What is NDC, and Why is it Important?
New Distribution Capability (NDC) helps airlines share more choices with travelers. They can offer extra things like seat selection or checked baggage directly through websites, travel agencies, and booking systems. NDC is like upgrading from old ways of doing things to a faster, smarter way using modern technology.
But there’s a catch! Travel agents who don’t upgrade their systems to work with NDC might miss out on these options. For example, in April 2023, American Airlines made almost 40% of its ticket options available only through NDC. This meant that travel agents without the right tools couldn’t book those tickets for their customers.
We’ve talked about how connecting to NDC can be tricky. This time, let’s look at what happens if travel agencies don’t use it.
Challenges of Existing GDS Distribution:
While GDS offers undeniable advantages like global reach and established processes like BSP and ARC, some drawbacks exist:
- Cost: The cost of distribution through GDS is considered high.
- Control: Airlines have limited control over who subscribes to the GDS, potentially including unwanted sellers.
- Content limitations: Traditional GDS struggles with efficient distribution of rich content. The agility of GDS’s NDC products remains debatable. Additionally, Full Content Agreements (FCAs) restrict differentiation opportunities.
- Customer experience: Limited data capture capabilities in GDS hinder personalization. An agent’s concern of losing customer details highlights the outdated nature of certain aspects.
NDC for Airlines Adoption: Slowly Changing How Airlines Sell Tickets
The New Distribution Capability (NDC) has been around for over ten years. It was introduced in 2012 by the International Air Transport Association (IATA) to change how airlines sell tickets and services. Instead of using the old, slow methods that booking systems (GDSs) relied on, NDC uses modern technology to make things faster and more flexible.
At first, not many airlines or travel companies were ready to use NDC. Airlines worried about the high costs and how it might disrupt their systems. Big booking systems like GDSs saw NDC as a threat to their business and weren’t eager to change.
But things have started to improve. Airlines like American Airlines, Lufthansa, and British Airways now use NDC and see its benefits. With NDC, they can offer more ticket options, create personalized deals, and combine fares with extras like baggage or seat selection. This gives airlines more control over pricing and how they stand out from competitors.
Travel agencies are also starting to catch up. They realize they need better technology to handle NDC bookings. Groups and tech companies are helping make the switch easier. Even GDSs are adapting by adding NDC features to their platforms.
NDC has a bright future, but challenges remain. It can be technically tricky to set up, and the travel industry is very spread out, making it hard to get everyone on board. Still, the benefits are clear: airlines, travel agencies, and passengers all stand to gain. As technology improves, NDC adoption will likely speed up, offering travelers a more personalized and dynamic travel experience.
American Airlines and New Distribution Capability (NDC)
American Airlines (AA) has been actively working on its New Distribution Capability (NDC) plans since early 2023. With NDC, AA is making big changes to how they sell tickets, including:
- Offering tickets with dynamic prices (prices that can change quickly).
- Creating bundles that combine fares with extras like baggage or seat upgrades.
- Making Basic Economy fares available only through NDC.
- Paying commissions to travel agents for NDC bookings.
NDC has stirred up debate in the airline industry because it requires travel companies to spend money, time, and effort to update their systems. Despite this, AA says NDC is improving the customer experience, making operations smoother, and boosting efficiency.
AA has also introduced a commission program to encourage travel agents to use NDC. According to Travel Weekly, agents earn a 10% commission for booking certain bundles like Main Plus, Main Select, and Flagship Business Plus using NDC. This program shows how AA is committed to making NDC a success while rewarding agents for adapting to the new system.
What Happens If Airlines Don’t Use NDC?
- No More Tailored Travel Options
With NDC, travel becomes more personal. You can save your preferences and get results that match what you need. For example, if you’re flying for business, you might see free Wi-Fi included in your company’s deal. Or, if you’re on vacation, you might get an offer to add something fun, like a brewery tour during your layover in Munich. Without NDC, airlines can’t offer these customized choices. - Slower and More Complicated Bookings
NDC makes booking flights faster and easier for everyone. Travel agents don’t have to juggle between different systems—they can handle things like paying for extra baggage, picking seats, or ordering special meals all in one place. Without NDC, booking stays slow, and you might miss out on extra options like more legroom or meal upgrades. - Missing Out on Low-Cost Flights
Budget airlines don’t always show up in traditional booking systems, making it hard for companies to track spending. With NDC, low-cost carriers can be added to the same system your travel manager uses, so it’s easier to book cheaper flights while keeping spending under control. Without NDC, managing these budget options becomes more difficult.
