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NDC – The Challenges and Possibilities for the New Age of Airline Distribution

New age of airline distribution

Air travel is still in growth mode with 3.7 billion passenger journeys made in 2016, and additional 700 new routes added across the globe. As part of its annual assessment, IATA concludes that average air fares have fallen by $44 making air travel more accessible to more travellers but also adding to the pressure on existing distribution challenges and costs.

Updating distribution has been key on IATA’s Simplifying the Business (StB) programme since first announcing its New Distribution Capability (NDC) initiative at WPS in Abu Dhabi in 2012. This was a much needed push to kick start innovative and disruptive forces in airline industry still operating on archaic lines. NDC is indeed vital in paving the way for airlines to embrace the 21st digital century that has already transformed the business models and practices of every industry, especially retailing. As a by-product of entering a new age of retailing, there is the hope that the high cost of third party distribution through the GDSs can also be slashed.

That IATA announcement was five years ago almost to the month so what progress is being made with this new way of distribution? Supporters not only believe that it makes perfect sense for the industry but promises to revolutionise how air travel is merchandised, sold, and processed for the benefit of all the stakeholders including customers, airlines and their various distribution partners.

This is the introduction to a blog series that discusses some of the opportunites as well as challenges that face airlines in adopting NDC and the related initiative known as ONE Order and how these can be overcome with the smart use of data intelligence.

  • Part One — “NDC is it taking off?” presents our take on where we see NDC adoption today and some of the obstacles that remain
  • Part Two — “The Opportunities and Challenges of ONE Order” is a deeper dive into how NDC and ONE Order will transform airline distribution
  • Part Three — “ONE Order — From Concept to Work in Progress” focusses on the cultural and technical challenges facing ONE Order adoption
  • Part Four gives an overview of how business intelligence can help airlines understand customer groupings and needs
  • Part Five describes the analytical layer that can be bolted onto an NDC implementation to deliver key insights to shape offers and deliver insights that can improve revenues

NDC is all about retailing and distribution, while ONE Order is all about simplifying the ticketing and billing processes around a single customer journey identifier. This single PNR equivalent would combine all elements of the trip into a single reference point that would then be used for the same trip by any third party service providers such as ground transportation, car hire, airport services, etc. In other words the customer would have a single all-encompassing trip reference and the airline would have full visibility into all aspects of the customer journey. This is the Holy Grail.

NDC and ONE Order are the essential building blocks for IATA’s vision of fostering an end-to-end new distribution capability for the whole industry from shopping and order management to booking and ticketing. Similar to the retail industry experience, collecting, and analysing and using customer data is fundamental for conversion success and building customer relations.

This merger of the booking and ticketing functions, while being long overdue, will ultimately help the legacy carriers to sell to and connect with their customers. Indeed NDC and ONE Order are both critical in transitioning from today’s cumbersome reservation platforms into true e-commerce platforms that open the door to creative innovation in both merchandising and customer loyalty programmes.

We begin with some context around NDC and ONE Order today and will get to the crux of how we see data analytics as key to NDC implementation success in the coming four weeks.

A full and complete copy of our white paper, “The Challenges and Opportunities for Airline Distribution from NDC and One Order” can be downloaded here.

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