The NDC (New Distribution Capability) standard, created by IATA, is a distribution standard in XML format aimed at facilitating the exchange of data between airlines and business travel agencies.
NDC provides several capabilities: It allows airlines to publish and communicate more personalized and dynamic offers, and it allows TMCs (Travel Management Companies) to offer travelers additional services (additional luggage, more room for legs, a more expensive meal, access to lounges in the airport, etc.).
NDC is a recent IATA standard. Although it is not mandatory, Airlines will one day need to comply with it, under pressure from indirect channels such as OTA (Online Travel Agencies) and GDS (Global Distribution Systems).
The most strategic advantage of NDC for airline companies is the ability to bypass the GDS and have access to the value-added information on the customer profile. Before NDC, airline companies published fares, schedules and availability information to GDS, TMC, and OTA, and had virtually no contact with the end customer and no ability to provide the customer with tailored services, add-ons, and specific prices.
NDC adoption is supported by both revenue increase and cost-cutting drivers. Capabilities that drive revenues include:
- Product attributes (differentiation): ability to show competitive features that may be unique to the offer and therefore drive purchase decision
- Fare Families: displaying multiple price points, with increased value, may drive “up sells”
- Ancillaries: displaying additional products (e.g. lounge access) may drive purchase decision
NDC is an opportunity for cutting costs, as it can be a trigger for modernizing often decades-old infrastructure, and lowering supplier prices by increasing competition.
Airline companies adopt NDC mainly to stand out from the competition, and to increase revenue opportunity offered by additional products. They can use NDC in several ways such as developing tailor-made offers for each customer account (flight + lounge for example) and the integration of third-party content (flight + shuttle service).
Target: 80% of passengers
The adoption of NDC is well underway. Over 40 airlines have already deployed, and the two-thirds of the remaining are in in the process of developing projects. Over 50 technology providers are now certified.
IATA hopes that by 2020, airlines representing 80% of passengers will have adopted the new standard, which is updated every 6 months.
For some airline companies, NDC has become so strategic that they are reviewing their relationship with GDS such Sabre, Amadeus and Portravel.
British Airways, and its subsidiary Iberia, for example, has decided to charge a fee of £8 for each reserved rate on systems that do not use a New Distribution Capability (NDC) connection. The supplement will come into effect from November 2017 on tariffs for all types of cabins and classes.
How to implement IATA NDC
NDC is a set of standard XML messages that allow the airline back-office to communicate with partners such as TMCs, OTAs, GDS and interline partner airliners.
The communication is done via an API, that is securely published and made available for external calls.
Publishing the API can be easily done via an API Gateway. You should consider the following capabilities when looking for an API Gateway solution:
- A Gateway that integrates vertical and horizontal systems to provide an end-to-end solution
- Allows you to publish APIs easily and securely, to seamlessly connect your back-office applications together as well as with your customers and suppliers etc.
- Allows you to publish APIs securely for consumption by user apps.
- Allows you to follow on your customers’ engagement and monetize their usage.