How to avoid booking surcharge imposed by airlines on GDS and get access to exclusive NDC/direct connect content?
A travel agent that depends entirely on the GDS incentives as their bottom-line revenue is in for a significant roadblock this year. As the pandemic ravaged economies and crippled financial sectors and brought life as we know it to a standstill, the aviation industry was affected immensely. To keep planes flying and remain in business while being compassionate about the destructive impact of the pandemic, reducing cost is on top of the agenda for many airlines.
The future of airline distribution is, to a great extent, the commercial future of the airline industry itself. Airlines urgently need new revenue streams to recover. In a post Corona virus-world, for airlines, the key to success will be to become true retailers – which means recognizing what their customers want, when they want it, how they want to shop, how they want to pay, and how they want to be supported after their purchases.
Most importantly, airlines want to be dramatically more effective in selling so that travelers find the value they seek and airlines can be more successful businesses. Airline distribution is evolving from its passive, rigid, and technology-centric state to a more flexible, dynamic, and customer-centric environment. Today they want to roll out new ancillaries and other products that can add revenues faster. They want to introduce dynamic pricing, personalization and upsell options, etc. Speed to market and distribution cost savings is going to be a priority.
Airlines want to push offers directly to the travel agencies through an Application Programming Interface (API) – in simpler terms; just through a connection between two systems. One side of the system is the Airline, and the other side the travel agent. For the Travel Agency, most airlines provide a user iinterface (NDC Agency Portal) for them to log in and access the airline content. It’s the most cost-effective way for the Airline to communicate and make amendments to their product and service instantly without any intermediary.
IATA’s New Distribution Capability (NDC) has shown immense potential to be able to increase revenue through complete, transparent retailing using personalization, dynamic offer creation, better content, and most importantly availability across all channels. 2021 will be the year of broad deployment of NDC-enabled airline content around the world. This year, we will see more and more airlines introducing exclusive NDC-only content. We will also see more airlines introduce ssurcharges for bookings made on traditional global distribution systems (GDSs) and imposing distribution fees for NDC content booked through GDSs.
Airlines have clamored for change with the current model of paying a specific amount to the GDS per segment, and the GDS, in turn, pay travel agents and agencies their GDS incentives accordingly. The pandemic only cemented the industry’s need to step above total reliance on the GDS with the introduction of the NDC channels. The three largest airline groups in Europe have been imposing surcharges on the usual GDS bookings for a while now. This was then quickly followed by Qantas, Singapore Airlines, and now Emirates.
According to the agency communication, British Airways’ NDC transactions through the GDS connection will cost $2.20 per passenger segment journey, meaning travel agents will pay for all British Airways NDC content through GDS instead of getting the GDS segment incentive. This is also likely to be followed by most of the 90+ NDC Certified Airlines, with few examples as follows;
Lufthansa Group is in total support of the new commercial model of NDC, as seen in an agreement made last year with Sabre. However, according to an official, its public NDC model does include extra charges but considerably lower than the current booking fees on GDS.
Last year, when Air France-KLM closed its NDC deal with Amadeus, it also suggested surcharges with NDC bookings. However, the GDS operators say bookings will cost just a few Euros and vary according to certain factors. These factors include the terms of the agreements, number of segments, and point of sales.
What are the options available for the Travel Agents?
Travel agents have a few options to choose from-
1. they continue their dependency with GDSs only, which could mean they end up losing customers as competitor agencies who have switched to an NDC channel offer attractive content, including fare (without any surcharge), ancillary, etc.
2. access airline content via the Airline NDC Agency Portals, which means they will have to search across several airline portals to compare and choose the best deal
3. subscribe to a marketplaces like NDCMarketplace.com, where agents can input their GDS online credentials and NDC airline credentials – and enjoy the best of both worlds on one screen. They also continue to receive the GDS segment fees for non-NDC airlines and save on GDS surcharge or distribution fees imposed by NDC airline bookings
4. Develop their own agency portal using the NDC Application Programming Interface or APIs provided by each Airline.
Aggregators like the NDCmarketplace.com give agents total control and access over their contracted content from GDS, NDC airlines, and LCCs and the opportunity to add sub-agents, markups, users, and more.
As mentioned earlier, although many airline companies started to connect their content on the GDS via NDC pipes, European airlines are clear about not bearing any distribution cost in the agency sphere and have started charging agents a distribution fee for NDC content via GDS. More airlines will follow this route soon. The distribution fee charged by some of these airlines is much higher than the subscription charges per passenger on NDCMarketplace.com.
How will Travel Agents benefit from NDC enabled airlines
The NDC enabled Airlines will offer agents
– Access to full and rich Air content of the Airlines
– Access to the entirety of the Airline’s product portfolio, including ancillaries and promotional fares
– Work with the real-time fare, product and policies information
– Deliver improved comparison capability to customers, based on product and service rather than price only
– Provide personalized service based on customers’ full travel history and preferences, if they chose to be recognized
Why Travel Agents are encouraged to use NDCMarketplace.com?
a. Cost savings
Just as an example; An agent using an aggregator like NDCMarketplace.com to book Emirates Airline tickets will save a minimum of $13 to $24 per ticket depending on the sector length. The calculation is as follows;
1. NDCMarketplace.com Subscription fees per passenger – approximately $1 per passenger
2. GDS Surcharge per ticket – minimum $14 to $25 per ticket
Total savings are $13 (b-a) or $24 (b-a).
b. Total control over content
Travel Agents access NDCMarketplace.com using their own credentials provided by Airlines and Global Distribution Systems. The commercial contract (incentives, special deals etc) is between airlines and travel agents or GDSs and Travel Agents. NDCMarketplace.com consumes the credentials and communicate with the airline through the Application Programming Interface (API) and showcase the results in one screen for the travel agents to have the offers from both worlds – GDS Content and NDC Content in one single screen.
c. No technology development required
Travel Agents using NDCMarketplace.com are not required to do any technology developments. As IATA changes the schemas or each airline IT vendor upgrade their versions, Travel Agent will not get affected by those changes as the entire technology part is done by NDCMarketplace.
To get started, visit NDCMarketplace.com and follow the simple steps for an easy setup. If you experience any challenges during the process, please contact the support team at firstname.lastname@example.org or chat via the chatbot on the website.