Not since APD has a three letter acronym caused such a stir
in the business travel industry. And those three letters? N, D and C, of course.
New Distribution Capability is a new business model proposed
by IATA member airlines that – if approved by the US Department of Transport –
will allow greater visibility of the airlines’ products at point of sale. Seats
will no longer be distinguishable purely by price and carrier alone. Consumers
will be able to compare class, seat type, service levels and ancillary costs,
as well, in the same way that hotels are sourced and booked.
The introduction of greater visibility means that airlines
will no longer compete on price and brand awareness, but rather on a more
accurate like-for-like product basis. The travel industry understands the need
for this change and agrees it is a good thing for the airline industry, the
manager and the consumer.
However, the NDC proposition is also stirring up a cloud of
controversy in the travel industry. Why? For two reasons. Firstly, IATA has
excluded travel managers, travel agencies and trade organisations from strategy
meetings. And secondly, because the new technology gives airlines the
capability to ask buyers to input demographic passenger profiles pre-search.
All airlines already hold extensive amounts of passenger
data, which is used in targeted marketing campaigns, competitive intelligence
and to establish the viability of new routes, which is essential for opening up
emerging markets.
But none asks for that information pre-search. Doing this
means the airlines could – note, not would – discriminate based on the
pre-search data, raise prices artificially and charge higher prices to those
travellers they feel are able to pay more: corporates. And in a time when
managing costs is still very high on the travel managers’ agenda, the
possibility of paying more – and artificially so – is understandably grating.
By David Chapple
David Chapple is event director of the Business Travel Show,
which takes place each February in London. Find out more at www.businesstravelshow.com.
Comment on this blog below, or contact David on Twitter @btshowlondon
