Exploring the NDC (New Distribution Capability): A Game Changer in Airline Retailing

The airline industry is undergoing a significant transformation, thanks to the New Distribution Capability (NDC). NDC is a travel industry-supported program launched by the International Air Transport Association (IATA) that enables airlines to bypass traditional distribution systems and connect directly with travel agents and consumers. This XML-based data transmission standard is revolutionizing the way air products are retailed, offering a more dynamic and personalized shopping experience.

What is New Distribution Capability (NDC)?

NDC is an IATA-supported program that enables airlines to distribute their content in a more flexible and personalized way. It allows airlines to define their own product offerings and pricing, and to distribute them through multiple channels, including travel agents, online travel agencies, and their own websites. NDC also enables airlines to provide more detailed information about their products and services, such as seat maps and baggage fees, and to offer more personalized options, such as extra legroom or priority boarding.

What Came Before NDC?

Before NDC, the airline industry used traditional distribution systems like Global Distribution Systems (GDS) to distribute their content. GDS is a centralized system that stores information about flight schedules, fares, and availability, and provides it to travel agents and other distributors. However, GDS has several limitations, including:

Limited product differentiation: GDS only allows airlines to display a limited amount of information about their products and services.

Limited time-to-market: GDS can take several weeks or even months to update, which means that airlines may not be able to quickly respond to changes in demand or market conditions.

History of NDC

NDC was first introduced by IATA in 2012, and has since evolved to become a widely adopted standard in the airline industry. The NDC standard has undergone several revisions, with the most recent version (NDC 21.1) being released in 2021. NDC has been adopted by many airlines, including major carriers like American Airlines, Delta Air Lines, and United Airlines, as well as by several travel technology companies, such as Amadeus, Sabre, and Travelport.

Some examples of how NDC is being used in the industry include:

American Airlines has developed an NDC-powered platform that allows travel agents to book and manage flights, hotels, and car rentals in a single transaction.

Delta Air Lines has launched an NDC-powered website that provides customers with more personalized options, such as extra legroom and priority boarding.

United Airlines has developed an NDC-powered mobile app that allows customers to book and manage flights, as well as access their loyalty program information.

Why New Distribution Capability (NDC) Matters?

The airline industry has long struggled with transparency in retailing, making it difficult for customers to compare prices and services across different airlines and travel agencies. The traditional distribution systems, such as Global Distribution Systems (GDS), have limitations in providing detailed information about airline products and services. This lack of transparency has led to a need for a new standard in airline retailing, which is where New Distribution Capability (NDC) comes in.

NDC addresses the industry's distribution limitations by providing a standardized XML-based data exchange format that enables airlines to distribute their products and services more effectively. With NDC, airlines can now provide detailed information about their offerings, including rich content and personalized offers, to travel agents and customers. This increased transparency enables customers to make informed decisions and compare prices and services more easily.

What is NDC’s Impact on the Industry?

The introduction of NDC has brought significant changes to airline retailing and distribution models. Airlines can now take control of their distribution channels and provide customers with a more personalized travel experience. NDC enables airlines to:

Offer personalized fares and bundles
Distribute rich content, such as images and videos
Provide real-time availability and pricing
Offer additional services, such as seat selection and baggage fees

The shift towards personalized travel experiences has led to an increase in customer satisfaction and loyalty. Travel agents and Online Travel Agencies (OTAs) can now access a wider range of airline products and services, making it easier for customers to find the best options for their needs.

The Evolution of NDC

The development of the NDC standard has been a collaborative effort between airlines, travel agencies, and technology providers. The International Air Transport Association (IATA) has played a key role in developing and maintaining the standard.

2012: IATA launches the NDC initiative
2013: First version of the NDC standard is released
2015: NDC is adopted by major airlines and travel agencies
2018: NDC becomes a mandatory standard for IATA members

Adoption rates have been increasing steadily, with many airlines and travel agencies already implementing NDC. Industry feedback has been positive, with many stakeholders praising the increased transparency and flexibility provided by NDC.

Key Features of NDC

NDC offers several key features that enhance communication capabilities and support rich content and personalized offers. Some of the key features include:

Enhanced communication capabilities: NDC enables airlines and travel agencies to exchange detailed information about products and services in real-time.
Support for rich content: NDC allows airlines to distribute rich content, such as images and videos, to travel agencies and customers.
Personalized offers: NDC enables airlines to offer personalized fares and bundles based on customer preferences and behavior.

