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1
FCM’s guide to
NDC and airfare
distribution
fcmtravel.com
fcmtravel.com
2
NDC gained momentum during the
last 12 months with never seen before
04 07
milestones: deals between airlines and
GDSs, airlines implementing continuous Introduction Using a TMC to help you
navigate NDC
04 08
pricing, 20+ airlines surpassing NDC
leaderboard target of 20% NDC bookings FCM’s industry leading
and of course even more airlines Distribution history
07 11
NDC approach
launching NDC content.
NICOLA PING, GLOBAL PRODUCT DIRECTOR, What are the NDC Keys to Adoption
A IR DI S TRIBUT ION – FL IGHT CENTRE TR AVEL GROUP
benefits of NDC
At FCM we made significant process on enabling
NDC content for our customers - we are live with
NDC and are involved in several more pilots with
airlines and technology partners. To learn more
about the history of airline distribution that led to
the implementation of NDC, the benefits of NDC
or our approach sit back and read on.
fcmtravel.com FCM’s guide to NDC and airfare distribution
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Introduction How the internet changed the travel industry flat seats, on board wi-fi on international services,
Long gone are the days when the only way to Airlines were suddenly “online”, and able to by- restaurant quality food and new aircraft. But with
reserve a seat on a plane was either at an airport pass the GDS and travel agents, selling seats no way for travel agents to differentiate their high-
check-in desk or via a high street travel agent. directly to consumers through their own websites. end product in the GDS to others, these airlines
Both leisure and business travellers now have a And then, shortly after, via third party aggregators were increasingly frustrated.
plethora of options available when it comes to and comparison sites using API data. Interestingly, around that same time, some of the
booking flights; and with new options comes the low cost airlines began to pay to have their flights
This gave consumers pricing transparency included into the GDS, which again caused legacy
benefit of more choice and competitive pricing.
and even more choice. It’s also enabled low-cost airlines frustration.
Distribution history airlines like EasyJet, Ryanair and Southwest
So, realising the need to standardise the different
to gain market share and grow at an
What is a Global Distribution System (GDS)? The sources of content, industry trade association
accelerated rate.
GDS platform was developed by Blair Smith, IATA launched New Distribution Capability – or
a senior sales representative for IBM, and C. The three biggest costs of running an airline NDC as it’s known - in 2012.
R. Smith, president of American Airlines. After outside the cost of the actual aircraft are: wages,
meeting on a flight from LA to New York in 1953, fuel and GDS costs. By by-passing the GDS, the A new distribution capability for airfares
the pair began discussing the travel industry. low cost airlines were able to offer “no-frills” rates But what exactly is NDC and how will it affect
They agreed that the industry would benefit from that lured consumers away from traditional legacy those that book and manage business travel?
a centralised data processing system that could airlines. In short, NDC is designed to be the solution to
create and manage airline seat reservations, with The legacy airlines found it hard to compete on these limitations as NDC is a new XML-based
data available electronically to any travel agent, price because of their employment structures and data transmission standard, developed by IATA,
anywhere around the world. larger overheads. To bring customers back, many which gives airlines the ability to distribute all
Their respective companies began developing of the legacy airlines, including American Airlines, their content through third parties. NDC provides
this system together. The Semi-Automated developed their own APIs. But this has led to the ability to connect travellers directly to all
Business Research Environment, now known pricing wars and preferential rates, with some airline content via third-party booking platforms
as Sabre, launched in 1960, revolutionising the third parties able to severely undercut others. including travel agents or online booking tools,
travel industry for both consumers and carriers. and thereby enabling dynamic personalised
Life before NDC offers with greater flexibility. NDC content can be
By using the GDS to aggregate hotel, car and air
content, travel agents had the ability to search for Airlines started to be able to offer “exclusive” distributed directly, via GDSs or any other content
prices, availability and flight schedules, making air extras, such as extra leg room, early boarding, aggregator as IATA standardised the different
bookings for customers that were cost-effective preferred seating and airport lounge passes via APIs being used to distribute content.
