With airlines changing the way they market and provide access to content, New Distribution Capability (NDC) promises both benefits and potential challenges for corporate travel programmes, according to new research from ACTE Global (Association of Corporate Travel Executives) developed in collaboration with American Express Global Business Travel (GBT).
The study, The Evolution of Air Distribution, explores travel managers’ experiences and attitudes toward changes in air distribution, including NDC – a technology programme developed to standardise API (application programming interface) distribution. Travel managers expect some benefit from NDC, with 64% saying it could improve the booking experience and 56% believing it could help contract negotiations with airlines. However, the majority of travel managers fear that fragmentation created by NDC could threaten cost control (89%), policy compliance (87%) and duty of care (77%).
Fragmentation is already occurring because of airline ancillary purchasing, with almost half of travel managers (49%) saying travellers buy out-of-policy ancillaries from airline websites “some of the time.” This leakage from corporate online booking tools (OBTs) is a direct consequence of airlines unbundling fares into paid-for components such as baggage fees and seat selection, hindering the traveller booking experience and preventing travel managers from gaining full visibility on air spend.
ACTE Global executive director Greeley Koch said: “Airlines have had to contend with proliferating traveller demands for decades, ranging from a preference for low fares to the desire for constant connectivity while in the air. NDC is a response to these market forces and could make for better traveller experiences through personalisation. But it has come at cost to travel managers, who are now scrambling to figure out how to maintain control of their programmes if NDC becomes the norm.”
Knowledge gap may be driving concerns and resistance to change
Although NDC has been widely discussed since airline industry body IATA introduced the concept, uncertainty about what exactly it is remains pervasive. Almost a quarter (23%) of travel managers say they are “not at all” confident in their understanding of NDC and what it means for their programmes, and a further 58% say they are only “somewhat” confident in their understanding. As a result, few travel managers are ready to incorporate NDC-enabled tools into their travel programmes, with 63% saying they are not exploring any new platforms beyond their OBT at this time.
Travel managers worry that NDC will undermine their programmes
Travel managers remain wary of NDC and fear that it may impinge upon key pillars of travel programmes. Top concerns about incorporating NDC-enabled content into existing policies include: reduced functionality of the OBT (90% of travel managers expressing concerns); unbundling leading to higher costs (89%); lack of availability of data (88%); and reduced fare transparency (88%). Travel managers are also concerned that NDC will negatively impact policy compliance (87%).
Travel managers cannot afford to wait to address new models
New air distribution models are ushering in fundamental changes to the way airlines sell services – but impact on the corporate travel sector remains unclear.
“When it comes to NDC, the biggest unknown is whether travel managers will be able to maintain visibility into costs and traveller behaviour. But they cannot afford to wait to address the issue,” said Koch. “Travel managers must evaluate their policies and technology now so that they’re prepared for the potential disruption. If caught on the back foot, they will be left grappling with a more fragmented, less safe and, ultimately, less effective programme.”
This and many other topics will be discussed at the upcoming CAPA-ACTE Global Summit & Corporate Lodging Forum in Sydney, Australia on 3-4 December 2018. To find out more and register your attendance, visit Sydney18.capaevents.com