Traditional VS NDC Airline Retailing

Traditional Airline Retailing

Static and limited product presentation
Limited access to airline content and fares
High dependence on third-party distribution channels
Limited ability to offer personalized experiences

NDC Airline Retailing

Dynamic and rich product presentation
Full access to airline content and fares
Direct sales channels for airlines
Ability to offer personalized experiences

The shift from traditional to NDC airline retailing has enabled airlines to move from a static to a dynamic retailing model, offering customers a more engaging and personalized experience.

Enhanced Content and Personalization

NDC enables airlines to offer tailored travel experiences by providing:

Rich product descriptions and images
Detailed fare rules and conditions
Personalized offers and services based on customer data
Examples of personalized offers and services include:

Customized fare bundles and discounts
Targeted travel insurance offers
Personalized in-flight meal options

Dynamic Pricing

NDC supports real-time pricing adjustments, enabling airlines to:

Respond to market demand and competition
Offer customers the best available prices
Benefits of dynamic pricing for airlines and customers include:

Increased revenue for airlines
Better value for customers

Direct Distribution

NDC facilitates direct sales channels for airlines, enabling them to:

Sell products directly to customers
Reduce dependence on third-party distribution channels
Impact on third-party distribution costs:
Reduced costs for airlines
Increased efficiency in distribution

Benefits of New Distribution Capability (NDC)

The New Distribution Capability (NDC) is a travel industry standard developed by the International Air Transport Association (IATA) that enables airlines to distribute their content and services more efficiently and effectively. The benefits of NDC are far-reaching, impacting various stakeholders in the travel industry, including travelers, travel agencies, travel management companies, and airlines.

Overall Improvements in Efficiency and Customer Satisfaction

NDC enables airlines to offer personalized and dynamic content, resulting in improved customer satisfaction. With NDC, airlines can also streamline their distribution processes, reducing costs and increasing efficiency.

For Travelers

Real-time Content: Travelers receive offers such as booking baggage, Wi-Fi, and meals on flights in real-time.
Personalized Offers: NDC replicates the content from airline websites to travel agents, benefiting the traveler with more personalized offers.
Transparency: It provides a transparent shopping experience, allowing travelers to see the full breadth of an airline’s products.

For Travel Agencies

Richer Content: Agencies gain access to more information about flight services and amenities, including images and videos.
Dynamic Pricing: Access to dynamic pricing and bundled offers, leading to more relevant offers based on customer preferences.
Efficiency: A simplified flow to search, book, and manage content via NDC, maximizing efficiency.

For Travel Management Companies (TMCs)

Ancillary Sales: Ability to access and sell ancillary products they can add in-app, allowing customers to shop for and purchase within their booking flow.
Customized Bundle: Access to customized corporate or agency bundles that are not traditionally available through traditional channels.
Entitlement Shopping: Integration of status recognition during the shopping process, reflecting value-adds.

For Airlines

Control Over Products: Greater control over their products and the ability to offer personalized and targeted content to travelers.
Enhanced Booking Experience: Rich content, including images, videos, and detailed descriptions of their products and services, enhances the booking experience.
Product Differentiation: Ability to differentiate their products by offering unique services and bundles through NDC.

Examples

Air France-KLM: Implemented NDC to offer personalized fares and services, resulting in increased customer satisfaction and revenue growth.
Expedia: Adopted NDC to access a wider range of airline content, enhancing their customers' booking experience.
American Express Global Business Travel: Utilized NDC to streamline booking processes and improve compliance with corporate travel policies.

Challenges and Adoption of New Distribution Capability (NDC) in the Air Industry

The New Distribution Capability (NDC) is an air industry standard developed by IATA (International Air Transport Association) to enhance the way airlines distribute their content to travel agents, online travel agencies, and other third-party sellers. Despite its benefits, the adoption of NDC faces significant challenges.

Technical and Operational Hurdles

Implementing NDC requires significant technical and operational changes, including:

Upgrading existing infrastructure to support NDC messaging
Developing new APIs (Application Programming Interfaces) to connect with airline systems
Integrating NDC with existing Passenger Service Systems (PSS)
Training staff on NDC functionality and benefits

These technical and operational hurdles can be daunting, especially for smaller airlines and travel agencies with limited resources.

Pace of Adoption

The pace of NDC adoption varies across different market segments:

Airlines: Major airlines like Delta, American Airlines, and Lufthansa have already implemented NDC, while smaller airlines are still in the process of adoption.
Travel Agencies: Large travel agencies like Expedia and Amadeus have adopted NDC, while smaller agencies are slower to adopt due to resource constraints.
Online Travel Agencies (OTAs): OTAs like (link unavailable) and TripAdvisor are also adopting NDC, but at a slower pace due to technical complexities.

