Buyers confront airlines with NDC woes at ITM autumn conference

The Institute of Travel Management did not shy away from perhaps the most divisive corporate travel issue of the moment at its autumn conference in London last week, where it brought three travel managers and three airline representatives together on stage in a lively session which inevitably focused on New Distribution Capability (NDC) and distribution strategies.

Twelve months since American Airlines’ announcement concerning its new distribution strategy – which included removing up to 40 per cent of its fares from traditional EDIFACT channels – one travel manager was sympathetic to carriers’ commercial strategies but was unequivocal on the disruption it had caused her travel programme.

While NDC was designed to help airlines better control, differentiate and retail their product, as well as offering a route to distribution savings, the upshot for many corporates has been difficulties accessing content through their preferred channels and subsequent programme leakage.

“We understand the economic realities of the situation we’re in. As buyers we’re not opposed to NDC or new distribution strategies – everyone has to make money,” said Sue Jones, global meetings and travel manager, Ingka Group.

Asked whether airlines and customers were aligned, however, Jones said she was “diametrically opposed”. She continued: “What the airlines are doing with this modern retailing strategy is treating individual travellers as the customers. That is absolutely fine on the leisure side of the house, but on the corporate side of the house it’s us, the organisation, that is the customer.”

She continued: “Where you [American Airlines] are removing content from the channels we use – we don’t really have alternatives right now – then every day my inbox is blown up by ‘I can find this cheaper if I go direct’, ‘I can do this better myself’, ‘Why do we have an agency?’, ‘Why do we have a booking tool?’, ‘Why do we have you?’ It keeps me and my team awake at night.”

Jones questioned whether the airline “needs us quite as much as it used to” but warned that leisure travel will plateau. “We can’t find a way through this right now. I genuinely don’t know what to do.”

Focus falls on travellers, not corporates

American Airlines’ director of global sales, Kyle Cumbie, said its long-term strategy was “oriented around the traveller” and making sure they have access to digital self-servicing and their loyalty recognition benefits. Since April, 50 per cent of the carrier’s indirect volume has come through NDC channels, he said, a figure that will “only increase” through the end of the year and into 2024.

Cumbie added: “The thing that has driven this strategy is the reality of where people are travelling and what we’re seeing in the data. Our revenue is 35 per cent leisure, 35 per cent blended, 30 per cent business travel. Corporate travel is still very, very important to us but what’s interesting about that 30 per cent is that the managed corporate volume is much less than it was and SMEs are growing significantly more to levels we’ve never seen before. That’s what’s driving the strategy – it’s making sure long-term that we’re building out ecosystems, whether direct or indirect, that provide the traveller with the best experience.”

He added that its GDS agreements – announced in October last year – were the foundation of its NDC strategy. “We heard for ten years this won’t work until you integrate with the GDS and that’s exactly what we did.”

David Oppenheim, director of global sales at British Airways, noted the carrier had “made a different set of content decisions” to its partner American, but said the industry needs to “get off the 50-year-old technology and I think the GDSs are there now”.

British Airways is live with its NDC content in two out of the three major GDSs (Amadeus and Travelport), said Oppenheim, while American is live in all three. “It’s not about the tech providers now because they’re doing it, it’s really about the TMCs. They’ve built a lot of custom work on the back of old technology and for them to improve… we have some that are doing it and some that aren’t.”

He continued: “The reality is that we have corporate customers and agency partners that are moving to this [NDC], and so it is possible. It doesn’t mean it’s easy. It’s not easy for us, it’s not easy for the GDS, and it’s not easy for anyone involved in this because it’s a massive change.”

The third airline representative on stage, Matt Raos, senior vice president of global sales at Qatar Airways, said: “I’d caution buyers that if you don’t get onboard [with NDC] there’s going to be some content – and good content – quite soon that you’ll miss out on. We don’t want to do anything that’s disruptive to the distribution chain but we don’t want that distribution chain to miss out on what’s coming.”

Diminishing corporate deals

Jan Jacobsen, travel and mobility procurement director at Accenture, agreed with Jones in that the focus of airlines with NDC is “too much on the end customer and not on who’s paying”.

He continued: “I’m not saying at all that the traveller shouldn’t be looked after but we have policies in place for a reason. I’m all for NDC but let’s get at the table and make it happen together.”

Jacobsen also argued that when considering corporate deals, airlines should take into account the overall value of an organisation’s workforce – not only of its business travel activity, but also those employees’ leisure spend too.

“It could be any supplier, not just airlines, but they have to look at this holistically – the value proposition of what we bring to the table and that’s 740,000 employees worldwide. They also travel for leisure,” said Jacobsen.

“We do [airline] status matches for a reason. They ask us to push those promotions because they want our travellers and their residual income. We do inhouse marketing for our [travel] partners and we don’t charge for that. I’m giving you access to a tribe of 740,000 people. That becomes your tribe too. Why doesn’t that have value? That should come into the equation too.”

Like American, British Airways’ leisure business has “grown tremendously” since the pandemic while business traffic is “meaningfully below what it was”, said Oppenheim. And although business travellers are still “incredibly important to us”, he pointed to a significant change in yields affecting the availability and extent of corporate deals.

“If you look at the average price a corporate traveller was paying [pre-Covid] – because they tend to book late and other things – and the average price that a leisure traveller was booking, there was a very large gap. The problem is it’s got much closer.”