What Are the Benefits of Adopting to NDC for Airline?
More Personalized Travel Options
NDC makes booking flights more enjoyable by showing detailed information like pictures, videos, and descriptions. Travelers can pick options that match their exact needs, unlike old systems that provide basic details.
Flexible Pricing and Special Bundles
With NDC, airlines can offer flexible pricing and packages, like combining a ticket with baggage, seat upgrades, or lounge access. This makes trips smoother for customers and helps airlines keep passengers happy and loyal.
Simpler Processes
NDC replaces outdated systems with modern technology, helping airlines and travel partners work faster and more efficiently. It enables real-time updates, making everything run smoothly.
Save Money, Make More Money
By using NDC, airlines can lower costs and make more money by sharing detailed product information with travel agencies. This leads to better teamwork and stronger partnerships.
More Revenue from Extras
NDC helps airlines sell extra services, like seat upgrades or priority boarding, during the booking process. Offering bundles increases the chances that passengers will buy these extras, boosting airline revenue.
Smart Selling with Data
Airlines can use data to recommend extras like lounge access or car rentals. These suggestions can happen while booking or even after the flight is purchased, increasing extra income.
Standing Out in a Busy Market
In a competitive industry, NDC helps airlines create unique service packages quickly. This helps them stand out and attract more customers.
Special Offers for Specific Groups
NDC lets airlines create offers for specific groups, like business travelers or vacationers. This makes it easier for airlines to appeal to unique markets and stay ahead of the competition.
What Are the Disadvantages of NDC for Airline?
While NDC has many benefits, it also comes with challenges:
Higher Costs
Using NDC can cost more for travel agencies, online booking tools, and companies that buy lots of tickets. For example, skipping traditional systems like GDS might mean losing bonuses or paying extra fees.
Hard to Fit with Old Systems
Many airlines and travel companies use old systems that weren’t built for NDC. Updating these systems to work with NDC can take a lot of time and money.
Different Rules Everywhere
Not all companies use NDC the same way, which makes it hard for travel agencies and others to work together smoothly.
Changes to Booking Channels
NDC has shaken up how tickets are sold. Traditional booking systems like GDS are less used, which can make some travel companies worry about fairness or losing access to important tools.
Keeping Data Safe
Airlines need to protect customer information from hackers and follow strict privacy rules, which can be tough and costly.
Impact of NDC on the Travel Industry
NDC affects different groups in the travel industry in the following ways:
Corporate Travel Managers
If booking systems don’t show the options travelers need, employees might book outside the system. This can raise costs, make tracking expenses harder, and reduce control over travel rules. It can also make it harder for companies to look after their employees during travel.
Airlines
NDC helps airlines take control of what they sell. They can show better details, like pictures and videos, to help travelers pick what they want. Airlines can also offer flexible pricing and bundles (like baggage, seat upgrades, and lounge passes), making more money in the process.
Travel Agencies
Although NDC might need some changes at first, it can boost business for travel agents. They can offer clients the newest and best options by using real-time updates from airlines. NDC also makes it easier to sell extra services, like better seats, which helps agencies earn more money.
Travelers
For travelers, NDC means a more personal experience. They get more pricing choices and options that match what they need. Bundled deals (like seats and baggage together) also make booking simpler and smoother.
In Short:
NDC is changing the travel world by making it smarter and more connected. As it grows, we’ll see even better ways for airlines, agencies, and travelers to work together.
The Risks of Not Using NDC
Switching to NDC (New Distribution Capability) is a big change for the airline and travel industry, but it’s very important. If travel agencies don’t adopt NDC, here’s what could happen:
Missing Out on New Deals
Without NDC, travel agencies might not see the newest fares and offers from airlines. This could make customers upset because they won’t get the best deals or choices.
Slower Work Process
Travel agents without NDC may have to search in different systems to book trips, which takes more time. This slow process can lead to higher costs for the agency.
Falling Behind
As more businesses switch to NDC, those that don’t might lose to competitors. Other agencies using NDC can provide better options and faster service to customers.
Why NDC Matters
Switching to NDC takes time and effort, but it’s worth it. Agencies that don’t use it risk losing customers, wasting time, and struggling to keep up with others. In a fast-changing travel industry, staying updated isn’t just important—it’s necessary.
