IATA's New Distribution Capability is an essential modernization project and a much-needed mechanism for travel suppliers to regain control over their distribution strategy.
NDC’s two-way XML-based data standard modernizes airline distribution infrastructure to improve the experience for both travel buyers and sellers.
Airlines can personalize fares, offer dynamic bundles and merchandise with rich content. Travel agents can see more options in a single view and be able to sell more to their customers by building personalized packages.
Yet, the Holy Grail of a streamlined experience is still far off. It's been nearly a decade after its introduction -- and the long rollout continues.
So what’s going on? There are a few hurdles that remain along our journey towards a more innovative, flexible and extensible distribution capability.
Hurdle #1: Implementation costs, complexity and timeframe
First and foremost, NDC is an investment in time and money. It’s a monumental task that requires deep expertise in XML, which is a verbose data modeling language that is quite inefficient for complex travel shopping requests.
That’s why, out of the 216 NDC-certified companies, only 99 have reached the top level of certification. As such, only giant tech companies with deep pockets can work with it, essentially becoming NDC aggregators. Small players are then left to connect to NDC aggregators, which means that they still rely on intermediaries for distribution.
In addition to costs and complexity, all of this certification and technical development extend implementation timeframes. NDC is a major change management project and requires a lot of internal collaboration and coordination.
It can be stymied by inefficient teams and internal politics. And, since the project is complicated and resource-intensive, it’s vulnerable to budgetary shifts (such as COVID, which has shrunk budgets just when NDC was starting to gain real traction worldwide).
Hurdle #2: Uneven Adoption
Each airline is at a different point in the NDC process, which means that you have to understand which features each airline currently supports - and prepare for future features.
For instance, American Airlines supports pre-ordering meals but not paying for them in advance. This creates an inconsistent experience that remains confusing and difficult to navigate.
Travel buyers may find themselves having to use multiple vendors when trying to connect to different airlines, or managing many direct connects on their own - an expensive and time-consuming task that requires regular maintenance.
A standard must be broadly adopted and consistently applied. That’s what makes a standard a standard. Yet, global adoption remains elusive as there’s no universal usage requirement or unilateral implementation. Since companies can decide whether and how to use NDC, the standard has yet to become a true standard.
Rather, there’s a patchwork of features and functionality as different entities run different versions of NDC. This further frustrates the vision of modern airline retailing - and has led to the creation of NDC Exchanges, which normalize data across different levels of NDC. Another layer of complexity to navigate.
Hurdle #3: Aggregators (of aggregators)
One of the disadvantages of direct connections is that there are a lot of them!
For travel agencies to maintain the same level of inventory that they had on the GDS, they must now manage multiple direct connections, each potentially with its own contract and terms which must be negotiated. And airlines must maintain NDC-compliant APIs, along with the associated account management and technical support.
There are so many moving parts that it dramatically slows down the process of accessing NDC APIs.
This has led to the rise of NDC aggregators, which pull together multiple NDC connections and offer access as a service. There are even “aggregators of aggregators,” which offer access to even more direct connections by pulling in feeds from NDC aggregators.
These added layers are familiar: it's “GDS lite,” at a lower cost but still putting an intermediary between travel buyers and sellers. As we saw with the GDS, costs may start low...but eventually rise, as intermediaries leverage their positions of power for financial gain.
Hurdle #4: Corporate travel
The Achilles heel for NDC is the corporate travel market where the focus is on after-sale support. Corporate travel agencies are not only in the business of booking travel but also supporting travelers before, during and after trips.
Without a comprehensive TMC desktop solution, which would enable travel agents to navigate a hybrid world of NDC content and traditional GDS, NDC will not succeed in this critical segment. We’ll continue to have silos that prevent consistent, streamlined adoption of the NDC standard.
What now?
In a survey back in 2018, fourteen NDC-certified airlines identified their top business justifications for NDC as increasing control and revenue, enhancing the experience, and reducing costs.
Indeed, the business case behind NDC remains strong: Airlines need to market their products in ways that suit their business objectives, and travel buyers need to customize and personalize the travel experience for their customers. These goals remain admirable and very much needed across the industry.
But COVID had other ideas. We risk losing all forward momentum and stalling progress towards a complete modernization of airline distribution infrastructure.
While some airlines, agencies and travel tech companies continue to invest in NDC, others have paused their NDC implementations, further slowing progress just as the industry needs to boost revenues and control costs.
By the time it becomes a true standard, will the technology still be considered modern? Or will we face another game of catch-up? Whether it's NDC or something else, the need to modernize still exists.
We need to leap ahead, just like many economies have leapfrogged traditional bank payments by going straight to digital.
We need a resilient, future-proof solution that realizes the benefits of NDC without fracturing its utility with custom implementations and patchwork adoption.
We must rely less on one-off deals with aggregators, TMCs, OTAs and travel agents to greatly expand access to airline NDC investments and enable settlement at the lowest cost possible. We must take a wider view of distribution, prioritizing simple and open solutions available to everyone (not just travel agents).
We must accelerate the adoption of NDC’s core goals while also reducing costs and the impact of intermediaries. Otherwise, we’ll remain stuck, halfway to the finish line but still too far away.