Historically, the cash incentives paid by global distribution system operators to travel agencies have risen at a slow but steady year-over-year clip. For 2018, though, all signs point to a greater-than-average acceleration in incentive payments, according to GDS financial data, executive commentary and industry observers.
"We have a very small percentage of transactions that are NDC enabled at this point," International Air Transport Association VP Doug Lavin said. "We're not happy about that." During a U.S. Transportation Department hearing this month, he directed frustration at global distribution system contract provisions that, he said, inhibit progress on the New Distribution Capability standard.
In June 2017, American Airlines announced a distribution offer that included a $2 per-segment incentive to any agency that booked through approved application programming interface connections. At the time, agencies had to issue a ticket through American's API connection by the end of 2018 to lock in the incentive through 2020. VP of sales and distribution strategy Cory Garner this week said the airline will give agencies another year to take the offer.
India-based Airlines Technology is entering the U.S. market as another NDC aggregator but with a different pricing offer for TMCs.
Through the end of the year, the Lufthansa Group will offer a 1 euro per-segment incentive for travel agencies in the U.K. and Ireland that book through its Farelogix-powered SPRK point-of-sale application, the group announced.
Amadeus during its third-quarter results presentation Wednesday acknowledged that moves by the three largest European airline groups to surcharge global distribution system bookings and drive bookings directly to their own channels are playing a role in disintermediating the GDSs. Yet, CEO Luis Maroto said he wasn't too worried about an acceleration in disintermediation.
As it approaches the fourth anniversary of its leading role among European airlines in surcharging global distribution system bookings, Lufthansa Group Thursday reported that direct-booking share, for the first time in the group's history, passed the 50 percent mark.
BCD Travel early next year plans to pilot New Distribution Capability bookings with Lufthansa Group and two undisclosed non-global distribution system aggregators.
Australian flag carrier Qantas introduced a new commercial structure for travel agencies to promote adoption of New Distribution Capability-compatible connections, either through a global distribution system or another approved tech provider. Its pitch to agencies includes the threat of a $12.50 per-segment surcharge on GDS bookings and diminished content access but also a private channel-type framework as a path for agencies to avoid both.
A U.K.-based travel management company last week transacted a flight booking on Travelport's Smartpoint point-of-sale system in accordance with the International Air Transport Association’s New Distribution Capability standard. Travelport claimed to be the first major global distribution system to do so.