MIDOCO NDC Enabler for Travel Companies
In the 1950s the airline distribution concept was fairly simple. The only way to buy a ticket was through a travel agency. At that time a very manual process with the airline ticket for a seat on a flight was the only choice. As the market grew and scaled up and technological development kicked in the airlines were in need for a technological solution to handle the growing amount of customers. This need resulted in the birth of the GDS.
A system, that enabled travel agencies to book airline seats on flights from a to b and issuing a ticket. Because the GDS only handled the booking of a ticket the BSP was founded to run the entire billing of airline tickets in the then still only indirect airline distribution world. Soon the GDS became independent of the airlines and over the years developed very efficient technological solutions. Technological development never stops and will over time create new needs and new markets. So the same way the growing markets for passenger flights gave birth to the GDS, the internet gave birth to direct airline distribution. In the 1990s, when the internet started growing the airlines took the opportunity to reshape their business models. The traditional airlines started selling tickets on their websites using the old systems. New airlines arose that skipped the ticket procedures and just issued order confirmations with booking codes that the customer shows when boarding.
The big idea behind this approach was to maximize profit by breaking down the ticket into several order items. In the old days a flight ticket contained all elements of the flight service including, transport from A to B, seat, meals, room, boarding priorites, entertainment etc.. By leaving the ticketing system, the airlines have the option to split up the entire service into single order intems, that can be combined and purchased as you like. This is where NDC comes into the game. NDC is the messaging format, enabling airlines to run those business models. At the same time airlines are enabled to control their tarif structure and sales effort in a better way.
NDC (New Distribution Capability) is an XML-based data transmission standard. The current limitations of the old approach have become more and more evident with the internet evolving and opening new opportunities.
The idea behind NDC is to enhance the communication capabilities between airlines and travel agents and to make the standard accessible to any third party stakeholder to implement and use. These being intermediaries, IT-providers or non IATA members. NDC aims for transforming the way airline products are retailed to corporations, leisure and business travellers. NDC also has the aim to replace the old data formats, which are spread out between GDS, airline and settlement organisations, leaving airlines with only a part of the truth in their own systems, limiting them to sell only tickets and some predefined additional services via well known sales channels, which are controlled by third party organisations.
Companies involved in the process of developing the NDC standard and related services such as One Order are airlines, GDSs, travel management companies, online travel agencies, midoffice providers and aggregators. All of them contribute to the development of the NDC standard in a collaborative approach.
Where is NDC today? NDC is work in progress. There are several aspects currently being discussed in workgroups. The discussions evolve around
Check out our report on the IATA NDC workshop in Miami 2019 (bottom of the page) to get a picture of current discussions on the development of the NDC standard.
A key challenge for the NDC standard is to achieve a broad acceptance in the market. This appears to be difficult due to the inconsistencies in the usage of the NDC standard and the comparably better performing GDS systems. Agencies and TMCs seem to wait for GDS implementations to make their live easier.
Development of opinion on NDC
Molly Dyson from buying business travel states that a recent survey conducted by buying business travel has found the group of travel managers in favour of NDC has decreased from 35 % in 2017/18 to 26 % in 2019. The number of people feeling uninformed has increased significantly. Of course this does not support a positive attitude towards NDC. An additional figure shows that people doubting the benefit of the new airline distribution strategies has increased by approx. 50 % from 39 % to 59 %.
We see ourselves as NDC enabler. NDC has openend the door to an entire new approach in airline distribution. MIDOCO is a company that has specialized on enabling companies to focus on growing their businesses by providing a tool that optimises and automates workflows, by consuming all the data from different sales systems and generating a unified after-sales process. This empowers companies to concentrate on sales. Extending sales capabilities is one of the goals that NDC is aiming for.
How does MIDCOO support travel management companies, tour operators, travel agencies and OTAs to take advantage of the NDC standard in their context ?
First of all MIDOCO connects various booking sources into one system delivering an order based view with order items of a booking. This is comparable to the One Order concept of the airlines, with the intention to address the sales organisations. With this setup MIDOCO is NDC ready and can process any NDC booking and put it in the context of an order related to a customer. The second step after adding NDC capable platforms to your product portfolio is including the direct connect booking channels into your process landscape. MIDOCO will automate the interpretation of incoming messages, apply transaction fee rules and many other steps of your workflows that follow a direct connect booking.
