NDC, A NEW ERA FOR AIR TRANSPORT DISTRIBUTION?
For the travel industry, NDC – New Distribution Capability – modernizes and facilitates the distribution and sale of airline tickets and attached services for airlines, aggregators and agencies.
This standard, initiated in the early 2010s, takes time to be adopted by the various players in the sector: its implementation is indeed an opportunity to challenge existing economic models.
An update on this key development that is shaking up the air transport and tourism sector.
A bit of history
For more than thirty years, the travel industry has relied on the GDS (Global Distribution System) to consolidate the content of airlines (number of seats available, schedules, tariffs, special conditions etc.) and make it available to travel agencies.
But the model has two major limitations:
– the cost of distributing GDS is very high for airlines
– the technology used, EDIFACT (Electronic Data Interchange for Administration) dates from the 1970s and is now obsolete. Its limitations prevent the airline sector from evolving in the distribution of its tariffs and simply offering its new services.
Hence the idea of a new model: this is how NDC was born.
What is NDC?
In 2012, aware of the limitations mentioned, IATA (International Air Transportation Association, representing all airlines) in collaboration with its active members, launched NDC (New Distribution Capability). The idea is to offer entirely new perspectives to distribution, especially increased personalization of travel offers for customers.
More concretely, in this new model, airlines can differentiate the services they provide to their customers, with many potential benefits for them: making more informed decisions when choosing a flight, simplified access to all products available on a route. This new standard is very promising for airlines: it allows them to greatly improve the customer experience and significantly enhance the transparency of the search and booking process.
The Challenges of Sector Transformation
However, for other stakeholders, especially travel agencies and GDS (Global Distribution Systems), this technological and economic disruption does not come without significant adaptation. This new standard enables a direct link between airline inventories and agencies, potentially leading to a major reevaluation of the existing system and a reshuffling of the distribution chain.
In fact, it obliges travel agencies and GDS to reinvent themselves: by improving the customer experience, enhancing their services, and emphasizing their value as distributors.
As demonstrated by Air France’s recent report on the French market, this crucial transition is not without pain. But it also opens up new opportunities…
Are there exciting opportunities to seize, or is it a difficult crisis to overcome for agencies that must adapt on multiple fronts?
What do you think? How can this economic and technological disruption be transformed into a growth opportunity?
Hélène Millet and Rodolphe Lenoir, Tuesday, February 28, 2023.