Business Travel News Europe posted a new podcast this week called Are we at a tipping point for NDC?
There are a few interesting points in this podcast especially around user experience, which I think is one of the most misunderstood elements of the NDC project and the wider consumerisation of the business travel industry.
The “naysayers”, as called in the discussion, often quibble “How can I continue to give the service that my customers expect when using NDC?”. Yet the critical failure of this argument is the failure to understand what your customers expect. This in fact, was broken long before NDC.
“It’s no longer 1976”
As stated, it’s no longer 1976. The customer expectations are not ringing a call centre to be sold products that they could book themselves online in half the time for less.
Click Travel has understood for quite some time that segment kick-backs and commissions have gone the way of the dinosaurs. That’s why from the start, we knew we needed to change what it meant to retail in business travel. Our mission is to reduce the cost and complexity of business travel for everyone involved. That means the suppliers too.
NDC often gets a lot more criticism than it deserves. It is, in the simplest terms, just a standard. The idea of APIs to book and service content directly with a supplier predates NDC, with Hotels, Rail and even Low Cost Airline content pushing the development of better retailing, long before NDC was such a hot topic. This only goes to fuel the argument that the combination of “misunderstanding the changing expectations” and “antiquated financial models” have scuppered innovation in air retailing for over 25 years.
“Now is the time”
NDC is not perfect, it’s not finished, airlines have different levels of certification. There are challenges but as the point was made in this discussion, with reduced demand now is the time to rethink your approach and break those age old financial dependencies. Whilst across the industry adopting NDC is still being seen as “a trial” or “an investigation” Click Travel has served tens of thousands of NDC sourced bookings.
Doing so is not pain free. So why would we do this? Why do we paper over the cracks in NDC and adopt early? Well this is critical to the answer to the question of; Who is the retailer?
The TMC product
I have to agree with Paul Tilstone, Managing Partner of Festive Road, on this point in that we must not oversimplify who the retailer is. 100% the retailer of the product is the airline. A TMC offers no added value in terms of the product and a consumer can purchase these products direct. What the TMC retails is the TMC product – your travel policy controls, your approval process, your duty of care, your cost saving process, your booking platform…etc. It is the sole purpose of the TMC to offer extra value to the process, otherwise we should simply be getting out of the way.
With this in mind, once again you have to wonder how the industry reached a point where some TMCs actively reduce value for the customer by promoting products that that benefit themselves financially rather than being in the customers best interests.
So that brings us to transaction fees and the aforementioned naysayers are purporting some shocking headlines. But what are they not saying? Is it a clever way to disguise their own inability to handle change?
In short, NDC does not mean transaction fees, but there is a cost of distribution no matter what technology solution is being used…
Up until this point the airline pays the GDS for distributing their content, so the GDS then offers their service for free to the TMC. NDC shifts the distribution to the airline (ignoring the GDSs who have decided to be NDC technology providers) so of course the airline has no need to pay for distribution. The GDS shifts to being an aggregator and they now need to start offering services beyond distribution to compete with the new entrants into the space and, of course, they still need to make money. Hence transaction fees.
The TMC has two choices:
1) Outsource the aggregation to the GDS or new entrant and pay a fee
2) Build direct integrations and avoid the fee, but incur the cost of development and maintenance.
There is always a cost and has always been a cost, the problem is basing your entire business model around somebody else picking up that cost for you. Transaction fees should not be vilified simply because they don’t fit with a 30 year old business model. At Click our approach is finding that balance between direct connects that are worth investing in for our customer base and how/when to handle the inevitable transaction fees for the services offered by our aggregation partners.
So is this a tipping point?
The tipping point for NDC technically was probably 2 years ago, but we do finally seem to be at the commercial tipping point, where we can hopefully start having some more sensible discussions around wider adoption… rather than crying over the spilt milk.
If you’ve not heard the podcast that this blog is referring to, you can find it on BTNE’s website here – Are we at a tipping point for NDC? | By Business Travel News Europe | 8 March 2021
Robin Smith | Chief Product Engineer