Increased choice and personalised offers from New Distribution Capability (NDC) solutions are proving ever more tempting for business travellers to book via off-platform, direct channels. The corporate travel industry faces risks posed by expected higher levels of out-of-system, non-compliant flight bookings as NDC becomes mainstream in 2023.
2023 will certainly be remembered as the year of NDC, as it finally became mainstream. American Airlines’ April deadline posed some real risks for the corporate travel sector, because a material percentage of the carrier’s NDC rates are anticipated to only be bookable directly via the airline or other NDC-ready travel intermediaries, both of which are typically outside of approved corporate channels.
This change is happening firstly because the increased breadth of NDC travel bundles offered by airlines creates a larger temptation for business travellers to go off-channel, and the options are seemingly both more personalised and therefore more appealing. And secondly because in 2023 we’re going to see more airlines offering more content solely via their NDC channels, as with American Airlines. Such actions mean corporate travellers will be forced to go out of system to book those fares.
Such out-of-system bookings can pose significant challenges to Travel Management Companies (TMCs) and corporate travel managers as this ‘leakage’ not only often results in higher travel costs, but also reduces visibility of spend and control over policies. It also raises worrying care-of-duty concerns for the employer. Too often the problem of leakage goes unnoticed as most companies simply don’t have the data tools necessary to track out-of-system bookings. As such they are unaware of the true extent of the problem and may not pick-up on the magnitude of this new challenge.
Other major US carriers, such as Delta and United, are carefully watching with keen interest to see how the industry reacts to American Airlines’ progress. If corporations and agencies are not successful in booking away from American Airlines, and the airline’s direct market share remains neutral of shifts positive, it is highly likely other carriers will soon follow with NDC mandates and deadlines of their own.
Given the time and effort involved for corporations to select and roll out a new TMC, it is unlikely that companies will be able to quickly shift gears and start using a new leisure agency that is NDC-ready. Not only do these decisions take time to deploy, but most leisure agencies are ill-equipped to pass rigorous corporate Info Security reviews, or handle the various HR, procurement and back-office processes mandated by larger corporations.
To understand the potential threat posed and respond to this challenge Traxo recommends that TMCs and corporate travel managers immediately take the following actions:
Find a way of collecting data on ALL travel purchases being made, including both via official in-channel and out-of-channel, non-compliant bookings.
Conduct an analysis of the carrier mix of all current air bookings to see how many of these are with airlines committed to ramping their own NDC solutions. The bigger the volume, the larger the likely problem.
Use this holistic on- and off-platform data to optimise negotiations with airline suppliers. In particular when the pursuit of better rates via an airline dot com site might be the cause of out-of-system bookings.
NDC has promised travellers more personalised and differentiated products and services, which will tempt travellers to book out of system if they view traditional channels as too inflexible. Any new approach needs to reflect the modern reality that corporate travellers are likely to book that trip one way or another. The question is whether they do it via official channels or not.
About Traxo
Dallas-based Traxo, Inc. is a provider of real-time corporate travel data capture, which allows companies to gain full visibility into all employee travel, regardless of source, eliminate blind spots with fully automated pre-trip auditing, and ensure the health and safety of all their employees through enhanced duty of care.
Traxo’s clients and partners include Amex GBT, EY, McKinsey & Co, ARC, Delta Air Lines, United Airlines, Lufthansa, easyJet, Tripadvisor, Coupa, Emburse, International SOS, WorldAware, ZS Associates and more.
