Moving the Needle on NDC

*This article was first featured in Phocuswire*

Tom Kershaw, Travelport’s Chief Technology Officer, talks about the current state of NDC, real progress in 2023, and moving the needle on adoption.

What’s your perspective on NDC?

We’re excited to see more than a decade of ruminations and machinations finally come to some fruition. We’re excited to see NDC launch at scale. The American Airlines announcement has really got the industry energized towards getting a system in place, and that’s led to a lot of really healthy discussions around the role of distribution and how you allow airlines to customize.

We got American launched on Travelport+ in Q4 2022, and it has been an exciting couple of months. The scramble can be a little bit difficult for some, but it’s an exciting time to see all that stuff coming to fruition and us collectively debating some of the fundamental challenges that NDC faces.

One is that it has to work just like all of the rest of the content, but the airlines are purposely doing it so they can differentiate their content. So how you allow airlines to customize what’s on the shelves and differentiate and compete with each other while also applying a common adjustable agent experience is quite challenging. This has finally got the industry talking to each other for the first time, which is really helpful.

I think a lot of the the work in IATA was fairly prescriptive and technical, and now that we’re deploying in the real world some of these fundamental challenges are really coming to the surface. One of the most important of those challenges is you can customize, change and personalize the offer, but it still has to fit in a screen eight inches by eight inches wide. You’ve got a small amount of real estate to present all the travel options to the agent and the traveler so that reality sometimes butts up against the desire of the airlines to customize so it has been an interesting journey.

What progress has been made in the past year on NDC?

We’ve started to see several European carriers launch, some at scale. We’re still talking, as an industry, about a vast minority of itineraries on NDC, and I think it will be way sub-50% for many years to come. We’re starting to see some unique offerings come to the channel, and that’s starting to see NDC rolling as a viable alternative, but there’s still a lot to work out.

I think initially the industry thought NDC was going to Balkanize travel and was going to mean maintaining multiple connections to multiple airlines. What we’ve realized is that it’s actually more conducive to an aggregator model or distribution model than traditional [distribution]. Because of the variations, because it’s got different workflows, different seat selection and different fare classes, you really do need a distribution mechanism to normalize all that and make it consumable by the user.

You mentioned the travel industry talking to each other more. Does that go for the agency community as well?

The agency community – I think it was sitting on the sidelines watching NDC evolve, and it was initially very much a supplier-driven technology around moving the system record, allowing customization and changes that agents were not actively engaging in a dialogue about how to make all this work. They certainly are now.

So having agents active in the process is going to help the travel industry because for the first time we’re going to have a marketplace. Instead of buyers and sellers kind of trying to game each other and not cooperating, the collaboration we’re starting to see is going to lead to a fair and neutral marketplace where everyone benefits and you have some level of standardization and commonality around how these things are done.

Just the prospects of a standards-based open community marketplace concept is exciting because it’s something the travel industry has been missing for a long time.

You mentioned NDC being sub-50% of itineraries for some time. What will it take to move the needle?

Once we have something that is consumable by the agent and consumable by the end traveler on a screen, you will really start to see this take off because there are some real advantages to being able to personalize and customize offers.

Until NDC, it was really a “one size fits all” offering to the agents, and now we can start to think about how to customize it or dynamically alter the offer based on both supply and demand conditions. Across much of travel, we have to deliver incentives and benefits to our technology to entice people to use it, and up until now, and with NDC, that’s a bunch of cost and a bunch of changes that have to be made without really providing any benefit to the traveler. Now we’re starting to see some really interesting concepts around pricing and personalization come into the NDC channel and a more varied offering.

Instead of three choices to fly to New York, there are a lot of nuances. You can decouple stuff, you can add ancillaries, you can add special seat selection, you can take advantage of special fare offers that come and go depending on marketing conditions. So now that you’re starting to see the effects on the traveler, I think it will take off.

