Here at TD we have a theory. We think that ‘NDC’ and ‘AI’ are being banded around travel conference halls far too readily, given that startlingly few people in the industry actually understand the terms. Indeed, the majority of people we spoke to at ITB Asia in Singapore didn’t even know what the term NDC stands for, let alone its technological implications and impact on the industry. (Video proof will follow soon if you don’t believe me.)
Enter: Todd Arthur, VP of sales and market development for Sabre Travel Network Asia Pacific. Arthur’s entire career has been in the travel industry and he’s now in his third stint in Asia – having been previously posted in Guangzhou and Hong Kong he is now based in Singapore. As such, he seemed the perfect person to explain NDC once and for all, as well as provide an update on Sabre’s own NDC programme, Beyond NDC, as well as the latest in APAC aviation. I caught up with him at ITB Asia to learn more.
“NDC is a standard for the next generation of airline retailing,” starts Arthur, “It’s the convergence of consumer behaviour and expectation with the industry being able to retail and distribute content in the way they would like – for consumers, OTAs and for corporate travellers.”
“Around 65% of content consumed is based on recommendations”
I asked Arthur for a real-world example and he replied simply, Netflix. “The more you use Netflix the more it understands you and it makes recommendations to you – around 65% of content consumed is based on recommendations, nowadays,” he explains. Similarly, airlines want to recognise you as a returning customer and to build a profile around you; they ask what you like and how can they serve you.”
The NDC XML language – which itself is nothing new – is being standardised across the industry so the 450 IATA airlines and the GDS players can speak one consistent language. They will be able to recommend specific things, bundled into a fare family, that you might be interested in such as lounge access or priority boarding, extra luggage, or an aisle seat.
A month ago Sabre announced the second wave of new partners for its own programme. “We thought it was important to not build something in isolation but to partner with airlines and travel management companies – build together test together and implement together,” continued Arthur. The Sabre Beyond NDC programme now has 10 partners in the Asia-Pacific region such as Singapore Airlines, plus Finnair in Europe, United Airlines in America, as well as Amex GBT and Flight Centre.
Arthur tells me: “You start to realise how it will really impact how an airline distributes its content; for example we did a survey of 30 carriers in the Asia-Pacific region and even though sales have grown 88% year on year, still only 20% of airlines of the 30 we spoke to said they were happy with distribution of their ancillary services.”
The possibilities are endless, thinks Arthur. “Say if you lived in Singapore and wanted to go to Tokyo for a week trip,” he muses, “NDC could one day go on to say, ‘Would you like to rent a winter coat for three days?!’”
Although perhaps one day anything might be available through NDC, Arthur believes the first things to become available will be custom paid luggage allowances, lounge access, Wi-Fi packages, seat selection and fast-track immigration. “The system will know that you have never checked a bag in the last year of travel, so they wouldn’t offer you a bundle with a check baggage allowance,” he explains.
In the future, there may even be some sharing of our preferences between airline alliances (data protection laws allowing), but for the foreseeable future, it will probably stay within one airline.
A travel agency keeps your profile and frequent flyer number on record and so when you request an itinerary, different airlines will be able to return NDC content based on what they know about you.
“Nowadays you would never look through 8000 products on Amazon”
“Or even maybe they don’t know anything about you personally, but they know that the majority of travellers taking that route like certain services. Nowadays you would never look through 8,000 products on Amazon,” smiles Arthur, “Instead it’s very targeted. You are told ‘You bought this, so you may like this’, or you are recommended products bought by people with similar buying habits to you.
“NDC will create a similar experience with personalised recommendations, instead of what we had in the past: one seat for one price point for travel from A to B.”
To conclude, we lake a look at the current status of aviation in the region. As we all know, business is booming. Arthur notes tow-cost carriers (LCCs) like AirAsia have been one of the driving factors behind the hypergrowth we are seeing – one of the latest surveys says that 26% of seats available in APAC come from LCCs – and countries like Indonesia and Vietnam are leading the charge – “They’re already becoming major aviation markets on the global scale,” Arthur says.
Lion Air, which is one of the largest low-cost carriers in the world and has a 55% market share in the domestic Indonesia market, joined the GDS programme. As a market matures, carriers recognise that distribution becomes more important and they need us to be able to help them distribute that content beyond the traditional LCC direct channel.
The aviation business is booming in this region, along with the economy. “It’s very exciting to see people who have never travelled before taking their first trip,” says Arthur as he quotes some results of a study commissioned by Sabre recently: at the start of the millennium, Chinese travellers made only 10 million international trips; within 15 years, this figure increased more than tenfold to 128 million trips.
“That’s an example of the hypergrowth China is seeing – and in India, only a single-digit percentage of the population has taken a trip on a plane, he concludes. “The market’s already booming but there’s still a massive opportunity coming!”