and guaranteed. And airlines were able to avoid their own sites and APIs. The internet enables The idea is that everyone, airlines, travel
costly mistakes such as over- or underbooked airlines to exert more control over what they want management companies and online booking tool
flights, passenger service issues and underutilised to display to the customer, unbundle products providers, involved in the business of distributing
aircraft. and charging supplements for seats, bags, meals content are all talking the same (technical)
etc. Historically, the EDIFACT (Electronic Data language and are using the same syntax to
Over the last 50 years, airlines invested heavily Interchange for Administration, Commerce and
in improving the speed and capabilities of exchange messages on shopping, booking and
Transport) standard used by GDSs to distribute servicing components of travel.
various GDSs, developing systems that benefit content to travel agents constrained the ability
Travel Management Companies (TMCs), travel to shop for the entire product suite airlines were This means all the products an airline offers on its
agencies, the airlines themselves and consumers. offering. Additionally, the EDIFACT standard has own website, such as upgrades, extra baggage or
Obviously, these developments had to be funded technology restrictions such as limiting price priority boarding, become available to everyone
somehow, so traditionally, an airline would pay to points to only 26. This meant TMCs using the GDS with NDC. It also means more transparency for
appear in GDSs. Every time a travel agent booked might not have access to the full range of airline the search and book process, as airlines will be
a flight through the GDS, the airline would pay a products on offer. able to differentiate their services among those
proportion of that back to the GDS. of their rivals, helping customers make more
Another disruption to the market was the arrival of informed decisions.
This model worked, until the early 90s. But new “luxury” airlines such as Emirates, Etihad and
the arrival of the internet in 1990 changed the Qatar. These airlines were investing significantly in Many airlines see New Distribution Capability
booking landscape again, however. their end products, offering business travellers lie- (NDC) as an enabler to deliver better and richer
content to consumers.
fcmtravel.com FCM’s guide to NDC and airfare distribution
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What are the benefits of NDC? shopping habits of the corporation and can tailor
some of the content. For example, if travellers
If all parties work collaboratively, NDC provides
regularly choose to have wi-fi, the airline could
multiple benefits for all stakeholders.
offer it as part of their corporate deal creating
IATA believes that NDC transforms the way air added value and further enhancing the traveller
products are sold to companies and individuals. experience.
Airlines don’t want their products to appear
TMCs, travel managers, arrangers, travellers
as a commodity. By allowing airlines to bring
and airlines alike benefit from NDC. Together
differentiated and personalised products to
with our airline partners, our travel experts can
market quicker, it also gives buyers access to
tailor quotes and products that meet each of our
a full and rich range of air fares. NDC brings
client’s specific requirements.
additional transparency into the search and
book process, helping customers make more
informed decisions. Using a TMC to help you
NDC enables continuous pricing, which offers navigate NDC
nearly unlimited price points and therefore Flight Centre Travel Group (FCTG) has a Global
eliminates the restriction of 26 price points Airline Distribution team, who oversees our
in the EDIFACT standard. Continuous pricing transition to NDC. The team consists of industry
benefits all stakeholders as prices are experts with both airline and GDS expertise.
competitive, consistent across all booking Nicola Ping, Global Product Director, Air
channels and often lower as large price gaps Distribution at Flight Centre Travel Group said:
between fare classes are decreased significantly. “Our corporate customers need access to good
Continuous pricing is designed to offer the reporting, good duty of care and really flexible
lowest available price while matching the 24-hour servicing. By ensuring that we’re taking
customer’s travel needs, so depending on your the NDC content from the right sources, Flight
company’s travel policy the savings could be Centre can be sure we get access to the content
significant. Fully flexible fare buyers are likely to without any disruption for our customers.”
see the most significant savings.
