TMCs Wrestle with New NDC Reality

American Airlines on April 3 began pulling up to 40 percent of its content from EDIFACT and making it available only through New Distribution Capability channels and its direct website. More than a month into this change, the industry is learning the fares that composed that 40 percent and is tracking the variable price differentials between EDIFACT content and NDC content.

But availability and pricing aren't the only challenges. Agency servicing for NDC bookings is a major pain point.  

PNR Conundrum

"One of the major problems with managing NDC content is that there is no mandatory location for the information to be inserted in the PNR," Spotnana VP of strategy and partnerships Johnny Thorsen told BTN in an email, referring to the passenger name record, which is the core record of an air booking in the global distribution system-enabled agency environment. "So [travel management companies] are all creating their own unique formats using passive segments—or even remark segments—as the method of storing the booking information." 

The passive information comes with limitations for automated processing, resulting in challenges during the servicing process. The problem is compounded as airlines create their own formulations of NDC content with unique services bundled into the airfare. But the PNR—which originated with the GDSs in the 1960s—wasn't created to manage or present more complex data elements. 

"It is hard to think of a bigger obstacle to progress in our industry than GDS PNRs, or, more specifically, the way most TMCs use them," AmTrav CEO Jeff Klee said. "With the GDS as the hub of their tech stacks and the GDS PNR as their data record of choice, it is very difficult for TMCs to integrate newer content booked outside of the GDS, or content that has features or attributes not historically represented in PNRs."

Many TMCs now insist that NDC be made to work better with their legacy technology, but it's that legacy technology that is the problem, not NDC, Klee said. "We have to get past the thinking that a PNR is the most suitable way to pass data between GDS, mid-office and back-office systems," he added.

But blaming the PNR is "an oversimplification of a multi-faceted situation," a Sabre spokesperson told BTN. "NDC will change many aspects of an agency's workflow. … Right now, workarounds are at play. That will change over time as NDC matures. ... The travel industry will operate in a world of hybrid content—traditional options and NDC offers—for years to come. … Sabre integrates and normalizes multiple types of content, including traditional ATPCO/EDIFACT options and NDC offers. We've worked hard to optimize our points of sale so that users can easily compare options in the same familiar displays.

"Agencies are faced with the tricky reality of managing multiple technology partners, such as mid- and back-office solutions, corporate booking tools and other operational systems. Each of those technology companies has work to do to advance NDC—no one company has a silver bullet. The pacing of those various companies will differ."

Amadeus and Travelport were unavailable to comment on a request by BTN to discuss evolving beyond PNRs. 

President of Travel Tech Consulting Norm Rose agreed that storing information in and tying mid-office and back-office processes to the PNR is part of the issues associated with NDC, "but the problem is more than just the PNR," Rose said. "The issue is about functionality not available through the NDC channel that is enabled in the EDIFACT channel."

Functionality Discrepancies

These functionality discrepancies across the NDC-EDIFACT divide precipitate challenges for the broader TMC community. 

Major sticking points include exchanging an EDIFACT ticket for an NDC one, keeping control of unused tickets and the inability to use re-shopping tools for NDC bookings. All these issues roll up into "a suboptimal user experience for customers, and [they] are a challenge for us in how we smooth that out while we wait for American to fix it," said Tom Rigby, SVP of commercial for the Navan Group, the travel management company formerly known as TripActions. 

American acknowledged it is working on a solution for unused tickets and is "getting close," according to an April 26 report in BTN portfolio partner The Beat. The carrier as of May 5 said it did not have an update on how that fix was going. 

Gant Travel Management CEO Patrick Linnihan said there is no near-term fix anticipated for seat and fare monitoring of NDC tickets, which long has been a core differentiator for agency-booked air reservations, so much so that companies like Tripbam and its earlier competitor Yapta isolated and magnified what once was a hidden mid-office routine into stand-alone companies.

There's no "fix" coming from AA on this count; indeed, they are doubling down on the restriction. The Beat on May 2 reported that American will prohibit "automated re-shopping" according to recent updates in the carrier's travel agency agreements as well as its contract of carriage, which is applicable to all passengers. 

Tripbam VP of air solutions Jason Kramer confirmed that the company is not able to re-shop NDC fares. Despite AA prohibitions pending for TMCs, Tripbam intends to continue with its NDC re-shopping roadmap. "The plan is to pull in non-GDS content and web fares for both re-shopping and analytics," according to a Tripbam spokesperson.

ITW director of global T&E Cathy Sharpe's backup plan is SAP Concur's TripLink, a tool that allows the company to capture bookings made directly with suppliers. But it has a "big negative" in that the company's TMC cannot service bookings made directly, she said. 

