The transition to airline digital retailing through New Distribution Capability (NDC) has been a topic of discussion within the travel industry. Many players, including airlines, sellers, and travel tech companies, have embarked on this transition, while others have chosen to adopt a wait-and-see approach. In this blog post, we will address common questions and concerns surrounding the perceived speed of the transition to NDC.
Common Questions
What is NDC?
NDC stands for New Distribution Capability, which is a set of technology standards introduced by the International Air Transport Association (IATA) to modernize airline distribution and enable the delivery of enhanced content, ancillaries, and personalized offers to travelers.
What are the benefits of NDC?
NDC offers several benefits for airlines, travel agents, and travelers. It allows airlines to offer more personalized and tailored products, enables travel agents to access richer content and ancillary services, and empowers travelers to enjoy a more customized and seamless booking experience.
What are the challenges in implementing NDC?
Implementing NDC involves various challenges, such as the need for awareness and understanding among industry professionals, identifying a compelling business case, securing funding for the transition, acquiring skilled resources, overcoming contractual restrictions, addressing technical complexities, and ensuring the availability of innovative partners.
What is the timeline for NDC implementation?
While there is no fixed timeline for complete NDC implementation, it is expected that the transition will be completed for the first players in the industry by 2025, with broader implementation across the industry anticipated by 2030.
What is order management in the context of NDC?
Order management is the next phase of the transition, focusing on streamlining the end-to-end process of managing airline bookings. It involves consolidating booking-related information, ancillaries, and payment details into a single order record, providing a more comprehensive and efficient way of managing travel transactions.
Understanding Expectations
Expectations regarding the implementation of NDC globally vary among industry participants. On one hand, the implementation of a distribution API by a single airline seems straightforward and fast. Some airlines, like Air Canada and easyJet, already had distribution APIs in place before NDC started. This might lead one to believe that NDC should be implemented globally within a couple of years.
On the other hand, the existing global interconnected platform that allows customers to find the best itineraries and fares worldwide has been built over the course of 50 years. Upgrading this platform to support the latest innovations in dynamic pricing and ancillaries is a complex task that requires new processes and technologies. Considering this, it is unlikely that the complete transition to NDC will take 50 years.
A reasonable expectation lies somewhere in the middle. The transition to NDC will likely be completed for the first players in 2025, with the rest of the industry following suit by 2030.
Key Remaining Challenges for Implementation
Several challenges have slowed down the implementation of NDC. These challenges are typical of major digital transformation programs, with some specific to the unique nature of the airline industry. Here are some key challenges that have been faced:
Awareness: Many travel distribution professionals may have heard about NDC, but their understanding and ability to define it vary.
Business case: While some airlines have successfully identified the business case for NDC, including revenue generation from ancillaries, cost reductions, and enhanced customer experience, others are still figuring it out. Simply using new technology to sell the same product to the same customer via the same channel does not create value.
Funding: The pandemic crisis has significantly impacted the cash resources of airlines and travel agents, making any project requiring investment challenging. However, some airlines and travel agents continue to invest because the new distribution channels enabled by NDC are more profitable.
Skilled resources: The transition to digital retailing requires a mindset shift, training or recruitment of staff capable of managing API distribution, and creating new offers across multiple distribution channels. Sales teams also need to be equipped to engage travel agencies and create value through partnerships.
Contractual restrictions: Existing distribution contracts between airlines and Global Distribution Systems (GDSs) may contain restrictions or incentives that hinder the implementation of alternative channels. While recent investigations have addressed some of these issues, certain restrictions may still pose challenges.
Technical solution: With advanced airlines already shifting 50% of their indirect bookings to NDC, technical questions regarding scalability, look-to-book ratios, polling, caching, and other aspects are being addressed within technical industry groups. Continued progress and innovation opportunities are expected.
Innovation partners: The open standard of NDC enables new entrants to the market, fostering innovation and partnerships with existing players. NDC API providers, aggregators, and service providers are emerging to support the transition and offer post-booking services.
Incentives: Airlines have developed various distribution strategies, and travel agents have formulated content sourcing strategies to leverage new content and fares. Incentives range from commissions to surcharges, with value creation becoming the primary driver between partners.
On-boarding: Airlines that have built their distribution platforms are in the process of on-boarding travel sellers, either directly or through aggregators. This process takes time but will accelerate over time.
Differentiated content: NDC's purpose is to enable a new distribution channel capable of supporting any kind of airline offer. The channel's value increases when content is differentiated, going beyond basic flight details to include dynamic offers constructed dynamically.
What's Next: Transitioning to Order Management
While the pace of the NDC transition may not be as fast as some anticipated, it is crucial to ensure a robust implementation. The next phase of the transition focuses on order management. The industry must accelerate this transition to capture the full benefits of digital retailing. The objective is not to question if the transition will happen, but rather when it will take place. Accelerating the move towards order management will help the travel industry maximize the advantages of NDC.
A Solution to Smoothly Transition From Your GDS To NDC
As the industry embraces the transition to NDC, travel agents require seamless solutions to adapt to the changing distribution landscape. BNW Travel offers a solution called BNW AgentConnect, which facilitates a smooth transition between SABRE and NDC. This innovative solution provides search results from both providers, ensuring travel agents can effectively navigate the evolving distribution ecosystem.
Discover how BNW AgentConnect can streamline your transition to NDC by visiting here. With BNW Travel, you can confidently embrace the future of airline distribution and seize new opportunities in the digital retailing landscape.
