It’s been eight years since IATA introduced the New Distribution capability (NDC) to the industry as a brand-new avenue for connecting airlines with their indirect channels. After a relatively slow start to adoption, there are clear signals of increased and accelerated investment in NDC to boost airline retailing.
NDC is becoming an enabler to create competitive differentiation (for example NDC exclusive bundling) and not just a cost-play.
There are a number of key trends driving this acceleration in NDC investment:
- Rising expectations have forced real-time servicing – The last number of months and years have brought with it increased customer expectations in terms of flexibility and ease of use. Due to this shift, all channels are expected to provide the same level of service flexibility in real-time – including indirect channels.
- Ramp up in investment in IT and digital initiatives – While COVID initially dampened any investment hopes for virtually anything other than keeping the operation afloat, now investment in digital is paramount. Airlines are ramping back up their capacity and are seeking out resources for NDC to accelerate growth in this new channel. With a growth mindset, NDC allows the airline to own and optimise the indirect channel.
- Increased demand for NDC providers - NDC is consistently included in every full-service airline tender response, and this indicates that it is being taken seriously by airlines as an important strategic distribution channel. Datalex’s Chief Product Officer Conor O’Sullivan reiterated how prevalent this trend is, “NDC is coming up in more and more tenders and RFPs for new customers, and it’s the same for existing customers who are prioritising NDC in their next releases. It’s a testament to how much NDC is now seen as a key enabler to take advantage of pent-up demand to drive growth in a channel that has been under-optimised for years.”
- Tangible growth tailwind - As airlines emerge from exclusive cost-saving exercises and cautious growth approach post-COVID, NDC is presenting a real opportunity to grow indirect traffic in new markets. It can enable greater reach by empowering agents in markets where you don’t have a presence.
- The need to control is greater than before - Airlines want and need to be back in control of their offers again. With NDC the airline is in control of what to offer, when, to whom and at what price, through the indirect channel, rather than the GDS (as is the case today).
- First step towards One Order - This is a mid to long term vision, but airlines are starting the transition today. The only way to engage in a full Dynamic Offer solution is when all traffic, direct and indirect, is coming through the airline’s Offer & Order system. The move to NDC for indirect channels therefore is a pre-requisite to this longer-term vision.
- Control of indirect being seen in indirect pricing – A trend has already begun where airlines that are using Dynamic Pricing, only apply the price adjustment to the filed fare if it means a discount to the customer. GDSs that claim that this is unfair competition are told that they are welcome to enjoy these discounted fares, just that they must use NDC.
- Channel consistency is key - Airlines are increasingly searching for products that enable consistent capabilities on both direct and indirect channels. These capabilities will empower them to decide on offers and content and make them unique for a given channel.
While in the beginning the shift to NDC may have been seen as a push towards a standard API connection, it has now reached a turning point where airlines understand the value of having high quality sellers in one place and having consistency across channels. The last few months and years have unfolded in favour of NDC, and this trend will only continue.
To find out more about Datalex’s product offering for NDC - Datalex NDC and the Agent Portal – visit https://www.datalex.com/datalex-ndc/