NDC is not just a standard – it’s a signal to the industry

Think about yourself as a consumer for a moment and how you booked your last holiday or work trip.

You probably put a list of requirements into a search engine, filtered out preferences, either yourself or through a travel agent and waited for the most suitable options to be presented back to you.

To find the trip which best suits your needs, a complex system springs into life behind the scenes – at Travelport, we’re right at the heart of that system.

As the world around us changes and technology innovations make processes simpler, the travel industry is also changing to keep pace with our expectations as consumers. IATA’s New Distribution Capability (NDC) is the current dramatic shift to signal that a transformation is taking place.

The change is inevitable; so, we, as an industry, must work together to ensure the technology solutions that we build and deploy today resolves challenges and provides a better experience, to meet travelers’ needs and expectations for decades to come.

In order to understand what NDC means for businesses and where the industry is heading, it is important to recognize current challenges facing our industry and improvements that are enabled through technology.

Let me begin by unravelling some of the complexity in how travel bookings are managed and share with you how we at Travelport recognize NDC and the concept of offers and orders as a growth opportunity for travel businesses.

The challenges that led to NDC and order management

I’m fortunate to have fond memories of the 1960s; but there aren’t many systems and processes from this era which we still consider ‘world-leading’ today. This is certainly true for the airline industry.

Decades ago, there were a small number of airlines and the majority were government-owned – with governments even determining their prices.

This was a heavily regulated environment allowing carriers to easily cooperate and agree on a set of standards for how fares, rules, passenger information, availability (inventory) information were coded and shared.

The standards set during these early days simplified how legacy systems retrieve data from multiple sources – fares and rules from source A, availability/inventory through source B and schedules via source C – then all this information is compiled to manage a single shop, price, book, ticket transaction.

Consider that initial flight search example at the beginning of this article. When you (or your agent) searches for a flight, the rules for sourcing data date back to the standards that were agreed on in the 1950s and 1960s – but the complexity of pricing air travel has changed significantly since then.

Now that airlines compete on price, they must have control over their own pricing. Growth in the industry, coupled with new retailing and business models, has led us to an increasing number of options considering various routes, fares and extra services travelers’ may like to add on for convenience.

Each airline also has its own method of how it sells products and services; and, many airlines are presenting their data in various formats.

All of these factors combined have prevented the ability to reasonably automate bookings or frequent updates; and, the complexity grows as an upsell takes place, an itinerary changes, a bag is added, and so on.

Since the systems in place must be coded to understand each new and changing piece of information, this leads to greater IT costs, inefficiencies and frustrations for travel providers (agencies, online travel agents, corporate travel management companies, etc.).

The retail model for travel is coming to a crossroads and IATA’s NDC standard introduces a significant step in shifting away from the traditional filed fares and rules approach to a model of intelligent offers and orders.

A new way of thinking: offers and orders

As a technology leader that is heavily involved in the architecture behind the systems that manages, moves and processes the information communicated between travel suppliers and providers – I am suggesting the unthinkable: Let’s leave behind the traditional reservation model and build around the concept of offers and orders.

When travel suppliers share information, which includes only a product description and a price (no rules), those consuming the information (travel retailers) are currently left to figure out how to best serve their customers for detailed options and services like modifications, add-ons, seat preferences and more.

This reactive approach ultimately prevents the ability to sustainably dedicate resources for travel retail providers to deliver personalized, end to end travel experiences that are in demand.

By steering the focus on offers and orders (rather than static filed rules), an intelligent offer will include exactly what you’re getting, the cost, modification rules, and clearly defined terms and conditions.

Standards like NDC solidify that all the product information from airlines is provided upfront, which enables the ability to automate processes like updates and add-ons.

While giving airlines more control over their products or offers – and, offers become orders once they’re paid for – NDC ensures offer information remains consistent no matter where the offer is generated.

As a result, travel retail providers will no longer have to navigate complex terms and conditions to manage airline offers and orders. Most importantly, travelers or their travel agents get a clearly visible travel option, so they can make an informed, comparable decision on whether it is right for their own travel experience.

Systems of the future

While the growth in travel can mean improved experiences and opportunities, all parties must operate more intelligently or risk higher costs, slower response times, inaccuracies - all of which deteriorate that simplified end traveler experience we’re collectively trying to provide.

Over time, offers will become more sophisticated as travel suppliers add more services and conveniences for travelers to improve their experience, think lounge access, bulkhead seats with extra legroom or priority boarding.

Offer and order management systems can effectively automate how offers are handled and enable providers to easily manage orders more efficiently.

The demand for intelligent offer and order management systems will grow as TMCs and travel providers lack the flexibility and scalability required to keep up with constant changes and dynamic offers from suppliers.

This will become especially important once hospitality and ground transportation industries implement their own standards for offers and orders.

GDSs are poised to lead the way in managing intelligent offers and orders, as the infrastructure is already in place to take on the challenges with constant updates, scale and speed of delivery so that providers can continue focusing on the end traveler experience.

At Travelport, we’re working on the next generation systems to give travelers simplicity and control over what they’re booking.

In an intelligent offer, products, fares and rules can change over time without the need for travel retail providers to recode their systems.

This gives airlines flexibility in their pricing, allowing them to compete for business on their own terms, whilst also empowering a traveler with straightforward, easy to manage offer information.

Our systems will be able to handle this flexibility at scale, as the $9 billion global travel industry continues to grow.