The (yet to be realized) customer benefits of NDC, dynamic pricing, offers and orders

The travel industry has always been driven by a compelling vision: to deliver personalized, flexible and frictionless travel experiences. This vision has come to be embodied in the New Distribution Capability (NDC) standard developed by the International Air Transport Association (IATA) that promised to revolutionize airline distribution.

The industry has responded enthusiastically, pouring countless hours and millions of dollars into developing technologies that support NDC standards, dynamic pricing and the shift from traditional fares to sophisticated "offers and orders."

But despite these ambitious investments and visionary promises, one critical question remains: Where exactly are the tangible benefits to the customers?

The dream of NDC

At its core, NDC holds tremendous potential. The traditional distribution model, historically dominated by Global Distribution Systems (GDS), has been rigid when compared with other industries, due to a highly complex travel infrastructure providing limited capability for customization and personalization.

Under this historical model, airlines publish static fares, restricting their ability to adjust offerings dynamically in response to real-time market conditions, consumer behavior or individual customer profiles.

Enter NDC: a modern, XML-based standard that enables airlines to deliver personalized offers directly to customers through intermediaries. With NDC, airlines dream of dynamically adjusting prices based on complex algorithms that account for factors like customer loyalty, booking history, travel patterns and even current events.

Imagine a world where a frequent traveler receives bespoke offers tailored precisely to their preferences—upgrades, bundled services, exclusive deals and flexible itineraries—all served seamlessly through their preferred booking channel.

Moreover, NDC promises greater transparency and richer content, enabling customers to make more informed purchasing decisions by clearly presenting product differences beyond mere price points. Airlines could showcase amenities, seat comfort, entertainment options and other value-added services directly within the shopping experience.

Investment vs. reality

Despite significant investment, however, the practical realization of NDC's promised customer benefits has lagged significantly behind expectations. While airlines and technology providers have enthusiastically adopted the NDC framework, consumers themselves often find minimal noticeable difference in their booking experiences. In practice, the dreams of dynamic pricing, personalized offers and richer content frequently remain just that: dreams.

Several obstacles hinder the fulfillment of NDC's promises:

Obstacle 1: Legacy technology remains entrenched across much of the travel distribution ecosystem. Despite ongoing investments in modernization, many traditional systems still dominate, leading to fragmented customer experiences. This coexistence between new and old creates confusion rather than clarity, limiting the effectiveness of NDC's innovative capabilities. In addition, marketplace economics have further hindered advancement as distribution intermediaries such as GDS and travel agencies are resistant to risk losing existing revenue streams.

Obstacle 2: Standardization itself has proved challenging. While NDC defines a basic framework, the industry has struggled with implementation inconsistencies. Each airline and intermediary has adopted variations of the standard, inadvertently creating complexity rather than simplification. This variability diminishes the benefits of a supposedly uniform standard. Also, airlines are far from uniform in terms of size of customer base, ability to invest in technology and level of technical sophistication. 

Obstacle 3: The envisioned personalized pricing and dynamic offer capabilities have raised consumer and regulatory concerns. Critics worry about transparency, fairness and privacy implications, particularly regarding how customer data is collected, stored and leveraged. Without clear guidelines and consistent execution, dynamic pricing risks eroding consumer trust rather than enhancing it.

NDC and dynamic pricing in action

Despite these challenges, dynamic pricing and offers have allowed some airlines to adjust prices in real-time based on various factors such as demand, booking timing and customer behavior. Here are some examples:

• JetBlue Airways: Implemented dynamic pricing for checked baggage fees, increasing costs during peak travel seasons and varying fees based on booking timing and destination. For instance, during peak periods like summer or holidays, the first checked bag may cost more than during off-peak times.
• American Airlines: Utilizes dynamic pricing to adjust seat prices based on factors like booking date, demand and competition. This approach allows for more competitive pricing and revenue optimization.
• United Airlines: Employs dynamic pricing strategies to manage seat inventory and maximize revenue, adjusting prices in response to market conditions and booking patterns.
• Delta Air Lines: Offers personalized upgrade options and ancillary services based on a passenger's travel history and preferences, enhancing the booking experience with tailored suggestions.
• Lufthansa Group: Provides customized travel packages, including seat selection, baggage and lounge access, tailored to individual customer needs.

The customer perspective: Expectation vs. experience

From the traveler’s viewpoint, the promised enhancements are hardly perceptible to date, as even where advancements are made, they are largely not available anywhere beyond the airline’s own website.

The vast majority of customers continue to experience confusing pricing models, unpredictable ancillary fees and cumbersome booking processes. While some airlines and some selected distribution partners have experimented with personalized offers, as noted above, these remain relatively basic, often limited to simplistic loyalty-based discounts or occasional targeted promotions. The full-fledged personalization dream, powered by sophisticated AI and rich customer data, remains largely unrealized in practice.

Customers often perceive dynamic pricing skeptically, fearing that prices fluctuate unfavorably or unpredictably. Without transparent communication of how and why offers are personalized, travelers may feel disadvantaged or manipulated rather than valued and empowered. This gap between expectation and reality not only undermines customer satisfaction but also risks fueling frustration and suspicion

Bridging the gap: Recommendations for the industry

To realize the potential of NDC fully, airlines, technology intermediaries and travel agencies must prioritize clearer, simpler implementation strategies. Harmonizing standards across all industry stakeholders is essential to avoid confusion and complexity. Without true standardization, NDC will remain fragmented and ineffective.

Transparency must also become central. Airlines and distributors should clearly communicate how dynamic pricing and personalized offers are created, ensuring customers understand the tangible benefits. This openness could mitigate mistrust and empower consumers, making them feel valued and respected rather than exploited.

As a travel industry, there may be an opportunity to create some form of “Good Housekeeping Seal of Approval” for the way customer data is used to create offers. (If you are under 40 years old, go look up the reference!)

Regulators have a critical role too, and may be needed—especially if the industry doesn’t monitor itself. Clear guidelines on data privacy, pricing transparency and consumer protection can alleviate customer concerns about fairness and privacy. Ensuring appropriate oversight and industry-wide accountability will build consumer confidence in the NDC-enabled environment.

A reality check for the NDC dream

The travel industry stands at a crossroads.

While the promise of NDC, dynamic pricing, and personalized offers remains compelling, the gap between the vision and reality is stark. Customers, whose benefits are ostensibly at the heart of this transformation, remain largely underserved by the substantial investments already made. Airlines are largely committed and continue to develop, test and learn at the pace at which technology budgets allow.

Realizing NDC’s full potential demands more than technological advancements; it requires concerted, collaborative efforts toward standardization, transparency and consumer trust. Only then can the travel industry genuinely deliver on the ambitious promises made to travelers and made by the travel brands that they trust.

Until that day comes, airlines, travel agencies and intermediaries will continue chasing the elusive dream of NDC—a dream that, without decisive action, risks never being fully realized.

The long-term success of all of this remains in the hands of the airlines themselves. If the sole benefit from NDC is increasing airline yields alone, then the outcome will be less than optimal. However, if the customer shares in and believes in the upside, NDC may end up being a truly transformational standard after all.