NDC: One Year In, What's the Latest?

New Distribution Capabilities (NDC) rolled out a year ago, and calling it disruption is an understatement. Developed by the International Air Transport Association, NDC was designed to transform how airlines distribute and sell flight content, enabling carriers to offer richer and more personalized options.

While the concept is sound—the old system is limiting, and carriers needed a new way to offer more content to travelers—the implementation has had its flaws. Here’s an overview of how NDC has fared one year in, focusing on how airlines are using it and the pros and cons of this modernized interface.

 These insights were discussed in a recent webinar hosted by Christopherson Business Travel’s chief consulting officer, Matt Cameron, along with account manager Paul Foster.

 Why Are Airlines Implementing NDC?

 The main goal of NDC is to allow for more content, while also improving the end-user experience—something all travel management companies and travel managers want to see.

 There are three key reasons airlines are implementing NDC:

1. New content delivery methods.

 The existing EDIFACT system, in use since the 1970s, was due for an upgrade. As Cameron explains, “The technology couldn’t handle the complexities of the content airlines wanted to offer.” NDC, built using XML, allows for richer content delivery.

2. Product marketing strategy.

 Airlines aim to move beyond being seen as commodities. “They wanted to uniquely market their products, create bundles, and differentiate themselves,” says Cameron. While NDC offers this capability, it hasn’t seen high demand in the corporate world focused on cost savings.

3. Airline cost savings initiative.

Traditionally, airlines paid the Global Distribution System (GDS) to sell their inventory, sharing revenue with the GDS and travel management companies (TMCs). By removing this cost, airlines aim to save money.

Advantages of NDC

• More content and options. NDC allows airlines to bundle different options at varying prices, offering more choices.
• Ancillary services. Options like seat selection and baggage fees can be integrated.
• Consumer-friendly experience. “It will look a lot more like some of the consumer sites,” Foster says.
• Initial savings on some American Airlines fare classes. “We did some research, and we found that in some instances there might have been, but the savings and elements associated with them were somewhat negligible,” Foster explains.

NDC Pricing Strategies

Different airlines have approached NDC pricing in various ways:

• American Airlines: Significant price differences exist between NDC and EDIFACT, especially in international business class.
• United Airlines: Implements “continuous pricing” for smoother price transitions between fare classes.
• Delta Airlines: No price difference between NDC and traditional channels; focuses on delivering new content through a new channel.
• Southwest Airlines: Historically outside the GDS channel, Southwest has adopted a more direct NDC approach.

Disadvantages of NDC

• Harder to price compare. It’s challenging to compare against the types of content, so you’re not getting the opportunity to price shop across all vendors and platforms, Foster says.
• Policy and approval process impacted. “The most key piece of this is if your travel program has a policy or approval process that becomes impacted because it’s not currently set up to support through that channel,” Foster explains.
• Risk management impacted. Booking outside the main system means you are not able to track, he adds.
• Serviceability. Travel advisors can’t service future needs for booking outside the system.
• Unused ticket management. “Unused ticket management has become a challenge keeping track of which tickets are coming through the standard channel versus which tickets come through the new channel,” Foster says. “They are working on a lot of these service gaps, but at right now, it is still considered a challenge or a disadvantage into your program.”

Current Status of NDC

 Key takeaways from NDC's first year:

• Slow adoption: Only about 1 percent of Sabre global bookings are through the NDC channel.
• American Airlines pivot: AA has shifted to a softer approach, trying to rebuild trust after initial issues. “They have a massive trust problem at this point,” Cameron adds, “but you can see they’re committed to earning that back, and we’ll just have to see how that is operationalized.”
• Third-party support: As third parties are getting up to speed to be able to support the NDC channel, third party products such as online booking tools are now on a staggered rollout. Just be aware that some options may be available while others won’t be quite yet.
• Lack of universal approach: There’s no standard that all vendors can agree on, and some are going to get on faster than others. “It's created some real challenges in the current environment,” Foster explains.

Future Developments

For Christopherson’s main GDS, Travelport+, the complexity has increased with different airlines implementing NDC in various ways. Future updates include:

• Q3: Travelport+ will update unused ticket management and Deem NDC support.
• Q4: Concur NDC support update.
• Q4/Q1: Delta NDC update.

Conclusion

After all the headaches, there is good news, Cameron says.

“After a year of pain, we're actually getting into calmer waters here.”

Everyone has learned along the way, and as the market tends to do, shuffles things along.

“We’ll help you manage through that as you get onto Travelport+ and have access to it. But it’s not going to be about price. It’s going to be about the bundles and the packages and if they add value to you in your travel program. And that’s what it should have been about.”

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