NDC: Why are we still talking about it?

It seems like you can’t go a day in business travel without hearing the term NDC - why are we still talking about it? On this episode, Chad and Miriam connect with Thane Jackson, SVP, global distribution strategy. Thane shares his perspective on why the NDC conversation should have just stayed in the background, how NDC is shaping business travel, and advice for travel managers to ensure their programs are optimized for the best content. 

Learn more by visiting https://www.bcdtravel.com or https://www.linkedin.com/company/bcd-travel/

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Intro:

Welcome to Connections with BCD Travel, an ongoing conversation about the modern-day travel program, the impact of technology, and how travel buyers can take control and drive change. What are we waiting for? Let's start connecting.

Chad Lemon:

Hello, everyone. Welcome back to Connections. I am Chad Lemon.

Miriam Moscovici:

And I'm Miriam Moscovici. Are you enjoying this podcast? Are you hating it? Do you wish we were talking about something else? Let us know. Please head to bcdtravel.com/podcast and give us your feedback.

Well, Chad, we knew this day would come and that we couldn't avoid this topic.

Chad Lemon:

Yeah. Yeah. And really, it's time. We need to talk about it.

Miriam Moscovici:

So today we are tackling the topic of NDC. And thankfully our guest is well-versed, not just on the typical talking points of NDC that we're all used to hearing, but also on the impacts and the future of business travel as it relates to NDC.

Chad Lemon:

Thane Jackson is Senior Vice President, Global Distribution Strategy at BCD, and I was excited when he agreed to come on the pod, so let's get started.

Miriam Moscovici:

Thane, I want to kick things off by talking about a conference I was recently at. Among other things, the speaker said something quite jarring to us. She said that the biggest travesty is that we've drug clients and travelers into this NDC conversation rather than just dealing with it on the backend. So I'm curious to know what are your thoughts.

Thane Jackson:

I think that statement is absolutely true. I've really been saying that since day one when I first attended the IATA NDC conference back in 2016 I think it was. NDC being New Distribution Capabilities, should any listener not know what NDC stands for.

It should really have been solved behind closed doors. This was a distribution wrangle and continues to be a distribution wrangle between airlines and their distribution partners. It's about costs, it's about technology, it's about different ways of earning new revenue streams.

So it shouldn't have come out, but it has, and we've had to accept that. And to a large degree, that's fine, because we need to really help our customers understand it, at least to some level of decency anyway, about where the industry is heading and where NDC fits into what is perhaps more aptly called the modern retailing journey.

Miriam Moscovici:

Mm-hmm.

Chad Lemon:

Okay, sure. But distribution fragmentation is not new, and quite frankly, I feel like that's why corporate partners are so vital. So we saw this with hotels before and it was solved, so is this just distribution drama?

Thane Jackson:

It's a long-running one if it is a drama. I think you could binge listen to this for many, many years I suspect.

Miriam Moscovici:

It's like Grey's Anatomy.

Thane Jackson:

Only worse. And to some degree it's more surgical than that actually. It's not a new topic. Fragmentation has been there for years and years and years.

Miriam Moscovici:

Right.

Thane Jackson:

In fact, if you think about NDC itself, it's been an ongoing conversation and initiative and technology evolution since it was first mooted by IATA in 2012. So it's already a pretty long-running show.

Miriam Moscovici:

Right.

Thane Jackson:

And if I think about what's happened in the world of distribution over many, many years, low-cost carriers caused distribution fragmentation. We solved for that by using aggregators ourselves or online booking tools, using their own connections to get to that content. Hotel content we've solved for really, really well. We have direct APIs in place there. We use hotel aggregators or hotel booking agencies, we bring content in from all sorts.

So it's not a new conversation, it's just I think this one in the airline world is probably a bigger and more wide-reaching conversation that will take a very, very long time to really reach full maturity in the context of what I would call modern retailing.

Miriam Moscovici:

But Thane, so where do you feel like we are as TMCs in solving this for buyers? We have so many new capabilities with new technologies.

Thane Jackson:

Yes, so some of this is about TMCs solving for it, but it's solving for their piece of it, which is really how you continue to provide that fully-managed travel service and all the valuable things that we provide to our customers.

To a very large degree, this is up to the airlines and their distribution partners to solve for. Whether that distribution partner is a global distribution system, a GDS, whether it's a third-party aggregator, or whether somebody chooses to connect directly to them, a lot of the work is in the airline APIs that need to be done that pushes the right information and the right set of functions through their APIs in the very first place. Then we can take that, receive it, and start to solve for how that impacts the systems and technologies we use.

