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​NDC: A 2020 reality check

January 07, 2020

This is the first in a series of three blog posts in which I look at what is actually happening in the way that airlines make their content – i.e. fares and services – available to the customer (known in industry-speak as “airline distribution”), and why it matters to the business traveler and travel manager.

Each post will take on one of three primary areas (distribution, content, and display), that I see as being disruptive in our attempt to demystify New Distribution Capabilities (NDC) and its impact, specifically, for business travel.

For this first post, we’ll focus on distribution. Today, airline content provided through travel management companies (TMCs), such as CWT, are predominantly acquired through third-party distributors such as Global Distribution Systems (GDSs) and content aggregators for certain low-cost carriers.

How does NDC impact the current dynamic?

NDC is a travel industry-supported program, launched in 2012 by IATA, the trade association for the world’s airlines, for the development and market adoption of a new, XML-based data transmission standard (the NDC Standard). XML enhances the communications capability between airlines and their distribution partners to deliver rich content and ancillaries, such as lounge access, seat upgrades, and amenities icons. Essentially, it provides indirect distribution channels, such as GDSs, the building blocks to match the capabilities of an airline’s website.

Taken as a whole, this is a good thing, and, if acted on collaboratively, offers opportunities across the travel ecosystem to improve the corporate traveler experience.

In reality, however, it is going to take years to achieve the goals of NDC – as airlines and technology partners adopt the standard and improve servicing capabilities to benefit business travelers to the point where it can be universally implemented by others in the industry.

So you might ask: Why all the press and excitement around NDC if it’s still years in the making?

It’s because some airlines have, quite frankly, co-opted the term NDC for their own purpose of changing the distribution economics by removing content from existing channels and making them available only through NDC-enabled channels that can be accessed by connecting directly to the airline. This move, however, has nothing to do with any shortcomings of existing technology or data transmission standard, but is simply a strategy being employed to re-engineer the underlying distribution economics in certain regions, using NDC as a convenient foil.

While the airlines’ strategy is their own to make, the heedless use of the term NDC in this context has simply added to the confusion and skepticism, and has led to unrealistic expectations of what NDC can do in the near term.

So what does this all mean for the business traveler or manager?

In reality, very little of the content that was removed from the GDS channel was applicable to a business traveler as they are highly restrictive fares. Nonetheless, the aim is to provide business travelers access to the broadest range of fares and services, and the removal of these types of content affects that goal.

Content that truly leverages NDC capabilities, has only been released as pilots and proof of concepts in 2019, but they are still valuable in the sense that they have enabled the industry to test and learn what works and what doesn’t. This iterative process will go on for several years – that’s just the reality.

Creating a viable end product that is differentiated, relevant, tested, and, above all, scalable, will depend on this process and the significant capital investments that all players in the ecosystem – airlines, GDS, aggregators, TMCs, OBTs, technology providers – should commit to making to upgrade their technology infrastructure to be able to handle NDC in all its realized promise.

But all this will be for naught if NDC does not provide value to the end customer – you, the business traveler – who will be the one driving adoption.

So why is content king? On our next blog, find out why the focus of NDC should be in providing relevant and scalable content. We hope this has been helpful, and we welcome your comments and questions on NDC.

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