20.2 release.”

And with many agency employees also furloughed or laid-off, they now lack the resources to integrate the standard themselves. Ferrari is now talking to one large online travel agency that previously planned to integrate the standard itself. Now, she said, Kyte’s “off-the-shelf solution might be a better fit”.

The distribution landscape has also changed from one of bookings to cancellations — and it’s argued this is another area where New Distribution Capability comes into its own.

“Covid-19 highlighted one of the biggest issues agencies face, and that’s servicing — giving the ability to users to amend, cancel or refund their booking,” Ferrari said. “There’s a lot of manual work, and the standard is supposed to enable travel companies to do most of this in an automated way. The crisis has highlighted how much need there is for this, rather than having to ring up call centres or agencies, or airlines.”

PLAYING FIELD

However, one flaw lies in the fact that not all airlines are on an equal footing. “The latest standard does support cancellations and refunds, which is great because as a travel agency you can build the self-serve flow that you can then give to your customer,” said Duffel’s Domin. “One thing it doesn’t support so well is the vouchers, and airlines are leaning heavily on vouchers. This is probably something that’s available in the newer version of the standard, but wasn’t in the version the airlines have implemented.

“We’ve had to ask refunds from the airlines using the phone, so there was a massive opportunity for the airlines to streamline that.”

“Currently there are no airlines certified on versions below 17.2,” Hoyles told Skift.

“Airlines will make their decision to move from one version to another based on their own business case. More generally, New Distribution Capability is a standard with different releases being published twice throughout the year to ensure enhancements are being captured. In this regard, the standard is no different to any other association standard.”

AIRLINES WILL BE AIRLINES

Germany’s AirGateway is focused on managed travel, and to date works with corporate travel agencies such as Consultia Business Travel in Spain, and Fello in the UK, among others. It’s also poised to sign up a large U.S. agency.

“The agencies do have time to consider new ways of accessing content. We’re having a good sales experience,” said Jorge Diaz, CEO and founder. However, with the platforms caught in between airlines and agencies, he said that patience is required.

“Airlines have higher priorities, but once operational problems are solved, we don’t expect a change in strategy. Our feeling is that at some point, for the traditional agency segment, this gives a shake to the industry, and helps New Distribution Capability-leveraged companies to help them transition from the old model.

“The crisis has two faces: difficulties that we’re in the middle of, and once we make it through, one that brings a bit of fresh air to the industry, and a change to the global distribution mindset of those agencies.

“We’re watching. It’s going to be a big shake, there will be a new age. Airlines will be airlines after all this, even if they have to change their fleet, or schedules, but for agencies, there will be a before and after, and new ways to manage travel.”

READY TO SCALE

While these start-ups enter the market, the global distribution systems have not been resting on their laurels. In 2018, Amadeus launched its “NDC-X” program to integrate airlines’ content in its systems, and now enables live bookings via its Travel API, Selling Platform Connect and cytric booking tool.

Amadeus told Skift it had not seen any significant impact on its deployment plans, and is continuing to work closely with its airline, agency and technology partners to allocate resources “in line with its customers’ evolving strategic priorities and ability to move forward on deployment at scale”.

“During critical times like we are currently facing due to COVID-19, it’s important to ensure key projects such as NDC [X] have a clear future-proof strategy, solid and realistic product roadmap, and strong collaboration with all stakeholders to adapt plans and deliver on the needs of today and tomorrow,” it said.

“Its success will eventually be measured by the level of sustainable adoption not merely by airlines but by all players in the travel distribution value chain. Collaboration with all stakeholders and focus on end-to-end use cases, including the initial booking and the great variety of servicing use cases such as large-scale disruptions, are key to deploy NDC at scale globally.”

Amadeus also thinks personalized corporate bundles, with elements like free WiFi, lounge access or seat selection for all bookings, will increasingly be taken up by travel managers. “Particularly, during a crisis, rich content could include updates on situations in certain destinations, risks and protection measures,” it added.

However, like Duffel’s Domin, it recognizes the need for a level playing field: “We believe true standardization is fundamental for the industrialization of New Distribution Capability to happen. All the airlines we’re working with are supporting version 17.2 or later versions. We will continue to help bring consistency in API interpretation and implementation throughout and following the COVID-19 situation.”

NEW WORLD

Before this crisis, the larger carriers — and in particular Lufthansa — were removing certain fares from the global distribution system to incentivize uptake of New Distribution Capability content. AirGateway’s Diaz said each time this happened it piqued interest in the standard. When the industry starts to pick itself back up gain, whether they will immediately return with similar tactics remains to be seen, but if they do other full-service carriers will follow suit, Diaz predicts.

Hoyles points out that the association’s focus is on managing the short-term. “During the pandemic and resulting virtual shutdown of air travel around the globe, we have shifted priorities to focus on our members’ immediate needs. Right now these are around cash, costs and very soon market restoration and stimulation,” he said.

However, he added the crisis is prompting a rethink. “Over the last few months, the whole value chain has been working together towards this new world of retailing and for some airlines New Distribution Capability has become a strategic channel and is now an integral part of their commercial strategy,” he said.

Photo Credit: Gatwick Ellen Milligan / Bloomberg