NDC – Next generation airline reservation and product retailing
The global travel industry is on the verge of a paradigm change with regards to how the distribution of airline tickets will take place in the future.
Since the 1980s, where the global distributions systems (GDS) emerged, the airlines have been able to distribute their tickets via travel agencies to a wide range of customer around the world. However, in the past five years a new technology has gained footing.
The old GDS technology, which have been instrumental in developing the travel business into one of the worlds largest industries, is about to have reached its limits. Today more than 80% of all tickets are sold via the global GDS systems, this is going to change with NDC.
The GDS limits the airlines possibilities to distribute new products and services (retailing) at the rate that will enable them to stay ahead of the competition. The reason it that GDS distribution is difficult. It takes a long time to code and implement corrections and add new functionality, sometimes up to two to six months.
With modern web technology, e.g. CMS (Content Management Systems), changes and additions can be coded and implemented in just a few days. That is why we today have products and services that are only available on the airline´s own website.
NDC (New Distribution Capability) is a new XML-based data transmission standard which will open up to increased “retailing” and faster distribution of tickets, ancillary products and services.
For comparison, think about the time we went from the old type of cellular phone where you could primarily talk and text, to a smartphone with apps which improved the user experience, and was easier to use.
NDC is an open source format which means that anyone with the right skill set can develop a new system based on the NDC standard.
With NDC distribution lower ticket prices will follow
One of the biggest advantages of NDC is that the distribution is directly between the airlines to the NDC booking portals. This will cut out several intermediaries and make distribution cheaper. This will benefit the consumer positively, as tickets can become up to 20% cheaper.
In addition, more and more airlines will choose NDC as the only distribute channel for certain types of tickets. These tickets will not be available through the GDS channels. You can only get the best prices via NDC because this distribution channel has first priority.
Better corporate agreements with the airlines
With NDC it will become possible to make better corporate agreements with the airlines. Besides being able to offer better prices, the airlines will be able to offer agreements specifically tailored to match e.g. a corporate travel policy or a combination of price and services packaged together to meet the company’s demands.
An example could be a company that has special policy regarding changes, fixed agreement on luggage, fast track and bookings. This kind of combined services was not possible with the GDS.
Great opportunities in the future
In the coming years we will see a huge rise in new booking portals, apps and other integration which does not necessarily come from the current distribution systems or global travel agencies. There are already several different types of solutions on the way. Many of these have been developed by small and large IT companies who, with their expertise in web service and XLM, are able to build the first solutions for NDC booking.
At the same time, it will create challenges for travel procurement managers in companies everywhere. They are facing new possibilities and must make decisions and choices with regards to which system to choose, based on the company’s needs. Disruption of workflows are viewed as one of the greatest barriers for implementing NDC.
At Nordic NDC we have many years of experience with workflows and ERP system integration and understand the complexity of digitalization.
We are experienced in the travel business and have considerable experience and a large knowledge pool to draw on with regards to the global travel business, travel technology and integrations between airlines, travel agencies and corporate clients. This unique combination of knowledge enables us to provide consultancy and help all the Nordic stakeholders in the travel procurement value chain who want to get stated with NDC.