Air Canada NDC Surcharges: Lessons in Change Management
Posted by Mike Atherton on 19 September, 2023
Air Canada recently implemented a US$20-30 surcharge on bookings made through legacy EDIFACT distribution, starting in June 2023. This move was part of the airline's strategy to incentivize the adoption of the New Distribution Capability (NDC) data transmission standards. However, the plan faced some backlash from travel agencies who worried about disruptions. Air Canada's approach provides some key lessons in change management that any corporate travel department or TMC can learn from.
Communicate early and often
A primary lesson is the importance of early, frequent, and transparent communication. Air Canada talked about this shift for years but only recently provided details. They held a media briefing and released fact sheets to explain the rationale and implications. Per execs, agencies asked for stability, planning, and transparency – which Air Canada aimed to provide through long runways, incentives, and openness.
Frequent, candid discussions are vital when implementing major changes that impact partners. Be clear on the reasons for any changes, timelines, benefits to them, and any near-term drawbacks. Giving stakeholders lead time to digest and prepare eases the transition and makes implementation more straightforward.
Acknowledge short-term pains, focus on long-term gains
Air Canada acknowledged some bumps would lie ahead. Initially, NDC channels lacked servicing capabilities like exchanges between ticket types or disruption support. The surcharges have pinched agency profits, and so IT investments and business process changes were required.
Still, Air Canada insisted that the "cost of inaction" was greater long-term than any temporary disruption caused by the changes. NDC unlocks innovations like customized offers, carbon offsets, and better merchandising, and direct connections shrink distribution costs that outpace inflation.
Provide incentives and support
Carrots work better than sticks for willing adoption. Air Canada offered a $2 incentive per flight coupon for NDC bookings through 2024. An agency incentive programme for ancillaries is now available, and education, training, and monitoring also supported the transition. Heavy penalties or forced mandates often backfire, which is why savvy leaders instead offer perks for early adopters, plus hands-on help for laggards. This smooths disruptions and builds collaborative momentum.
Take a gradual, flexible approach
Air Canada stressed that its strategy was "additive, not subtractive", avoiding sudden content limitations. Surcharges didn't start for months. NDC development has a "long roadmap", and the airline sought feedback and promised to adapt as needed. A flexible, step-by-step game plan is wise when overhauling systems, so move cautiously, assess impacts, and adjust along the way. Partners will be more patient if changes are gradual and responsive versus drastic overnight shifts.
Let data drive decisions
The numbers didn't lie – Air Canada's distribution costs were swelling, and NDC successfully closed the revenue gaps. Analytics grounded the strategy and allowed an objective approach to forecasting, risk management, and change implementation. Before disrupting your business, therefore, it's essential to inspect data to confirm that the change is required. If the case is there, share details among stakeholders to justify decisions and quell doubts.
Rally allies as advocates
Air Canada trotted out agency testimonials supporting its roadmap, and as a result, travel leaders backed the long-term payoffs despite a few near-term hassles. Unified voices drowned out the sceptics, which proves that major changes work best when supporters speak up, not just the complainers. Rally partners as advocates to boost confidence and camaraderie.
Admit imperfection – and commit to improvement
Air Canada confessed that NDC progress would be bumpy and ongoing work remained, but transparency and commitment to enriching functionality over time eased concerns. Change is rarely perfect right away, so be honest about flaws while pledging continued enhancements: partners will forgive missteps if progress doesn't stall.
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