Emirates recently announced that it is applying a charge of between $14 and $25 per ticket to bookings made via the GDS by July 2021. Emirates’ announcement will act as another blow to travel agencies that have yet to adapt to New Distribution Capability (NDC) technology. Most agencies still use the traditional Global Distribution System (GDS) platform – a global central reservation system that enables agents to search and book flights in one place. Emirates is among several major carriers to impose GDS charges such as British Airways, Lufthansa, and Air France-KLM.

NDC – A painful headache for travel agencies or an opportunity to become market leaders?

The concept behind NDC  undoubtedly provides myriad benefits, but the processes and costs associated with its implementation have so far served as a barrier to mass adoption. Airlines are open to working with agencies in using their platforms. Examples of these include Emirates Gateway, British Airways NDC, and Lufthansa NDC partner programme. Agencies can log into these platforms and gain direct access to tailor-made fares, dynamic pricing, and rich ancillary content. However, this is not an efficient way of booking because the travel agent is no longer using a central reservation system. It results in a patchy and lengthy booking process as the agent has to use multiple booking tools to compare quotes, confirm flights, cancel, and amend bookings. This does not help the consumer – according to a GlobalData 2019 global tourism consumer survey, 91% of respondents said they are interested in buying products that save them time and effort.

There is a remedy for this issue as NDC technology provides an API link. Agencies can then build online applications and reservation systems that pull the content and this enables customers to shop online with the same flexibility as the airline’s website. Unfortunately, the implementation costs are significant and require deep knowledge in XML from IT development teams.

NDC is a significant change management process. The uptake from travel agencies has been slow, considering NDC has been around for nine years. In many instances, back-office solutions from travel agencies and travel management companies are developed around GDS technology and processes. As such, only 12 sellers have reached level 4 certification (the highest a seller can achieve) according to IATA. It may be unfavourable to adapt to this change in the short term, as changing to NDC is not cheap, and agencies are reducing budgets due to the Covid-19 pandemic. With agencies unable to offer consumers the best price or ancillary options, customers will inevitably book directly via the airline’s website.

What is NDC?

NDC is a travel industry-supported XML-based programme developed by IATA. It enhances the capability of communications between airlines and other intermediaries. As a result, agencies and airlines can sell more diverse, rich product. NDC will give travel agencies more access to ancillaries and personalised services for their clients such as dynamic pricing and special offers based on previous searches and bookings. As many carriers (in particular full-service carriers in recent years) have started to unbundle fares, consumers will have more options to customise their booking experience via a travel agent.

There’s no doubt that the industry can benefit from NDC – it is a consumer-focused platform that enhances the retail experience. Agencies that can adapt to NDC technology quickly will offer an enhanced service for their clients. The problem lies with the agencies that fall behind this theme, particularly in these unstable times. Travel agencies that cannot keep up with the trend risk losing their customers because they cannot offer them the same shopping experience directly with the airline or another competitor.

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