As Airline GDS Surcharge Looms, IATA Promotes NDC for Travel Agents

by Richard D'Ambrosio
As Airline GDS Surcharge Looms, IATA Promotes NDC for Travel Agents

Photo: British Airways.

Travel agents and other travel sellers aren’t happy that starting Nov. 1, British Airways and Iberia will begin charging fees for bookings through traditional global distribution systems (GDS) as the carriers encourage third parties to book reservations through New Distribution Capability (NDC) connections.

Similarly, Lufthansa AG has been charging a 16 Euro fee for GDS bookings since 2015 for the same purpose. The move to NDC adds to the complexity and confusion surrounding how agents book airline tickets, agents said at the most recent American Society of Travel Agents Global Convention, and they are trying to understand what the future holds as distribution technology evolves.

Yanik Hoyles, NDC director at the International Air Transport Association (IATA), says NDC will usher in an era where travel agents will find airline bookings simplified and offer agents an enhanced ability to customize airlines services for their clients while earning more money.

IATA sees the move as beneficial to agents and airlines alike because NDC allows both parties greater ease in loading and marketing inventory to the consumer versus traditional GDS channels.

“When you have a new product, or fares, you can get that out on your website pretty fast. To get that same content out through the GDS channel is clunky,” Hoyles said. Additionally, GDS are not agile in providing customer personalization, like allowing travelers to shop the same routes using several frequent flyer numbers simultaneously.

One of the most common complaints travel agents have is that there are certain airline reservations functions they cannot perform when booking an airline ticket through the GDS, forcing them to jump to a carrier’s website or third-party service provider to finalize the reservation.

“In the NDC environment, a third party can build a tool that bolts on to the reservations system and reduces all this jumping around,” Hoyle said.

The NDC evolution will pick up speed in 2018 when the industry launches its next two versions, Hoyle said, while GDS like Sabre reach what IATA calls Level 3 certification, encompassing more of the full reservations process than previously provided.

Short-term pain for long-term gain?
Getting there, Hoyles acknowledged, includes an interim period of unsettling and potentially confusing change for agents, including commercial agreements like the one BA and Iberia launch next month. (American Express Global Business Travel recently negotiated an agreement with the airlines to avoid the fee.)

But this stage of painful evolution is necessary for agents given that the airlines have already committed to distributing their fares and services through the very internet technology NDC will support. Further, Hoyles said, NDC will open up innovation in the travel agent space.

“No new entrant is going to come in and build reservations and marketing solutions for travel agents in the current [GDS] environment. But in the world of internet technology, where the barriers to entry are a lot, lot lower, I am convinced there will be startup opportunities to build solutions to offer value to smaller agents,” Hoyle said.

The agents that will thrive in the NDC environment will be those persistent enough to adapt to the change and interested in adopting innovations, Hoyles said.

He pointed out how even though the airlines have tried to move their distribution to 90 percent online, “in reality, it’s closer to 50-50 or 60-40 today, with agents in one form or another maintaining a significant share of the market,” Hoyle said. “That proves that there is value for intermediaries like agents to add. Travel agents are here to stay.”

Take charge of your future
In between now and when GDS and internet technologies converge, “we understand the dialogue. Some agents are saying ‘What do I do? How do I deal with this?’” Hoyles said.

He encouraged agents to be active in the evolution. “I spend a lot of time talking to agents and there are several forums they can join if they want,” including IATA’s NDC advisory group which meets three times a year. He also recommended agents talk to their information technology providers and their GDS, if they have one, to express their needs and concerns, and to learn more about NDC solutions.

“The only condition or criteria for success is your attitude towards change. For those ready to embrace change, no doubt this world will be more agile. If you retrench and reject the change, it will be more difficult” to thrive, Hoyles said.

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