The rumors are true: New Distribution Capability (NDC) is set to redefine and modernize the airline industry. But what is New Distribution Capability, and how exactly will it affect travel managers, consumers, and the travel industry as a whole?
In this article, we’ll chart the history of airline distribution channels, define and decode NDCs, and explore how this paradigm shift could revolutionize air travel.
New Distribution Capability Defined
New Distribution Capability (NDC) is a travel industry standard that aims to enhance communication and data exchange between airlines and airfare sellers, allowing for more personalized and dynamic airfare and ancillary service offerings.
To understand the emergence and importance of NDCs, we must first acknowledge how and why the change in airline retailing has occurred.
Below is a brief timeline that tracks how airlines shifted their distribution methods over the years.
Airlines and travel agents relied on manual systems and paper cards for reservations, which was a work-intensive and inefficient process.
The first computer reservation systems (CRSs) like SABRE were introduced, enabling travel agents to access flight information and make bookings electronically. Still, each airline had its own CRS, and booking flights remained time-consuming.
The U.S. government deregulated the airline industry and Global Distribution Systems (GDSs) emerged. Multiple airline inventories were integrated into a single platform, revolutionizing how travel agencies operated.
The advent of the Internet completely transformed airline distribution and travel merchandising. Consumers could now book flights directly through airline websites or via online travel agencies (OTAs) like Travelocity and Expedia.
The airline industry introduced New Distribution Capability (NDC), a technology that streamlined the sharing of detailed flight information, personalized offers, and ancillary services directly with travelers through websites and apps.
When you book a flight online, airlines use a special system to show you flight options. NDC is an improved version of this system. It helps airlines and websites communicate better.
With NDC, airlines can share more details about flights and ancillary offerings directly to travel agents, aggregators, and third-party platforms. The technology also lets airlines change prices based on factors like availability and channel that information to the consumer in real time.
NDC adoption has been slow. Like developing a new highway system, adopting NDC involves building entirely new routes and pathways for airlines to distribute their products and services. Just as highways require meticulous planning, construction, and coordination between various stakeholders, NDC implementation demands careful collaboration between airlines, travel agencies, technology providers, and regulatory bodies.
But navigating the various challenges of implementing NDC will be worth the payoff. NDC aims to transform airline distribution by offering more direct and personalized connections between airlines and travelers.
The International Air Transport Association (IATA) developed the new XML-based communications standard to help airlines bring rich content and ancillaries directly to online travel agencies (OTAs), corporate travel management companies (TMCs), and other flight resellers through a set of travel APIs (Application Programming Interfaces).
The NDC initiative aims to provide a standardized framework that empowers airlines to present tailored offers, ancillary services, and pricing options in real time. It fosters more efficient and customer-centric interactions while allowing airlines to achieve product differentiation in a competitive marketplace.
NDC’s goal is to address some of the limitations and complexities of the traditional airline distribution system, which primarily relies on outdated systems and protocols to distribute fares, availability, and related services to travel agents and online travel agencies.
NDC introduces a more flexible and dynamic approach to distributing rich content, a term used to describe all the information airlines provide about their products and services. NDC also enhances the capability of communications between airlines and travel agents and is open to any third party, intermediary, or IT providers.
Global Distribution Systems (GDSs) act as a bridge between travel agents and airlines. As a reservation platform, a GDS allows agents to manage ticket bookings, modifications, and cancellations. They can also make hotel and car reservations via GDS.
The GDS is a funnel through which NDCs can be deployed. Many online booking tools (OBTs) and corporate travel management companies are waiting for the GDS to build NDC connections instead of actively investing outside the GDS.
Airlines adopt the NDC standard into their systems, then update their offerings, fares, and ancillary services to adhere to the NDC format.
Distribution channels such as travel agencies and aggregators integrate NDC APIs into their systems and establish a direct connection with airlines’ NDC-enabled systems.
A consumer initiates a flight search through a distribution channel’s user interface, indicating travel preferences, dates, and destinations.
The distribution channel sends a real-time query to the airline’s NDC API, which processes the request and generates a personalized offer based on the consumer’s input. This offer includes various fare options, seat choices, and additional services tailored to the traveler’s profile.
The traveler selects their preferred options from the personalized offer, and the distribution channel sends a booking request to the airline’s NDC bookings system. The airline confirms the booking, issues an electronic ticket, and shares the booking details with both the traveler and the distribution channel for itinerary management and post-booking services.
NDC transforms the travel distribution landscape by enhancing content, personalization, and efficiency, resulting in improved customer experiences and more robust partnerships across the travel industry.
Some benefits of NDC include:
Sparking Travel Tech Innovation
NDC encourages innovation in the travel industry, as it opens the door for developers and technology companies to create new applications, tools, and platforms that enhance the travel experience.
The adoption of the NDC standard in the travel industry has brought about various challenges that airlines, travel agencies, technology service providers, and other stakeholders must navigate.
These challenges stem from both technical and business aspects and have contributed to the gradual and sometimes uneven adoption of NDC.
Some challenges of NDC include:
Slow to Adapt
The complex process of achieving consensus and collaboration among airlines, distribution partners, technology providers, and regulatory bodies can slow the overall progress of NDC implementation. Industry stakeholders need to adapt and seize the opportunities presented by NDC to remain competitive and meet evolving traveler demands.
New Distribution Capability (NDC) is set to have a transformative effect on the travel industry. It will influence various aspects of how airlines, travel agencies, and travelers interact and engage.
Widespread NDC adoption across the industry is necessary for the new standard to reach its full potential. But NDC’s multifaceted impact on the travel industry will include:
NDC technology facilitates the exchange of comprehensive traveler data and enables direct communication between airlines and distribution channels. By comprehending this interplay, travel managers can leverage NDC to their advantage through the following factors:
NDC brings a higher level of personalization, flexibility, and efficiency to leisure and business travelers by enhancing their travel experiences and providing more choices that better suit their preferences and needs.
NDC requires industry players to adapt their technologies, processes, and strategies. Many travel management companies have found it difficult to adapt to this shift in the travel ecosystem.
Navan prioritizes innovation and has made integrating NDCs a priority. When American Airlines shifted its content to NDCs, Navan customers had uninterrupted access to the airline’s NDC content on day one.
Navan gathers air, ground, and hotel content from various sources within the industry and consumer channels. This comprehensive strategy around inventory guarantees that the fares and rates available in the system are among the best on the market.
Companies that choose Navan for travel management are well-positioned to navigate future changes.
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