Is Now the Time for NDC to Take Its Place in the Travel Industry?
The new distribution capability (NDC) was created by the International Air Transportation Association (IATA) in 2012. The goal of this new XML standard is to allow airline service providers to deliver rich content and ancillaries to their customers. However, not every airline has adopted NDC yet.
According to Travel Today, 21 carriers participated in the initiative when it first launched, and they use NDC solutions for at least 20% of their indirect sales. That's up from just 11% in December 2019.
Still, the question remains: Is it time for NDC to take its place in the travel industry? What does it mean for procurement?
What is the New Distribution Capability?
The New Distribution Capability is an XML standard. XML is a markup language that allows developers to create rules for how data should be structured and formatted. In other words, XML provides a common language for information exchange between different systems.
This makes XML an ideal format for the NDC, as it was created to allow airline service providers to deliver rich content and ancillaries to their customers.
Airlines can use the capability to provide more information about their products, create new services for customers, and sell these new offerings through new sales channels.
In other words, NDC gives airlines the ability to create new revenue streams by offering new products and services in a standardized way through new channels.
The new distribution capability brings many advantages to the travel industry, including:
- Improved customer experience by providing more information about the flight
- Greater flexibility in how airlines can market their products and services to customers
- Increased revenue from new sales channels, new product offerings, and new services
For example, if a travel agent wants to book a flight for a customer, they would need to be able to access information about the flight (e.g., departure time, airline, seats available). But they'd also need to be aware of any ancillaries that are available for purchase (e.g. baggage allowance, seat selection). The NDC enables carriers to transmit this information, so anyone making travel arrangements can view it through their preferred channel.
Will More Carriers Adopt the NDC?
More airlines are expected to adopt NDC due it its many benefits. As we've seen from the numbers above, there are already many airlines that are using NDC for a significant portion of their indirect sales.
New carriers continue to adopt the new distribution capability standard every year. By some estimates, as many as 75% of airlines are committed to adopting the capability.
In the United States, NDC adoption is increasing as new carriers join the initiative and existing ones expand their offerings. For example, American Airlines, the first U.S. airline to adopt NDC, plans to complete the full integration of NDC into its North American points of sale in 2022 through the Amadeus Travel Platform.
According to American Airlines, "Travel advisors and corporations using the Amadeus Travel Platform for points of sale in North America will soon enjoy a more seamless shopping, booking, ticketing, and travel management experience. In addition, they will have access to the airline’s Main Plus offer, which includes complimentary access to Main Cabin Extra and preferred seats, preferred boarding, and a free checked bag in addition to the Main Cabin baggage allowance."
New carriers are adopting NDC in Europe as well.
What Does the NDC Mean for Travel Companies and Procurement?
While the NDC might offer some advantages for the travel industry, it may complicate some aspects of corporate travel management and procurement.
The NDC could give procurement professionals more transparency into the options they have when they book a flight, including increased seating options and the ability to bring on extra luggage. However, it also means that airlines and other carriers will be able to market more features directly to passengers. This could cause issues if it increases uncontrolled or unsanctioned spending.
It could also change the way tickets are processed, the way contracts are managed, and the way organizations manage travel data. The new data format may make it necessary for organizations to restructure some of their data internally. It could also increase the importance of individual contracts agreements with airlines.
Prepare for NDC
Procurement professionals should begin making preparations for the switch to NDC now, even if their current vendors don't use the capability. Although it may not result in a seismic shift for the function, it could lead to headaches if organizations don't take steps now to prepare for it and keep their travelers informed.
The NDC is set to be a hot topic at the next ProcureCon Travel conference, happening from June 13th to 14th at the Omni Rancho Las Palmas, in Rancho Mirage, CA. Download the agenda today.