Together with our airline partners, our travel
NDC helps TMCs access content which isn’t experts are able to tailor quotes and products
available through the EDIFACT standard. that meet each of our client’s specific
Corporate buyers or travellers can directly requirements. “As a corporate customer, we
book additional products through the TMC ensure that nothing changes from a processes
rather than through the airline direct channels, perspective – you simply get access to the new
enabling greater opportunities for tailor made content,” confirmed Nicola Ping, Global Product
offerings matching the customer needs. By Director, Air Distribution at Flight Centre
providing choices beyond best price, like the Travel Group.
ability to choose and pay for a seat at time
We will be able to provide a more personalised,
of booking, NDC reduces complications with
service for our clients, negotiating value adds
reimbursements and the need to leave the
and delivering a better overall experience.
booking process to go to the airline website.
Additional price points enable more competitive “I’m very excited about the improvements that
pricing and better comparison shopping without it can make to our existing processes. A lot of
having to check multiple sources. This means people are excited about new content, such as
NDC enables delivery of ancillaries, product personalisation or seats – and that’s true, it will
bundles, dynamic pricing and customised offers all be a part of it. But personally, the ability to
while improving travel adoption which leads to improve the processes that are really inefficient
drive incremental savings, better quality data, today is very exciting,” concluded Ping.
reporting, visibility and duty of care. This gives
corporate travel managers the confidence that
they can get the access they need for all of their
travellers while staying within policy.
As the corporate travellers access more of
the content, the airlines learn more about the
fcmtravel.com FCM’s guide to NDC and airfare distribution
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FCM’s industry leading Travel Management Executive Council, which
is currently chaired by Markus Eklund, Global
NDC approach: Managing Director at FCM. In addition, some of
Our philosophy our executives and key members of our teams
are part of various advisory boards, panels and
FCM fully embraces NDC. We believe NDC
forums to help provide critical information to
encourages innovation by creating greater
further advance NDC. Our company with its
flexibility and quicker speed to market. We
diverse geographic and multi-brand strategy
are committed to offering the widest range of
has a unique vantage point for those sessions
content seamlessly for all customers, across
and events.
all booking channels. Every FCM customer
benefits from developments in travel technology, We are “NDC-ready”, which means we are
from travel manager and travel arranger to the live delivering NDC content to our corporate
traveller. customers and we are a frequent pilot
customer for leading airlines, GDSs and online
Our goal at FCM is to make sure our clients
booking tools as they continue to expand their
have nothing to worry about. This is why we
solutions.
are working closely with all stakeholders in the
industry (major GDSs, payment providers, online Working with aggregators
booking tools and leading airlines) to ensure While some competitors have chosen to use
our customers maximised NDC benefits while a direct connect with airlines to consume
ensuring FCM’s wide ranging services continue in NDC content, we believe in our approach to
our customer’s distribution channel of choice. work with our content aggregation partners,
Our leading industry representation like Amadeus and Sabre as well as but also
TPConnects, Flight Centre’s technology
Our industry representation is unparalleled, and
provider for NDC content outside GDSs.
we are helping to design solutions that will drive
Given the ever-growing number of airlines
travel distribution in the future.
with NDC content, building and maintaining
We became the first global TMC to attain IATA these direct connects will be challenging.
Level 4 (highest level) NDC certification. This Investing strategically into TPConnects,
confirms that FCTG can provide ‘Full Offer and offers control similar to a direct connect while
Order Management’ and in addition to booking having distribution technology experts build
NDC airline content, our travel consultants can and maintain connections for us. None of our
also support changes in travellers NDC bookings competitors benefits from a setup like this.
and flight disruption.