It's heavily weighted on airline distribution and airline distribution partnerships. And the reason I say that is not because we are one of those legacy TMCs that wants to hide behind, "Well, we're just going to use the GDS." It's because actually there are 300 IATA airlines out there, of which about 65 to 70 have truly started on the NDC journey. So you've still got that long tail that needs to be solved for.

And then you've got the low-cost carriers out there who aren't really embracing NDC in the same way, because many of them would say they're way past NDC and their functionality on their websites and their apps anyway.

And then you've got all the other providers out there, the hoteliers, the car rental companies, the ground transportation companies, rail companies. Well, you've got to bring all of that content together, and you've got major distribution systems out there who spent their life and built their business on connecting all of that stuff. So why not use those guys? Because that's what they do and that's what they're expert at, and they have that scale and scope to go and do that, whereas if you think a TMC or any single TMC is going to solve this entirely, then I think that's probably a bit of a misnomer.

Chad Lemon:

When I listen to NDC conversations though, I hear many of the same airlines over and over again. And I say that because I kind of have a two-part question for you. One, is this a geographical or a global issue? And regardless of which one, what's the value for the buyer?

Thane Jackson:

Yeah, that's really good couple of questions there, Chad. So let me deal with that first one, which is you will hear often-wise a lot of noise around the latest big announcement in the marketplace. And I guess the biggest single announcement most recently was American Airlines' strategy.

But then if I think about where this all really started back in 2015, it was Lufthansa group that really got out there with a new strategy. So you've kind of got the top and tail there of the two big carriers in home markets making very sizable announcements.

But it was a geographical issue to start with, because primarily I would say that the big carrier groups in Europe really jumped onto this one sooner than the perhaps the North American carriers did. So we've been focused in terms of resources, in terms of education around the European marketplace. It was then followed by certain Asia-based carriers, and a little bit of happening in LATAM.

And it wasn't really until American Airlines made its bold moves in end of 2022, beginning of '23 that it became something real in the North American marketplace. So you hear about those airlines in particular because they kind of topped and tailed the situation, but there's a tremendous amount of stuff been happening in the European marketplace, in the LATAM marketplace and in the Asia marketplace in that intervening period. So it's a global issue, not necessarily a geographical issue, although it was talked about much more geographically previously.

If I move to that question of value, that's a really interesting question, because the way every airline seems to approach this is a pretty standard playbook now, is first and foremost, they're looking into their home market where they have the most volume and often-wise are either dominant or semi-dominant in that marketplace and consequently, they can affect things more easily in that home marketplace.

And that also tends to be where the lowest fares are. You don't tend to get super low-value fares on transatlantic or transpacific journeys. You tend to get them in the home domestic markets.

And so a lower relative fare has a high relative distribution cost. So disrupting that is probably their first aim, because one, they've got a lot of volume, and two, they probably felt they were paying more than they should be doing in those home marketplaces.

So it's become a question of how do you push everybody to move down that road? And the value that seems to have been interpreted so far has been we're going to pull some of these low fares out of the traditional systems and only make them available through an NDC connection, which could be still piped into those traditional systems, it's just it's a new connection.

And consequently, there's this feeling or view that, "NDC means my fare is going to be cheaper because I can no longer get that fare in the old traditional GDS channel, but I can get it in the NDC channel. Therefore, NDC equates to fare savings."

But if we think about the true, true journey of modern retailing, this is about evolving a set of technologies to give the end user and the end traveler more choice and a better retailing experience.

So the value isn't going to be about I can save some money. Yes, there may be some lower fares, different price points because the technology is more flexible, but it isn't automatically NDC equals a fare saving.

And I don't think airlines have done a brilliant job in articulating that fact, because it's in their own interests to push people to NDC and to allude to the idea that NDC means you're going to get a cheaper fare.

Think about what low-cost carriers do. They can flex their fares really, really well on their websites based upon demand, time, day, et cetera. But equally, when you're on there, they're asking you, "Would you like a bigger seat? Would you like to check an extra bag? Would you like to pay for wifi? Would you like to buy car rental?" That's what modern retailing is all about.

And so I think the value proposition so far has been slightly misguided. And if you think about a world of NDC in the long-term, when everything's NDC, you can't refer back to the old system and look at what might've been a cheaper fare in one versus the other. That's just going to disappear.

Miriam Moscovici:

Thane, I want to talk about a few scenarios. Let me give you a pretty common scenario as to what you think corporate travel programs should be doing at this stage.

You've got a corporate travel program primarily based in North America, multinational locations and a few locations, and they're on Concur. Are you saying you think they should move to the next version of Concur to avail themselves of NDC right away?