But there’s still a long way to go, because there are still some pretty serious technical challenges to NDC. Because every NDC carrier is almost like it’s own marketplace when you have 20, 30, 40 NDC connections, all of which are different, that’s where the industry really is going to face some challenges, and that’s where we’re focused right now. How can you make a multi-supplier experience consumable and scalable? It used to be we aggregated across multiple airlines; now each one has it’s own nuances and differences.

The other challenge has been around the commercial innovation. Do you see movement there?

I don’t think that’s really been a huge challenge. There was this common narrative that NDC was about changing commercials. I think we’ve seen the ability to change commercials independent of NDC. You don’t have to move your tech stack to get to a new commercial model. I think the reason NDC exists is to allow customization. It’s to give airlines control over the product that appears on the shelf, and I think that’s understandable.

In parallel it has helped to prompt conversations around new business models and those are welcome. The industry does need to think creatively about how to price, how to run a fair and neutral marketplace based on the value you’re providing, so we welcome some of these conversations.

In any industry, we talk about technology being the cool thing that transforms everything, but commercial innovation is equally important and coming up with pricing models or bundles that are subscription-based or transaction-based is going to be important. I think that providing services that are not fully integrated, the traditional [global distribution systems] is a fully integrated model, means you can think about the pieces of what we do – managing data, ticketing and exchanges – that really can go across multiple supply sources.

That’s what NDC has done to us; we now have to provide all these services to independent supply sources. We haven’t seen watershed change in the business model, but it’s at least prompting that discussion, and it’s going to lead to some creative outcomes.

Do you foresee a future of microservices?

I think microservices or services that cut across multiple supply sources, that’s what NDC is. If I look at what Travelport has done, we used to have our services that apply to this big pool of content, now they are written to apply to each individual airline implementation, and that means we have built stuff that works across multiple supply sources. I think you will start to see more of a horizontal approach to delivering travel services.

Another thing it will allow us to do is around the search process. In our industry it’s free and that’s where the growth is. The search volumes go up daily and are already way ahead of pre-pandemic levels because there are more options in the funnel as well as the decoupling of ancillaries, but no one monetizes that. We monetize ticketing, so that’s another example where if you’re really good at search you can eventually think about turning it into a stand-alone business. That would be completely anathema to everything that currently exists.

The reason I love NDC is because it’s disruptive, and it gives us a chance to rethink some of the things we’ve been doing over and over again for decades and a hearty dose of technical change is very welcome.

IATA has a goal of getting rid of electronic miscellaneous documents, passenger name records and e-tickets by 2030. That would mean NDC and related developments would have taken 20 years to implement, but even then is it realistic?

“Getting rid of” is a phrase I struggle with. I think we’ll get the majority of the way there, that last 2% in travel is always the hardest. The hardest thing for us in the industry is the PNR [passenger name record]. It’s the anchor of our business; all our processes and back office systems are built around it.

ONE Order [the industry initiative intended to simplify airline reservation systems] has been kind of the hardest nut for the industry to crack because there are so many dependencies on it, so many variations in PNR structure. It often lives on legacy systems, which means it’s harder to modify and move, and you’ve got this all-over-the-map approach to ONE Order where on one side we talk about where we are today then someone says, “Let’s do it all in blockchain.” We need some disruption, but it also needs to be realistic, and the idea that you’d rip the guts out of the industry and replace it with a blockchain-based system is probably a little ambitious.

Another interesting thing with NDC that people don’t talk about is that it should be the end of the debit memo. There should be no more dispute over charges because everything is anchored in the system, but getting to a debit memo-free world where everyone is happy and hugging in the street is going to take a little bit of effort, so we’re going to have to see how these things play out.

SAS delayed then abandoned its wholesale model, Air France-KLM delayed its surcharge implementation for a second time. Why is it the industry can’t quite hit these deadlines?

Not to apologize for travel too much, but every industry in the world sets deadlines it misses. I can think of the end of the third-party cookie, which was supposed to be gone last year. With these big, multi-layer projects that involve hundreds of different vendors or, in our case, airlines and agencies and the front-end online booking tools, there are lots of pieces that come together.

