Realising the potential of NDC for a transformed future of travel retail is one of the fundamentals of our mission at Datalex. Enabling airlines to achieve much greater flexibility, consistency, and differentiation in how they retail across all channels and most importantly create new opportunities to drive additional revenues.
In a recent report, McKinsey & Co. estimated airline retailing to generate approximately USD$ 40 billion in additional annual value by 2030. This represents an extra 4% of the total industry revenue or $7 per passenger at the end of the decade. The potential of NDC to enhance airline retailing is the one of the most important opportunity airlines have in the ongoing recovery of travel, and represents the path to truly modern airline retailing. It’s clear that airlines that don’t integrate NDC into their strategy are leaving opportunities on the table.
In a Datalex co-hosted webinar with IATA Airlines. today, we delved into this important topic of NDC and its role as a vital enabler in the industry-wide ambition to realise true modern airline retailing. Let’s take a look at some of the insights from that webinar and how Datalex is differentiating, and leading the market with NDC for better retailing for all – the airline, the agency and the end-traveller.
THE AIRLINE / AGNECY RELATIONSHIP REIMAGINED
For too many years, travel agents have been selling airline products without full knowledge of airline offers and using sub-par tools to do so. For this reason, these relationships were not nurtured, let alone optimised. NDC however is transforming the airline / agency dynamic and presents one of the biggest opportunities for the airline industry in the journey to modern airline retail. By leveraging advanced NDC technology, airlines and agencies can accelerate a distribution channel that has been underserviced and under-optimised for years. Airlines can gain greater control over the traditionally passive relationship with agents, while these agents can access richer content from the airline that was not accessible previously. Maria Gray, Senior Product Manager for NDC at Datalex noted that 'it is a power struggle - it's a synergistic relationship enabled by technology.'
The advantage to the sellers and travel agents overall from NDC is that modern retailing is now available in the agency world and are available in the following ways:
NDC AND MODERN RETAILING TRENDS
A WIN-WIN FOR ALL – REVENUE-GENERATING AND COST-SAVING
A strong NDC strategy will ensure an airline not only benefits from distribution cost savings, but also from revenue generating opportunities.
Revenue-generating - Through differentiation of offers airlines can compete for greater wallet share and can eke out competitive differentiation. Airlines can generate greater revenue through dynamically determined and optimised offers all enhanced by continuous pricing. According to BCG & IATA, there is $7 for the taking per passenger by 2030.* Datalex’s NDC is underpinned by a unified merchandising platform which helps airlines to realise these revenue generating opportunities.
Cost-saving - Through next generation order servicing airlines can save costs through a reduction in direct customer contact as they are better placed to self-serve. BCG and IATA have found that early-movers in the distribution-cost saving space have seen as much as a 50% cost reduction.**Airlines can now have complete order control to manage the order journey, with zero duplicate costs incurred. There is also the benefit of ‘distribution freedom’ and the negotiation power that comes with that. Datalex NDC capabilities reflect these needs for cost savings by putting the airline in control of the order.
* McKinsey & Company November 2019: https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/airline-retailing-the-value-at-stake
** October 2021: https://www.bcg.com/publications/2022/airline-retail-revolution-demands-reshaping-airline-organization