Thane Jackson:

So that's a really interesting one, Concur being one of the largest online booking tools out there. I think the short answer is yes, if the content is available through Concur, and so take a good example, United Airlines and American Airlines available in the North America marketplace over Concur if you're connected to the Sabre Distribution System.

I think only in the last week Concur have released a connection through to the Amadeus system, but until now, you had to really be working with Sabre as your underlying GDS to get access to that content.

But I would say yes, move across to the next version, the T2 evolution with Concur, get used to that now, get on board with that now, because it's the way the industry's going. NDC is just not going to go away, so why wait? Yes, accept that some things might be different, there might be some functionality in Concur that's not there yet, but it's coming, versus what you use in the current platform. But I would get on board as soon as possible, because better to be ahead of the game than behind the curve, so to speak.

Miriam Moscovici:

Okay, let me give you another one, Thane. You are a travel program based in Europe, maybe you use Cytric or some other booking tool in Europe, and you do have some multinational, if not global business. What's a program like that to do?

Thane Jackson:

Again, if your online booking tool is connected and has the capability to deliver NDC, then get it turned on, come to us, talk to us about it.

I would liken it to the Concur situation that as these technologies evolve and start to be able to bring more content, they've also got to make sure they're evolving in all parts of the world.

So for example, you might want to get Air France-KLM content, which available through us now through Cytric now in Europe, fantastic. But it may not be available to you if your part of the program globally is on Sabre elsewhere or on a different online booking tool elsewhere. And that's one of the nuances of this. It's coming out really home market by home market.

And pretty much just to digress ever so slightly, everybody I talk to, whether it is an airline approach, to dealing in their home markets first, whether it's a major booking tool like Concur or Cytric, they deal in their home markets first. And so this will evolve over time, but it's not that you can just flip a switch and say, "I want American Airlines on everywhere in the world." It just isn't quite like that yet.

Miriam Moscovici:

Thane, I'm also curious to hear your take on what are some of the hard truths of NDC?

Thane Jackson:

Yeah, so it's going to take time. And so I guess a little bit back to what I said before, it shouldn't have really been out in the public domain, it should have been solved in the background, but it is out there. But it's going to take time. It's one part of that very long journey to modern retailing. So NDC is just the first piece of that.

So let's not think that once you've switched on a couple of airlines it's going to be done and dusted. There's going to be more functionality released from those airlines over time, more airlines coming in over time.

The technologies need to be more fully evolved, and those technologies have to be fully evolved to cope with this in all markets all around the world where we operate and our clients operate. And the value needs to be better articulated by everybody.

And I'd use an example here of what I would call readiness. An airline will often say, "We're ready on our side." That's a little bit of a single dimension, because if you want to work in a collaborative way with joint customers that we look after, you've got to make sure that you're working with us, you're working with the distribution systems, the online booking tools to make sure all parts of that ecosystem are ready.

So just because one says they're ready doesn't mean that everyone else is being slow, it means that collaboration is needed to make sure the whole ecosystem is there so our customers can get that value in a meaningful way without being disadvantaged.

Chad Lemon:

But let's not leave out the actual travelers, right? I mean, how much does a travel manager need to communicate to their travelers about NDC?

Thane Jackson:

I think the industry, and BCD included, has probably been guilty of talking about the technology and the complexity for many, many years, when in fact that's not really what we should be talking about. And certainly the travelers just don't need to know about that. That's really for us to deal with.

That's just annoying noise for travelers. All, from my experience, they want to know is am I getting the right fare with the right things I need for my journey to make me efficient when I travel?

So I think we would advise travel managers don't talk about the technology and the complexity, focus on the end game, which is an end game. It won't be there fully everywhere for quite some time, but it's going to bring a better user experience, more choice, more ability for things to be flexible.

I'd say it's not an if it happens, it's a when and how it happens, but also accepting that some things are just not going to work the same way as they used to do. And that happens in any major technological evolution like this, is some things are going to be thrown away.

And hopefully those things that are thrown away, the things that really inhibited us in the past, and to get into a little bit of more of the technical detail, you issue a ticket if it needs to be reissued and there's some additional price you've got to pay, then some miscellaneous electronic document's got to be issued and got to be processed by the agency. Throwing away that kind of process is a good thing rather than a bad thing.

So it will be good in the long term, but don't expect you can flip the switch on the 1st of August and NDC is going to be perfect. But it will bring more choice.

I would also say make your travelers aware, and from a travel program management point of view, think about how this is really going to impact you, because as I've referenced before, NDC doesn't automatically equate to you're going to get lower prices.

I would suggest that airlines are not necessarily in the business of reducing their fares to everybody. They're doing this because they want more flexibility. They want to be able to sell more of those ancillary products or bundles as they get called out in the marketplace, and that's a revenue play, it's not a cost reduction play for the airline.

