Air Canada Shifts to NDC Program, with Carrots and Sticks to Get Agencies On Board (2023)

We’ve been reading about it for years, and now Air Canada has finalized implementing their NDC program.

Saying that the current booking system is antiquated and doesn’t properly serve agents or customers, Air Canada on 19APR announced its move to the NDC (New Distribution Capabilities) program.

In the long run, it says, advisors will be better off with a new, streamlined system that allows them to serve customers more efficiently.

While explaining the benefits to advisors, agencies and even clients, it also outlined how it’s going to ease the transition, along with perks for agencies to use the NDC, and on the other hand, fees for continuing to use legacy GDS.

In a media conference, Air Canada said the NDC program now implemented will feature new benefits, expanded content and additional trade support for agencies and travel buyers. Airline executives said the program will provide a competitive alternative to legacy distribution, giving agents access to Air Canada inventory, fares, ancillary services, ticketing, and digital products.

The shift to NDC is no surprise, as the airline has been testing and working with IATA’s NDC program for some time, and Air Canada and Amadeus recently announced a new multi-year agreement that will provide access to the airline’s NDC-sourced content.

Air Canada said the new program “utilizes IATA NDC industry standards to offer Air Canada’s complete content at the best possible prices.”

“For buyers and travellers, NDC technology means their preferred agencies can now offer a broader range of Air Canada travel options and services at the best possible prices, improving competitiveness and the customer experience,” the airline said in a statement.

“From local independent agencies to large corporate travel management companies, our travel trade partners were, are, and will always be crucial to Air Canada’s commercial success,” said Mark Nasr, Senior Vice President, Products, Marketing & eCommerce at Air Canada. “As we continue to introduce new products and revenue management capabilities, it’s incumbent on us to provide the travel trade with better technology so that they are well prepared for the future.”

Transitioning Carrots and Sticks

“The transition to modern distribution enables delivery of the full range of content and fares that Air Canada provides, as well as access to the many upcoming products and services that will improve travel,” the statement said.

Additional content immediately available on NDC technology includes domestic Basic fares, with best available seat inventory and discounted ancillary pricing becoming available on 14JUN, 2023.

Agencies will be disincentivized from continuing to use legacy GDS beginning that date.

Air Canada will begin to charge $20 to $30 USD per ticket to address the high expense of legacy models. The fee will be applicable to all tickets issued globally via GDS EDIFACT beginning 14JUN, 2023.

The fee does not apply to bookings made via any of Air Canada’s NDC connection options including NDC-sourced content in a GDS solution.

On the flip side, an NDC incentive for agencies, worth $2 per coupon, will also be introduced beginning the same date and will apply to eligible NDC bookings made directly with an Air Canada NDC API connection or via select NDC certified technology partners.

The coupon is “meant to help them … offset, at least temporarily, that loss of revenue they may get from booking in another channel,” Keith Wallis, Air Canada’s Senior Director, Distribution and Payments, said in the media conference.

Officials said Amadeus is 95 per cent integrated with Air Canada’s NDC already and will “seamlessly” offer both AC NDC and GDS EDIFACT content. Bookings made via Amadeus and NDC won’t incur the $20-30 fee, but neither will they trigger the $2 coupon.

In a one-on-one interview with Open Jaw, Nasr said the trade has four ways to avoid paying the fee.

1. Use Air Canada Connex, a travel agency specific website that doesn’t require investment in new technology. Nasr conceded Air Canada Connex is probably best for a smaller agency, versus a large one.
2. The second option is for an agency with technical know-how to get the NDC specs and code and integrate the system directly.
3. Agencies can also work with special, “next generation tech companies” in the industry who have already integrated their systems with Air Canada or other airlines.
4. Go into Air Canada’s NDC through Amadeus, which is set up to handle both GDS EDIFACT and Air Canada’s new program. “You don’t have to have a special version of Amadeus, or hit the right decoder on the right day. You just go right into NDC,” Nasr said.

Nasr conceded there will be resistance by some agencies, but he pointed out that $20 to $30 USD is “just a few percentage points” on the cost of a ticket.

