AIRLINES

A New Year and an NDC Update: Is it Finally Ready for Takeoff?

Jan 21, 2016 / By Madelyn Young

It’s been more than three years since the International Air Travel Association (IATA) first announced its New Distribution Capability (NDC) initiative – a project intended to “modernize the way airline products are distributed” via a new, XML-based data transmission standard.

Since that July 2012 inception, however, there’s been plenty of NDC talk and testing – but little by way of real action. Is the new standard finally ready for takeoff? With the first set of usable NDC messages deployed in September 2015, and no less than Google reportedly (and very quietly) exploring its approach to the new standard, it very well may be.

The time for NDC is more than ripe. When first debuting the NDC initiative, airline industry observers knew exactly what was at its heart: A recognition, among IATA members and the travel industry at large, that airline retailing is a huge and growing market – one that can’t reach its full potential without a proper infrastructure.
It was also an acknowledgment of the mammoth business challenges airlines face, with third-party booking sites like Expedia, Priceline, Orbitz and others seizing the lion’s share of search traffic (and culling millions in commissions and fees from carriers).

While the NDC initiative doesn’t address those challenges directly, it will inject much-needed structure into the entire airline-distribution ecosystem, making it easier for airlines to communicate and transact with third parties; create new opportunities for product customization and personalization of the traveler’s experience; and potentially increase efficiencies across the board. Because the NDC language is powered by open XML standards, it will also ideally serve as the airline industry’s platform for ongoing technological innovation (in much the same way as Apple iOS does for app creation).

The IATA has bold aspirations for the NDC’s impact:
* A 2012 report commissioned by the association predicted that by 2017, “traditional” bookings via global delivery systems (GDSs) will account for just 7% of worldwide airline reservation volume, with the bulk of bookings migrating to airlines’ own websites or new commerce channels, referred to as VCHs or “value creation hubs.”
* A just-released IATA study, in which participants were shown examples of how the NDC standard can be applied for an improved air travel shopping experience online, found that more than 75% of respondents said an NDC-based display would make it easier to compare flights and prices and understand the true cost of their flight.
* In the same study, more than 70% of business fliers and 65% of leisure travelers said they would be more likely to purchase optional/ancillary airline services if presented with information about the services in an NDC-based display. Sixty-three percent (63%) of business travelers and 69% of leisure travelers also said they would find it helpful to receive timely promotional offers via text message.

For updates on the NDC initiative from the IATA, click here. You can also learn more about NDC-powered travel retailing trends in a new report from OpenJaw, available for download here.

Want to leverage your NDC-focused insights to boost your travel technology business’ performance – and increase your exposure to airline buyers? Get in touch with us to learn how our agency can help.

Madelyn

Young

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