One of the big challenges NDC faces is that you end up having to do normalization and translation in the booking tool. It’s really hard to do technically, but in general when you have this many pieces trying to come together, delays are inevitable, and one of the challenges is that we really don’t have robust standards in the industry.

The IATA standard for NDC, as you know, has many different versions, the airline customizes it. We have a new schema coming out this year, which is going to be a breaking change, which means it has to be completely recoded. So that lack of standards has led to a lot of challenges and delays because you can’t have 30 standards, you can have one or two. And you can’t take a standard and change it around because of convenience to you.

That lack of standardization has hampered what the industry is trying to do, and also the fact that our industry is by its very nature global also creates challenges as there are all these regional variations that have to be taken into account. We’re getting better, but I do think the technology in the industry is slower than many other industries.

Do you think there’s more appetite to gather around a sort of master standard?

No. Do I feel like that the revolution has occurred and everyone has come together? No. I still feel frustrated by the lack of standardization, the lack of community participation. I’m also frustrated by the lack of open source and standards in the industry. It’s getting better, but NDC is an example where if we get some of these things standardized much better, we could probably move at a pace, which is five times where we are today because we wouldn’t have to make all these customizations in the point of sale and front-end systems. We could have a common approach to things.

Is it because the travel industry is not good at getting together and talking about things?

I think agents and airlines have a little bit of an adversarial relationship that’s totally unnecessary, and we’re now starting to engage in dialogues that are better. I also think organizations like IATA are just too big and global. You see smaller grassroots organizations coming together to solve problems and to put solutions into real production even before they’re really ready, to really experiment and innovate and iterate on problems.

As you see smaller groups in our industry come together and do that, to complement what IATA is doing, you’ll start to see some real change. You’re starting to see that in the environment and sustainability space, for example, where groups are coming together and they are really innovating and creating some community property around some of the stuff. If we could take that and apply it to big, meaty commercial problems, you’d start to see some exciting stuff happen.

So is it the lack of standards or lack of collaboration?

Certainly, it’s the lack of a standards. By nature NDC is kind of an airline wanting to put its own differentiating fingerprint on its content, and that sometimes is at odds with an agent needing to provide multiple options to the consumer. So that lack of dialogue and standardization has without a doubt hampered the ability of NDC to grow and changes to the standard also hold us back. The definition of new in our industry is a little bit different in others.

What real progress regarding NDC do you see in 2023?

I think we’ll start to see an additional 30 or so carriers who launch NDC at various stages of readiness. We are about to cross that threshold where you can do one or two, but when you have 30 you absolutely have to have a standard. The role of distribution is growing, not shrinking, and we’re going to have to make hard decisions about how we normalize 30 different carriers, plus all the existing content we have through our ATPCO [Airline Tariff Publishing Co.] connections.

So we’re going to see duplicative content inventory, and this is what the internet has been doing well for years – this flood of very similar content that we have to de-duplicate, score and personalize and deliver. When you get to 10-plus carriers in the NDC channel, you’re going to see some really interesting things happen.

While commercially it can be a challenging problem, it’s a really fun technical problem to try and take these disparate things and put them on a shelf in a way that’s consumable by the average person — who, by the way, doesn’t care about any of this complexity and doesn’t know what fare class means and doesn’t want to to know. That’s the fun challenge that’s coming this year, and I think we’ll cross the thresholds this year where you start to get sufficient scale in NDC that it really becomes a first-class citizen in travel.

Does the fact that full-service carriers have gone ahead and developed some of these solutions and are fully engrossed in NDC make it easier for those coming behind?

That’s the theory. It’s like the new version we’re putting out this year; [we think] this is the one, this is the standard, it won’t vary anymore. It’s one of those things I have to see to believe. There are best practices out there now.

When we do an implementation, we can copy some of the things we have done from the previous six carries so the seventh becomes slightly easier, but I also think that as it starts to scale the temptation from airlines to differentiate and deviate from standard practice is going to put more pressure on companies like Travelport to do those translations and normalizations.