Key Points
  • The role of Global Distribution Systems (GDSs) as the main intermediary between airlines and booking agents has been challenged since IATA introduced New Distribution Capability (NDC)
  • While the traditional role of GDSs will continue to exist at a comparatively smaller scale, they will also serve as platform/IT service providers and content aggregators across airlines
  • With NDC opening the market for new entrants, GDSs will need to pursue product innovation and strategic acquisitions to stay relevant and compete in the new distribution landscape

The New Distribution Capability (NDC) initiative introduced by the International Air Transport Association (IATA) in 2012 has been one of the most discussed innovations in the airline industry. An open, XML-based data transmission standard, NDC seeks to establish direct communication between airlines and booking agents. It allows airlines to package their base tickets and ancillary services together as competitive, differentiated offerings, and allows these offerings to be made available on all booking channels.

It has taken a while for industry players to warm up to NDC. This is true especially in the case of Global Distribution Systems (GDSs). NDC has challenged their role as the main intermediary between airlines and booking agents. Post-NDC, all commercial information will be compiled within the airlines’ offer management systems, and can be accessed directly by agents if they choose to do so. 

So, what does this mean for the GDSs going forward?

Based on an IATA survey, we can surmise that the adoption of NDC may not be absolute in the coming years. Some airlines may adopt NDC fully while others may adopt it partially, and a few may even shy away from it completely. This dual system clearly indicates that the traditional role of GDSs will not alter drastically. Also, as GDSs account for more than two-thirds of ticket reservations across all channels, their reach is extremely valuable to airlines in an intensely competitive environment. GDSs will also serve as platform/IT service providers and content aggregators across airlines in the new ecosystem. 

However, with the NDC standard expected to be open to newer entrants as well as non-IATA members, GDSs stand to lose the entry barrier to their market. They will need to innovate constantly to retain their leadership positions. WNS’ analysis recommends the continuation of a two-pronged strategy focused on in-house development of new products and strategic acquisitions with the aim of achieving greater market share, financial stability and the ability to connect with more partners.  

GDSs are in the best position to de-commoditize airline merchandise and act as aggregators to further integrate the travel experience with hotels, restaurants, local transport and other forms of travel. So, the question is, ‘What new business models will the post-NDC distribution landscape throw up, and what are the business parameters that will help GDSs maintain their competitive position?’

To know more, visit us at WNS DecisionPointTM | NDC Take Off: Planning for the Long Haul


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