We believe our approach represents the most
We are a launch partner of Amadeus’ NDC-X efficient and scalable way for NDC to be offered
programme and Sabre’s Beyond NDC to customers and integrated into all our TMC
programme. systems. Our NDC approach is industry leading
and you won’t find a broader, more thought-
We are an active member of the IATA Global
through NDC solution with another TMC.
fcmtravel.com FCM’s guide to NDC and airfare distribution
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Potential pain points Seamless services NDC Keys to Adoption –
The ultimate goal is to perfectly align NDC with Inconsistencies and deficiencies in airline work-
an aggregation layer. flows and APIs may impact after-sales service
and our solutions
and the traveller experience. 1. End to End Servicing
We believe that NDC content will require
an aggregation layer, be it through the new Reporting & risk End-to-end servicing needs to be robust in order
technology from the GDS actors or third parties for agents to guarantee their duty of care to their
Content fragmentation across multiple booking
such as TPConnects. While further development passengers. The industry NDC standards around
channels adds further challenges and limitations
of this new aggregation layer is ongoing NDC servicing and airline capabilities have progressed
in regards to risk hand-offs and data reporting.
content is delivered where available. We are significantly during 2020. FCM will only sell airline
balancing the short- term priorities with building What’s the timescale? content that works with all of our existing servicing
a long-term, sustainable solution. We are at the We are live with NDC with our industry leading processes, so prior to offering the content we ensure
heart of this phase of industry transformation. NDC approach, however during the next that functionality needed such as cancel, void,
We have identified and mitigated the following years, FCM customers will see significant change flight etc. is all working. FCM are continuing
potential risks to our customers. We are working developments as we take a pragmatic approach to work with IATA and airlines to finalise the last
with industry stakeholders including IATA, to procuring content whilst protecting the remaining gaps in servicing capability.
airlines and our technology partners to eliminate customer experience. 2. Disruption handling
them entirely. • We continue to lead conversations with Notification messages need to be transmitted
Transparency the airlines, IATA, TPConnects, Sabre from the airline to the agent and the passenger in
and Amadeus, in order to enable all case of time changes or flight cancellations. FCM
The airline will control all elements of the travel
differentiated NDC content to be available will ensure that our customers can be assisted if
offer which the TMC presents to its clients, so we
to our customers. there is a disruption to the passengers’ flights. Our
have to ensure our clients get the best content.
• FCM will persevere to limit the impact of the aggregated solutions receive the messages from the
Choice & consistency complexity of implementing NDC content to airline so we can notify our travellers of the changes
In an increasingly fragmented distribution our clients. and then assist them when required. This means
landscape, we are responsible for ensuring our • We will continue to work with all our that tools such as our SAM app will have the correct
customers can compare various options and customers to ensure they fully understand information about the NDC bookings. On the day of
have access to the widest available choice. both the impact and the true benefits of departure, servicing of bookings can also be handled
NDC content. by the airline at the airport.
Cost efficiency
Distribution fragmentation adds complexity and 3. Reliability of Airline Technological
costs that may offset our ability to deliver a cost- Infrastructure
effective, end-to-end service. Existing GDS technology uses tried and tested
technology, capable of handling the billions of
requests being made from a variety of sources at
any one time. In NDC the full burden of the request
is with the airline, which only handles about 30% of
the volume of interactions. In 2020 many airlines
have upgraded their IT systems and over 20 airlines
surpassed IATA’s NDC leaderboard target of 20%
NDC bookings, which indicates their technological
infrastructure’s resilience and reliability.
FCM has a Minimum Viable Product that the airlines
must meet before we will sell their NDC content.
This provides confidence to our customers that the
risks associated with NDC are minimised.
fcmtravel.com FCM’s guide to NDC and airfare distribution
12
Discover the alternative
FCM is one of the largest travel
management companies in the world,
and the flagship global business travel
division of Flight Centre Travel Group.
Whether you have regular international
travel needs, take single trips at the
last-minute, or want to consolidate
your business travel services and
costs — FCM’s global network has the
experience, reach and negotiating
strength you’re looking for in a
travel partner.
Discover the alternative at
www.fcmtravel.com
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