Have a look at how the MIDOCO features can decrease your downstream process manual workload. Choosing MIDOCO enables you to take an easy step forward into profiting from the advantages of the NDC format. MIDOCO enables customers to use a mixture of direct connected and legacy systems such as GDS in parallel.
What are the key aspects of NDC for TMCs?
The main goal of a TMC is to meet their clients travel needs, respecting their travel rules, reporting and invoicing constraints. As technology evolves, clients want to benefit from these impovements. Especially being an early adopter can put a TMC in a benefical competitive position. Using a mix of booking channels is the result. The changes in travel distribution break up a long established content parity. Airline want to improve the travel experience and be part of the travel retail process. NDC is the standard that enables airlines to follow this path. Since TMCs need to deliver best solutions for their clients and content parity has be broken up they need to get access the full content. Basically TMCs have three options to become NDC ready
How can TMCs get involved in NDC development?
The Global TMC Executive Council (GTEC) is a platform provided by the IATA for TMCs to engage in the NDC development and for the IATA to understand the needs of the TMC community. Sourcing content has become one of the major challenges for TMCs. This means that TMCs have a growing need for aggregators that provide access to full content. As TMCs aim to run cost effective travel management for companies, analytics as well as backoffice processes play an important role. Working across different channels increase the variety and complexity of workflows, a challenge that TMCs need a solution for, if they want to profit from NDC as a technological improvement.
Coming from a single stream retail setup regarding travel retail travel agencies are facing a completely new competitive environment. For decades travel agenices and GDS were the only way to sell and buy travel products. Even though NDC still isn't processing a significant part of the market, new channels are developing constantly. Direct sales through airlines increasing constantly, generating pressure on the travel agency position. For travel agencies this means that they need to rethink their strategies and either invest in these upcoming new developments for their own benefit or lose more and more ground. This also means that travel retail becomes more diverse and solutions that capture this diversity like MIDOCO are important to survive. As we see it, even more than ever.
The Idea of OTAs is to make the consumer feel comfortable, providing usablitity throughout the booking experience including comparison, combination and personalization of offers. This is basically one of the drivers of NDC. NDC empowers airlines to become more personal and driving revenue through product differentiation.
IS NDC an opportunity or a threat for OTAs?
It is both. Overcoming obstacles along the booking process for the travellers and delivering exceptional user experience is one of the main goals. Airlines now have the opportunity to be more competitive meeting customers needs in a better way, so competition is getting harder for OTAs. But NDC does not only create new opportunities for Airlines. There is something in it for everybody but OTAs are ahead of the GDSs. Kayak processed the first bookig via the NDC standard in September 2016 and both Kayak and Skyscanner are using NDC already. The reason for Airlines and portals to focus on NDC is clear. Portals concentrate purely on sales. The slightest price difference comparing services will therefore influence the buying decision. Lufthansa Groups price reduction for NDC sales therefore affects airline portals business. New NDC capable portals for offe comparisons evaluate prices delivered by airlines in a more effective way. As a consequence they will always prefer a direct connectivity over an indirect. Furthermore OTAs leave the customer relationship to the airlines. Traditionally this isn't the case for travel agents. So OTAs will only need the booking part of NDC. Nearly all of the airlines are working on apps and solutions to deliver this extended service.
Tour operators will profit from NDC, too. The standard will make it easier for tour operators to bundle airline products in different manners into their travel packages. Early adopters would also profit from the current situation with the LH Group lowering prices for NDC content. To take advantage of NDC as a tour operator there are a set of options. Develop an interface to connect the own inhouse CRS to Airlines NDC interfaces, secondly there is the option to ask a third party IT company to develop a connection and the third option is package on a third party CRS.
https://buyingbusinesstravel.com/news/0629854-fewer-buyers-see-benefit-ndc
https://www.iata.org/whatwedo/airline-distribution/ndc/Documents/infocus-for-tmc.pdf
https://www.traveltalkmag.com.au/smart-business/will-ndc-fast-track-success-for-travel-agents
https://www.iata.org/whatwedo/airline-distribution/ndc/Pages/default.aspx
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