When asked about this issue, an SAP Concur spokesperson replied that "many TMCs work with TripLink today. … If a traveler wants to be serviced by a TMC, the TMCs have access to the Concur APIs that allow them to see each of the travelers' bookings. Different TMCs have built different processes for these bookings, but the actual booking cannot be modified in the GDS."

Sharpe said she supports waiting to embrace NDC until her TMC has a complete end-to-end process that includes displaying the content in the online booking tool via the GDS. However, Concur instead is operating a "Select Access" program that pipes in NDC content from air content aggregator Travelfusion—an option that can get expensive.

"It's not just in the hands of the TMC. We won't wait forever," Sharpe said. "As we speak, there are savings out there we are missing. We are very aware of that and becoming more aware every day. It's a need that unfortunately we've ignored for 10 years and now it's upon us."

The ROI of NDC

TMCs cited plenty of other pain points, including booking multileg trips that are not a pure roundtrip, a number of auto-servicing functions that don't work the same way in NDC as they do in EDIFACT and difficulties with upgrading NDC bookings to a higher class of service. This is putting the onus on human intervention to address each situation.

TMCs "can service the tickets and may choose not to, but systems are available," said Cory Garner, CEO of distribution consultancy Garner, specifically referring to Concur's Select Access program but also other solutions provided in the GDS environment. 

"There seems to be a continuing overhang of lack of awareness or lack of action," said Garner, referring to both travel managers and TMCs. "If there are [NDC] impacts on American's corporate share [for the TMC], the inaction has more to do with that than nitpicky servicing scenarios, many being handled by GDSs today adequately."

But the question of whether TMCs "can't" or "won't" service NDC bookings in the PNR environment may just be semantics. 

The real question may be "at what cost?" for what looks like an onerous process that has meaningful fee implications for managed travel programs—fees that in many cases will go beyond whatever savings an NDC booking might provide on its face.

"American hasn't defined the equation of what is the return on investment for the additional cost to use Travelfusion [with Concur] and more manual servicing by the TMC," Fox World Travel VP of business travel George Kalka said. 

"We have communicated and shared with [clients] our results and testing where there will be service gaps and how to automate an exchanged ticket and unused tickets, that it would drive an increased usage of agents," Kalka added. "That's something the travel manager has to consider if they are going to implement NDC." 

"Every TMC training department is over-stretched right now," Gant's Linnihan said, trying to address the need for manual intervention on NDC bookings. 

President of Tower Travel Management John Smith shared that a number of travelers were caught in flight disruptions one weekend and, for the NDC-ticketed travelers, agents had to contact American directly for solutions. 

"The customers are having to deal with the implications of after-hours personnel dealing directly with American," Smith said, referencing limited availability and the high costs associated with such services. "Agents were on the phone for two to three hours to effect changes for customers. That certainly is not sustainable."

Linnihan added that with using Travelfusion, "trying to manage a ticket in a managed travel program is an inefficient workflow for most TMCs," he said. "It's not as fast as working in the GDS, therefore you need more people. That labor requirement compared to the GDS makes the hidden costs of having Travelfusion way more expensive." 

Tower has not enabled Travelfusion, but if it had, "not only do you have all those associated issues, but also Travelfusion costs with [online booking tools]," Smith said. "There is a host of different costs that can come into play with using NDC in today's environment."

Smith also noted that "when we can have all that stuff operate completely the same, a lot of those costs will go away."

It's Not All Black and White

Still, Klee said knocking NDC servicing is short-sighted. Though there are some glitches right now, the promise of servicing on NDC is "really compelling," he said, in terms of future customization and retailing. He also added a nuance—that servicing isn't a binary "it works or it doesn't work [situation]. Both are wrong."

"Generally, servicing does work, and we are able to exchange, change returns, use unused ticket credits through NDC," Klee said. "But there are limitations and gaps that we and American are working through to get everything fully working to the level we would like."

About 60 percent to 70 percent of AmTrav's servicing requests can be automated, Klee said. For those that fall outside that range, the company uses a tool American provided called SPRK. 

Spotnana's Thorsen said SPRK is basically a browser-based airline portal offering TMC agents access to a simplistic and limited user interface where they can make changes to existing bookings if they don't have an agent desktop that supports those features, or if the airline doesn't support those services via their NDC API. 

"The SPRK portal is generally viewed as a very inefficient and unpopular solution by TMC agents and will hopefully be replaced by better systems in the future," Thorsen said. Both he and Klee said they have minimized its usage and hope to eliminate it completely.

Thorsen added that the company also saw a "dramatic increase" in the NDC share of its American bookings in April, to above 70 percent, and the company didn't experience any service problems worth mentioning. That said, Spotnana isn't working in a PNR-based environment. "Unused ticketing works just fine, but obviously the TMC must have a system capable of managing unused tickets across multiple channels," Thorsen said.

