What New Distribution Capability (NDC) means for you
1 December 2016
IATA's New Distribution Capability (NDC) programme has received loads of media coverage over the past few years.
But how much do you know about it? Having a basic understanding of NDC, and how it will affect you, is important for those working in business travel. Here’s our explanation:
Life before NDC
Since the days of dot-matrix printers, and green-screen computing, travel management companies (TMCs) have sourced their air travel-related information direct from the GDS (Global Distribution Systems), on outdated technology. Air fares were loaded by airlines in a static fashion, and TMCs were only able to sell very specific items to customers. Generally speaking, this was only a seat on a flight itself.
Business travellers might require extras such as early boarding, preferred seating, lounge access and more. However, TMCs using GDSs are not able – in the current environment – to book these services in a seamless fashion for their customers.
What is NDC?
NDC is a new XML standard that will enable TMCs and other third parties to present the full variety of products that airlines offer to their customers in a seamless fashion. Think of XML as a language used to make your web applications smarter and more flexible.
So TMCs will be able to provide a shopping experience akin to what you’d experience directly via an airline’s website.
The International Air Transport Association (IATA) is the trade association for the world’s airlines, representing around 83% of total air traffic. The association’s introduction summary to NDC says it ‘will enable the travel industry to transform the way air products are retailed to corporations, leisure and business travellers, by addressing the industry’s current distribution limitations.’ Those limitations include product differentiation and time-to-market, access to full and rich air content and a transparent shopping experience.
So, what’s changing?
With the introduction of NDC, airlines will be able to share their content in an improved way with third parties, including TMCs, globally. It drives the use of a new, XML-based data transmission standard for all airlines.
The new standard should improve communications between airlines and customers, and between airlines and TMCs. Specifically, airlines will be able to differentiate their products from their competition.
This is especially important now that so much booking is done online without the support of a travel consultant. If I’m shopping for a smart device on Amazon, I’m presented with an endless choice. When I select a particular option that I’m interested in, I’m immediately offered different colours and models. Next comes the ‘frequently bought’ suggestions and with so many other people buying the added extras – from an anti-slip case to a wireless keyboard – I’m encouraged to click and add to my order.
In a business travel context, while this is great for personalisation of traveller’s experiences, the offer of the right price and the presentation of associated services might prompt my decision to spend so the introduction of NDC needs careful management.
Advice for travel managers
Travel policy and control
In the future, when extra travel content or features are available for travellers to book, how can travel managers ensure that these items are allowed within policy?
Access to enriched content is great for the airline and traveller. However, by motivating travellers to add services such as upgrades and food, the airline has the opportunity to charge more for a booking. Budget holders should make sure they have the right travel policies in place to manage this effectively.
In the NDC world, the ability to compare products could become increasingly difficult as airlines add services to fare quotes according to demand and customer profile. Ensuring you are able to compare an ‘apple’ with an ‘apple’ will enable you and your travellers to make the right buying decisions.
Filtering the best options
NDC will liberalise the distribution of airfare content and allow any third party, IT provider or non-IATA member, to use its code to do so. Whilst this is a good thing, it will become increasingly difficult to ensure that you are seeing the whole of the market. Partnering with a travel management company that has access to multiple content sources will ensure you and your travellers are able to access travel tickets at the lowest possible price.
There is still a long way to go with before NDC is fully live and functioning. But in the UK market we are starting to see the first concrete steps towards getting content live and delivering value to customers. Keeping abreast of developments and making sure that you understand how new systems could impact on your travel policy is key.
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