Chad Lemon:

And to their airline partners, what questions should travel managers be asking them?

Thane Jackson:

There's probably three or four key ones, Chad, that I'd say that we really would advise that they kind of get some understanding, is "What is the airline offering that's different to that which they have today?"

So if I think about a typical very, very frequent traveler, they probably have some kind of status, or status as you might call it, with an airline. And that's probably getting them access to the airline lounges in many parts of the world. It's probably getting them their bags included, it's probably getting their wifi included, their meals included, because they're traveling maybe up at the front of the aircraft.

So what's different in what an airline's going to offer you as a corporate travel manager in their program with NDC? Is it going to be supplementing those things, replacing those things? How will that program differ because of NDC? And what's the quantifiable benefits that they can articulate to travel managers for that?

Simply saying, you've got the choice to buy an additional bag or a bigger seat or lounge access. May not really cut the mustard if you've already got that included in your frequent flyer program for most of your travelers anyway.

Encourage our travel management colleagues to ask their airline how are they working with the distribution systems and their TMCs to really enable this? And I'm going to quote, or quote, I'm going to reference one major North American-based carrier who we believe has taken exactly the right approach, who's working with us, with all major TMCs, with all distribution systems ahead of the game to make sure they don't disrupt, and they bring NDC content that works for them in a way that also works for the customers without creating this, "Oh my goodness, NDC is the end of the world."

Now, one could argue everyone else has done the hard yards that's enabling them to do that. One could also argue if everyone did that in the first place, we perhaps wouldn't be in the scary world of NDC being so complicated already.

Miriam Moscovici:

Okay, fine. So knowing what we know now, what are we doing? What are TMCs like BCD Travel doing to help programs navigate NDC?

Thane Jackson:

I think I'm on record many, many times by saying if I was to go back 10 years to when I first started looking at this particular topic in some level of detail, I probably would've gone out and recruited three or four people just to educate. Their full-time jobs would've been just to educate.

Because if it doesn't hit your radar because nobody's doing anything significant, we've got many other things that our travel management colleagues are having to deal with, whether it's sustainability, whether it's fuel surcharges, whether it's how do they make sure their travelers are all safe and secure?

They're dealing with all those kind of things plus disaggregation in the hotel world, the rail world, the car rental world, et cetera. NDC is not going to hit people's radar unless it's really going to impact them. So education is massively important and ongoing for, I suspect, for the four or five years of serious education on it.

We've done a lot of that in terms of our publications, in terms of what we have available on our website. We've equipped our program management teams with decision guides to help walk a customer through whether it's the right time and the right place to do this, which airlines. We have our customer connections calls. And where we see it's got value, the customer wants to, we're enabling this.

So we're doing an awful lot of stuff, but I think education sits at the heart of it. And dispelling some of the myths. I recently had some feedback about a major travel management conference, which included TMCs, but a lot of corporate buyers in there, where we had some people on stage still talking about the fact they believe the only reason NDC hasn't happened is because TMCs are wedded to the GDSs. And that's such a narrow view of the reality of what's happening out there.

And what we're also seeing now is collaboration really seriously beginning to happen with major carriers who perhaps had a different strategy originally, but now I think for the corporate marketplace we're beginning to see that collaboration.

So the negativity around this, people being wedded to GDSes, we all need the GDSes, whether you're BCD, GBT, Spotnana, Navan, whoever, we all need them because as I've mentioned, 300 airlines, no one's going to go and connect to 300 airlines themselves, because you're building a GDS then. So what's the point of that? So, but educating our customers I think is probably the single biggest thing we can continue to do.

Miriam Moscovici:

Last question, Thane. In just a few words for all of our listeners out there, what's the one thing they should be thinking about as it relates to NDC?

Thane Jackson:

Start somewhere. Start now. Accept that some things are going to be different, but don't let it become something that catches you and your program and your travelers out. Get on board with it.

Chad Lemon:

I have to be honest, Miriam, there are some days where I am sick of hearing the term NDC, but I'm glad we did this episode, because Thane gave me some new things to think about and some new perspectives as well.

Miriam Moscovici:

I love having Thane on. I hope you'll be back soon, Thane. But that's all for this episode of Connections. Be sure to comment and download the Connections with BCD Travel to stay up to date and listen to future episodes.

Outro:

Thank you for connecting with us. BCD Travel helps companies travel smart and achieve more. We drive program adoption, cost savings, and talent retention through digital experiences that simplify business travel.

Learn more about the topics you heard on this episode by visiting bcdtravel.com/podcast.