Key Points

  • The adoption of New Distribution Capability (NDC) by airlines has been fairly slow due to investments required in implementing NDC Application Program Interfaces (APIs)  

  • Larger Global Distribution Systems have been early adopters of NDC and are expanding their portfolio to non-aviation travel options

  •  The industry is seeing a surge in new entrants in the technology and content aggregation area; over 30 technology companies are developing solutions around NDC

In the latest New Distribution Capability (NDC) roundup released in August this year, the International Air Transport Association (IATA) reveals that of the 179 airlines surveyed globally, 86 plan to adopt NDC (up from 73 last year), 23 will not adopt and 70 are still unsure. These numbers are a fair representation of the part-progressive, part-ambivalent state of NDC adoption in the aviation industry.

For an initiative that started off fairly controversially, the biggest achievement so far is that the narrative has turned largely positive. All the entities in the aviation distribution ecosystem, airlines and Global Distribution Systems (GDSes) included, agree that standardization is needed to bring in transparency and efficiency in the current distribution system. IATA, for its part, has kept up the momentum with steady upgrades to the standard, as well as ongoing pilots and certifications across the industry to drive greater adoption. It released NDC version 15.2 in September 2015, with extensive offer and order management capabilities.

NDC spells an increase in potential revenue per passenger for airlines arising from the easy bundling and sale of ancillaries, as well as an opportunity for greater differentiation through personalized offers across sales channels.

The larger GDSes have been early adopters of NDC, and have in fact, adapted their business models to become technology and content aggregators for airlines. They’re also proving their relevance in the post-NDC distribution chain through their reach and technology capabilities. For example, in November 2015, American Airlines (AA) signed a deal with Sabre, the largest U.S. GDS, to sell the airline’s premium seats using NDC. This allows AA to highlight their ancillary offerings to more than 400,000 agents that use Sabre to book tickets. A WNS DecisionPoint™ study reveals that the growing investments of the larger GDSes in non-distribution and non-aviation travel products show them evolving as one-stop travel platform providers.

However, the NDC initiative has opened the floodgates for content aggregators and technology service providers. The fact that NDC is an open standard has lowered entry barriers. According to IATA, over 30 technology providers are building solutions around NDC, and there are 23 NDC-certified technology companies in IATA’s certification registry, many of them GDSes. Riding on common data standards, and digital technologies such as the Internet of Things (IoT), big data analytics and smart mobility, we foresee technology innovation leading the way to a fully connected, multi-modal travel ecosystem. In this case too, GDSes can benefit from their existing status and play the role of collaborators rather than competitors to the new entrants.

Way Forward

The airlines that have completed successful pilots report that NDC supports increased customer loyalty, enhanced distribution of products and reduced commoditization. So, will these growing capabilities drive more cohesive adoption amongst airlines? We’ll have to wait and watch!

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