Long Term Benefits and Transition: Not Cold Turkey

In addition to making available the most comprehensive Air Canada content, the airline says the NDC program offers an efficient shopping experience for retail fare products and the elimination of select debit memos. Continuous pricing, as well as the addition of Flight Pass, is planned for 2023, Air Canada executives said.

Nasr said NDC is a “very mature” concept in Europe and parts of Asia, and is inevitable here in North America.

American Airlines recently unveiled its own NDC plan. It was heavily criticized by the trade, as Skift.com reports, because American planned to stop selling nearly one-half of its airfares through traditional channels and would instead sell them exclusively through its own website and NDC-powered channels.

Open Jaw asked Nasr if Air Canada has plans to do the same thing.

“Our strategy is about addition, not subtraction,” he replied. “We’re not going to at this point take away from the existing channel. Now, in the future, if we reach critical mass, if we arrive at a certain point, that might be a reasonable expectation, but we are not there.”

“We know we're asking travel agents to make a transition here,” said Wallis. “We're asking them to leave a technology that they have been using for decades that they believe in, that is comfortable for them, it's efficient for them. We take seriously our commitment to travel agents, and we realize that we are asking them to trust us and to use technology that we are supplying.”

“NDC is a big black hole for a lot of people; they don’t know what those letters stand for,” said Lisa M. Pierce, Vice President, Global Sales & Air Canada Vacations at Air Canada.

Pierce said Air Canada has been working with the new program for some time.

“It is going to be bumpy along the way,” Pierce acknowledged. “We recognize that it’s going to take time. It’s why we have a strategy that’s not really as drastic as you might see others doing.”

“Travel agencies represent the Air Canada brand,” Nasr told members of the media at the conference in advance of the news being released. “They are in many cases the front line to so many of our important customers. If we’re really going to elevate the customer experience, it’s not just about delivering better tools and better product directly, but a critical part is making sure the trade community is empowered with all the same information, access to benefits and tools, that our own internal employees have."

Air Canada officials said the current technology is unable to properly display important programs such as Air Canada for Business, Flight Pass and Cancel for Any Reason. Even a simple promo code, such as 20 per cent off all tickets to London, are hard to work with GDS. There’s also no support for the trade in GDS for Aeroplan, he said.

“But right away with NDC we can expose the benefits a customer might have. For example, if they hold (Aeroplan) status or they have a credit card that entitles them to say a free seat, the travel agency will be able to see that before the booking is complete.”

It’s not just a convenience factor that pushed the move to NDC, it’s also an important economic decision for Air Canada.

“In addition to the technology being old and limited and arcane, the financial model associated with classic distribution has become unsustainable,” Nasr said. “Period. End of story.”

Even with today’s elevated inflation, Air Canada’s distribution costs have greatly exceeded inflation levels over the years, he said.

He added that the new system is critical to help Air Canada meet other goals, too, including maintaining market share in Canada, expanding its global network, offering deliberate, consistent and friction-free customer hospitality, capitalizing on leisure expertise and diversifying non-ticket revenue streams, all with sustainability as a key driver in all their decisions.

Pierce said partners have been given advance notice to provide them with time to prepare.

“We’ve had conversations and engagement around this change since last fall. We're going to be having regular webinars, email updates, and training sessions,” she said. “Most importantly, we're going to have one-on-one support for managed accounts as we understand the importance of having someone there who understands the unique business needs of each individual account.”

She said Air Canada will have a team of NDC experts on hand to help advisors and agencies with the transition.

“We recognize the time and effort required by agency partners to transition to new technology and we are committed to supporting them,” said Pierce. “Their feedback to-date has served to shape our implementation plans. For example, our focus on introducing new content on NDC rather than removing existing content from GDS EDIFACT channels is a direct result of agency partner inputs. We will continue to actively listen to feedback, and we’ll use it to shape our policies and roadmap of future products and features enabled by NDC.”

Officials said many of Air Canada’s key agency partners have already begun implementing NDC connectivity, including Priceline, Flight Centre, Fareportal, Flighthub, Hopper, Maritime Travel, Skylink Voyages and Travix. These and other early partners have the opportunity to drive requirements and new functionality as the program develops. Air Canada will add NDC features and offerings as new products and services become available.

For more information, travel advisors and agencies can go to aircanada.com/ndc.