Increased choice and personalised offers from new NDC solutions are proving ever more tempting for business travellers to book via off-platform, direct channels
'Year of NDC' poses risk to corporate travel industry in 2023, according to Traxo
Traxo Inc. has warned the corporate travel industry of the risks posed by the expected higher levels of out-of-system, non-compliant flight bookings as new distribution capability (NDC) finally becomes mainstream in 2023.
Increased choice and personalised offers from new NDC solutions are proving ever more tempting for business travellers to book via off-platform, direct channels, it says.
The looming American Airlines April NDC deadline – along with other airlines adopting similar practices – will force more off-system bookings in 2023, according to Traxo.
Such ‘leakage’ increases costs, reduces visibility, breaks travel policies, and presents care-of-duty risks – a problem often “unnoticed as companies don’t have the data tools to track out-of-system bookings”.
Andres Fabris, chief executive and founder of Traxo, says, “2023 will certainly be remembered as the year of NDC, as it finally becomes mainstream.
“The impending AA April deadline poses some real risks for the corporate travel sector as a material percentage of AA’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.”
Fabris adds that the change is happening firstly because the increased breadth of NDC travel bundles offered by airlines create a larger temptation for business travellers to go off-channel, and the options are seemingly more personalised and so more appealing.
“And secondly, because in 2023 we’re going to see more airlines offering more content solely via their NDC channels, as American Airlines will do from April onwards. 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 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 care-of-duty concerns for employers. The problem of leakage can go unnoticed, and so companies can be unaware of the true extent of the problem.
“Other major US carriers, such as Delta and United, are carefully watching with keen interest to see how the industry reacts to AA’s deadline.
“If corporations and agencies are not successful in booking away from AA, and AA’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,” says Fabris.
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.
New approaches need to reflect the modern reality that corporate travellers are likely to book that trip one way or another, says Traxo, and the question is whether they do it via official channels or not.