Legacy Infrastructure

Integrating NDC with existing systems is a significant challenge:

Complexity: Integrating NDC with legacy systems requires significant technical expertise and resources.
Case Studies:

Lufthansa: Successfully integrated NDC with their existing PSS, enabling them to offer personalized offers and dynamic pricing.
Amadeus: Developed an NDC-based solution to connect airlines and travel agencies, enabling seamless content distribution.

Resistance from Resellers

Traditional resellers have concerns about the NDC model:

Loss of control: Resellers worry about losing control over content distribution and pricing.
Strategies to overcome resistance:

Education and training: Providing resellers with NDC training and education to address concerns and showcase benefits.
Incentives: Offering incentives for early adoption and successful integration.

Training and Education

Industry-wide training on NDC capabilities is essential:

Resources:

IATA: Offers NDC training and certification programs for airlines, travel agencies, and OTAs.
Airlines/GDS: Provide training and support for travel agencies and OTAs to ensure successful adoption.

New Distribution Capability (NDC) Progress

The New Distribution Capability (NDC) has revolutionized the airline industry by enabling airlines to sell their products and services through third-party channels. Since its introduction, NDC has made significant progress, with many early adopters reporting impressive results.

Success Stories and Testimonials

Lufthansa: Implemented NDC in 2018, resulting in a 25% increase in ancillary revenue and a 30% reduction in distribution costs.
Air France-KLM: Reported a 15% increase in online bookings and a 20% increase in ancillary sales after adopting NDC.
Qantas: Saw a 10% increase in revenue from third-party channels after implementing NDC.
CWT: a global leader in business travel management, marked the most active year for NDC since its inception, showcasing a shift from concept to reality for a large segment of the business travel sector.

Data on Improved Performance Metrics

Average Order Value (AOV): Increased by 12% among NDC adopters, indicating higher revenue per booking.
Conversion Rates: Improved by 8% on average, resulting in more bookings and revenue.
Distribution Costs: Reduced by 18% on average, leading to significant cost savings.

Future Outlook

As NDC continues to evolve, its role in the next decade will be shaped by technological advancements and industry trends.

Predictions for NDC's Role

Increased Adoption: More airlines and travel companies will adopt NDC, leading to widespread industry transformation.
Enhanced Customer Experience: NDC will enable personalized and dynamic offers, improving customer satisfaction and loyalty.
New Revenue Streams: NDC will facilitate the sale of new products and services, such as travel insurance and destination activities.

Technological Advancements

Artificial Intelligence (AI): Will enhance NDC's capabilities, enabling more accurate demand forecasting and dynamic pricing.
Blockchain: Will increase security and transparency in NDC transactions, reducing fraud and errors.
5G Networks: Will facilitate faster and more reliable data exchange, supporting the growth of NDC.

Looking Ahead: New Distribution Capability (NDC) Events in 2024

The New Distribution Capability (NDC) is revolutionizing the travel industry, and 2024 is set to be a pivotal year for its adoption. As the industry continues to evolve, it's essential for stakeholders to stay informed and engaged. In this article, we'll highlight upcoming forums and conferences, provide recommendations for stakeholders, and emphasize the transformative potential of NDC.

Upcoming NDC Events in 2024

DDS Forum 2024 will take place on 5 - 6 June in Istanbul, Turkey

ATPCO NDC Summit (June 2024, Washington D.C.)

CAPA NDC Conference (September 2024, Singapore)

WFS & WPS conference is scheduled for 30 - 31 October in Bangkok, Thailand

IATA World Passenger Symposium (October 2024, Dubai)

Recommendations for Stakeholders

Airlines:

Develop a clear NDC strategy and roadmap
Invest in staff training and education
Collaborate with technology providers for seamless integration

Travel Agencies:

Embrace NDC-enabled booking tools
Develop expertise in NDC-based fare construction and pricing
Foster close relationships with airline partners

Technology Providers:

Offer flexible and scalable NDC solutions
Ensure compliance with industry standards (IATA, ATPCO)
Continuously update and enhance NDC capabilities

Best Practices:

Foster industry collaboration and knowledge sharing
Prioritize customer-centricity and personalized experiences
Monitor and adapt to evolving industry standards and regulations

Amadeus NDC Workflow Video

Conclusion

The New Distribution Capability (NDC) is revolutionizing airline retailing by overcoming the limitations of traditional systems like EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport). By enabling personalized and dynamic services, NDC enhances the shopping experience for travelers and gives airlines greater control over distribution. Despite challenges like updating infrastructure and training staff, progress by airlines such as Lufthansa and American Airlines demonstrates NDC's potential. As the industry evolves, NDC is set to become a key component of modern airline retailing, offering benefits that will drive innovation and improve competitiveness.