It’s no secret that for many airlines’ profits come from their ancillary product sales.
According to the research paper conducted by IATA and WTAAA, NDC: Travel Agencies’ Enabler to Success, on average 76% of travel agencies book airline ancillary products.
TMCs are the most likely to book airline ancillaries for their travellers, with nearly nine in 10 doing so. TMCs’ primary audience, corporate travellers, may have travel policies that allow them to buy these products.
Airlines’ websites offer the most complete selection of ancillary products – no doubt the reason why agencies use them most to book ancillaries.
To do this, though, may require an agent to toggle between a GDS, where the agent books the flight, and an airline website, to book the ancillaries. The process is inefficient, reducing agent productivity, driving up agency costs, and frustrating travel agency executives – and, by extension, the travellers the agency serves.
Agency executives don’t like this fragmentation. Agencies view having to use multiple channels to book air and ancillary products as counterproductive, and aren’t pleased with the additional effort required to integrate non-GDS transactions into their mid- and back-office systems.
This is why the researchers believe in the critical nature of NDC to the global airline industry. With NDC, airlines can, at last, help evolve the traveller’s purchase decision in indirect channels from being based strictly on price, rendering airlines as substitutable commodities, to overall value based on factors such as airports, schedule, amenities, journey cost – not to mention the value of the brand. Price will always be a decision-making criteria, but it need no longer be the lead or sole criteria.
What to learn more about NDC? Visit IATA’s NDC page for details.
The share of airline tickets being sold by agents has been declining as airlines increasingly choose to distribute their products through direct digital channels.
The way the world searches, plans, and buys air travel is continuously changing. Gone forever, on most airlines, is the time when a traveller or travel manager need focus only on routes, schedules, and airfare to determine the “best” flight for a journey.
Many airlines now offer “Fare Families” or “Branded Fares” to distinguish their fare products from one another, and from those of their competitors, and to help travellers find the value they seek.
Airlines’ ancillary product-focused business models extend choice and control to the traveller by letting them select, or decline, various airlines features and amenities, resulting in a more complex planning and booking process.
To help airlines, travellers, and the world’s travel agency community improve the process of searching, booking, and extracting value from scheduled airline flights,
IATA has been spearheading the development of the New Distribution Capability (NDC), a series of XML-based schemas that airlines can use to improve flight search, booking, and transaction processes via third-party channels, including GDSs and travel agencies.
NDC is designed to help airlines and agencies shift travellers’ flight purchase decision-making from commodity-like comparisons of schedule and price to a more robust, experience- and value-focused process.
How will it work?
NDC’s schemas will allow the airlines that opt to use it create personalised, relevant offers to travel agencies and their clients via the distribution channels agencies use, such as GDSs.
The objective of NDC is to help travel agencies across all segments – including retail leisure agencies, TMCs, OTAs, and others – become more competitive with airline direct channels.
NDC should enable agencies and their travellers to search and book flights based on what the traveler wants, from a fare that offers just a “seat and seatbelt” to a more comprehensive experience that includes multiple amenities and services.
Business travellers using a TMC should see their negotiated fares and any benefits negotiated between their employers and their preferred carriers. Elite-tier airline loyalty members should see the perks provided as a result of their loyalty status.
Find out more…
The recent NDC study conducted by the WTAAA indicated that travel agents in all markets had a lack of understanding about it, but highlighted that NDC’s promise would only be fulfilled if all members of the NDC provider community committed themselves to understanding, supporting and fulfilling agencies’ unique and specific needs to successfully and efficiently serve their clients once NDC is brought to market.
For more information about NDC, visit IATA’s dedicated NDC Programme Page.
The debate around IATA’s New Distribution Capability (NDC) has been given a new dimension with today’s release of the NDC: Travel Agencies’ Enabler to Success report; the result of a global study conducted in conjunction with a number of member associations of the World Travel Agents Association Alliance (WTAAA), including ASATA.
Funded by IATA and undertaken by T2Impact and Atmosphere Research Group, the study reveals the views of global travel agents with regards to changing air travel search behaviour, the role that NDC will play within this and its impact on the travel trade.
The reports key findings are:
Travel agencies use a diverse mix of channels to book clients’ flights
As airlines have evolved what they sell, and how they sell it, agents have adjusted. Although GDSs remain the predominant channel agencies use to book airline reservations, on average, a travel agency in the survey books 26% of its air reservations outside the GDS.
Airline product complexity influences agency booking behaviour
Agents have had to respond to airlines’ evolving product strategies. To be competitive and serve a diverse mix of travellers, airlines have introduced a variety of products to the marketplace. Two categories, “Branded Fares” and airline ancillary products have influenced airline distribution strategies. For example, airlines may offer all of their optional ancillary products through their websites, but the GDSs may carry only a portion of these. To serve their clients, travel agencies use airline websites and other channels to book these products. A majority of agents in the study feel that airline websites have an advantage over GDSs in terms of content, and view the booking channel fragmentation as counterproductive.
NDC-enabled processes must be usable in multiple GDS environments
Agencies are more likely to use the GDS native display, also known as “green screen”, to book airline ancillary products than other channels. Fifty-four percent of the travel agencies in the study use the native display to book ancillaries, ahead of agency desktop solutions (44%) and proprietary agency solutions. As NDC-enabled processes are brought to market, NDC providers, which include airlines, GDSs, mid- and back-office software firms, and other travel technology firms, must create ways to present airline products and enable booking via both GDS native displays and through agency desktop applications, which use graphically rich user interfaces.
Travel agents express limited awareness of NDC
Although NDC has been discussed extensively in travel trade press and elsewhere, more than half (53%) of the agencies in the survey said they hadn’t heard of NDC before they took the study. It will be very important for each NDC provider to deliver a singular view of what NDC is, what it means, and what its value is to each of the respective stakeholder communities.
Agencies are optimistic about NDC
In spite of agencies’ limited awareness of NDC, they show considerable interest in the programme. Why? Agencies want better access to airlines’ complete catalog of fares, products and offers – and they believe NDC-enabled processes will help them achieve that. Agencies believe NDC-enabled processes will help provide easier access to all relevant airline fares and products, allow them to search for and book the content through a single GDS screen, and lead to faster transaction times.
Agencies want to be positioned for success using NDC
As a new and somewhat unknown series of processes and solutions, agencies want to be sure that NDC providers will create effective “onboarding” programmes as they begin to use NDC-enabled solutions. In the survey, agencies’ primary concerns about NDC are the costs to support NDC implementation, employee training to use NDC-enabled processes, possible added booking complexity associated with using NDC-enabled processes to search for and book flights, and ongoing product and technology support. Even though much of NDC will operate on the back-end, invisible to agencies or their clients, agencies deserve the support of the NDC provider community to ensure they are equipped withthe tools and training needed to use NDC effectively and fully.