Forget Servicing Issues, Follow the Money

Still, Rose noted, carriers' long-term strategy for NDC is far broader than developing new servicing methods, and buyers should consider what he called airlines' ultimate goal. 

"Airlines are taking control of inventory and changing the commercial relationships with suppliers," Rose said. "They're testing whether or not travel management really has teeth. We'll see how it shakes out."

Rose implicated revenue streams as the true blocker for a transition away from the PNR, though he acknowledged the servicing challenges are causing real pain. 

"NDC is leading to the reduction in GDS rebates for the TMC. This is the underlying issue preventing the large TMCs from adopting NDC," he said. "I consider the noise about functionality a distraction, though these limitations are real issues. When the dust clears, the economic issues will not be resolved even if the NDC channel has full interoperability with EDIFACT and has all the prior EDIFACT functionality."

Klee posited that while each carrier is moving at a different pace, every carrier will hop on board the NDC track sooner rather than later. 

"By the end of next year, 80 percent of tickets will be done through NDC," Klee predicted. "Regardless of who is in the middle, every major airline is going to be distributing all their best content and functionality through NDC. [And the conversation] will be about better functionality, servicing capacity, and bundles and options as opposed to taking things away [from] EDIFACT." 

Following the AA Leader? Not Exactly.

Multiple sources mentioned United's NDC plans as a counter to how American went to market with its NDC changes. "American has a hammer approach to the market and is challenging the basic tenets of corporate travel management," Rose said. United and a lot of other airlines "are taking a scalpel."

United began offering NDC content within the past two years, according to United VP of sales strategy and effectiveness Glenn Hollister. There are three ways to get that content: with an API direct connect, through an aggregator or through traditional GDSs. Amadeus was the first to offer United NDC content. Sabre was added last month, and Travelport is working on it and "it will come reasonably soon," Hollister said.

Unlike American, which started to take content out of EDIFACT-connected channels on April 3, United has kept all the EDIFACT content and added to its NDC offerings. But it, too, now has a roughly 40 percent difference between what is available through the traditional model and what is available via NDC, Hollister confirmed, adding that there is not any content on United's website that isn't available in its NDC channels. 

Unused tickets are not an issue for United because the carrier uses its own ticket stock for NDC ticketing, and most other carriers use neutral ticket stock, Hollister said. "That is what gives us a really good visibility into unused tickets and to apply those credits where needed," he said. "Also, the fact we issue on our own ticket stock gives us the omnichannel servicing capability."

United also looks at NDC as a way to offer continuous pricing, which is not possible with the EDIFACT model. 

Delta Air Lines is taking a measured approach to NDC. In an April 18 call with corporate customers, Delta managing director of distribution Jeff Lobl noted that the carrier views the journey toward NDC "as an evolution, not a revolution." 

"NDC is not ready today," Lobl said. "If it was, then airlines wouldn't be out there imposing surcharges and removing content from preferred customer channels in order to get customers to notice it."

Delta SVP of global sales Bob Somers concurred. "We do support NDC and will be a part of NDC, but only when it is ready and when it is mature, and only when we are ready and our constituents are ready and when our stakeholders are ready, so we come out together and not in spite of each other," Somers said. "We will come out with something that automatically on day one will drive value to our customers and drive value to Delta. That is a distinct difference from what is going on right now."

Southwest Airlines, too, does not yet offer NDC, but the carrier's director of B2B channel and TMC relations Eric Hall wrote in an email that "we have plans on our roadmap to upgrade our API to NDC in the near future, and we're also looking for new API aggregation partners that can help us grow our API availability to reach the buyers who prefer it over traditional GDS channels."

Qantas, Singapore Airlines and several European carriers, including Air France-KLM, British Airways, Finnair and Lufthansa, offer NDC content. Some have removed content from traditional GDS channels. Some also impose a fee for traditional GDS bookings—or intend to in the future.

Garner noted that people are too focused on American. 

"We were not even out of April when [Air Canada] announced it was differentiating for NDC content," Garner said. He added that about two dozen carriers have active NDC strategies, and all are watching what is happening with American's "bold" move in the corporate space.

"If [American's strategy] works, you better bet some of those two dozen airlines will start those strategies as well and apply them to the corporate market," Garner said. "We're in the first inning of a long game over the next two to three years that will be marked by rolling brownouts of airline content that will shift from airline to airline and GDS to GDS over that period."

Tripbam is advising clients to think beyond just the changes to distribution. 

"What does it mean for airline contracts going forward?" Kramer said. "Will there be airline contracts going forward? If travel sits in a procurement organization with NDC and the prevalence of continuous pricing, how do you set a baseline savings from which to compare? Now is the time to think about what is next. And that becomes not just distribution, but booking channel, policy, duty of care, sourcing—a lot of downline impacts that NDC brings forward that is not just fare differential."