How does the new distribution capability work?

Perjalanan perniagaan remains vital for bottom lines, powering connections, deal-making, and global relationship-building. But as the travel landscape shifts, savvy travel managers are becoming hawk-eyed on costs, hunting for ways to optimize spending without sacrificing efficiency and comfort.

Enter the New Distribution Capability (NDC) – the travel industry’s shiny new toy, courtesy of the International Air Transport Association (IATA). NDC is shaking up air travel distribution with a cocktail of transparency and personalization.

Cracking the NDC code is crucial to cashing in on its perks, helping companies align travel strategies with financial goals. In this article, we’ll lift the lid on NDC mechanics and explore its impact on modern travel.

What is New Distribution Capability (NDC)?

In the good old days, travel management companies (TMCs), corporate online booking tools (OBTs), and retail online travel agencies (OTAs) to book flights would entirely rely on an old technology called EDIFACT to get the job done.

Fast forward to now, and airlines are ditching EDIFACT like yesterday’s news, opting for direct-connect application programming interfaces (APIs) to spoon-feed fares directly to the intermediaries.

However, those direct-connect APIs aren’t exactly the poster child for consistency or efficiency. Enter NDC, IATA’s attempt to give these APIs a much-needed makeover with a standardized structure. This uniformity is set to boost the popularity and utility of direct-connect airline APIs. Some airlines are even yanking fares from the old EDIFACT channels, giving you a nudge to hop on the NDC bandwagon.

NDC is the airline industry’s answer to the need for richer content and more personalized travel options, leaving the old EDIFACT system in the dust. With NDC, airlines can dazzle travellers with customized fare options, snazzy ancillary services, and irresistible promotional offers—all served up transparently and efficiently.

This innovation tackles the airlines’ gripes about inconsistent fare and service offerings across different sales channels. As NDC becomes the industry’s darling, it’s poised to revolutionize the indirect channel, fostering a more collaborative and efficient relationship with digital travel players like OTAs and metasearch engines (MSEs).

In short, airlines can now deliver content to these platforms without breaking the bank, ultimately making life easier—and cheaper—for everyone involved.

What is The Difference Between NDC and GDS?

GDS Fares

GDS Fares are like the classic hitmakers of the airline world. These systems have been rocking the travel industry for decades, by hooking up airlines, travel agencies, and other parties to book and manage reservations seamlessly. Think of GDS as the ultimate compilation album – it aggregates fares and availability from multiple airlines, letting agents mix and match prices, schedules, and services all in one place. Plus, with their top-notch search capabilities, agents can access a smorgasbord of flight options and snazzy extras like seat selection and meal choices.

Advantages of GDS:

1. Wide Reach: GDSs have a global audience, offering access to a sprawling network of airlines and destinations.
2. Efficiency: Agents can manage bookings, changes, and cancellations like rockstars, all through a centralized platform.
3. Standardization: GDSs stick to a familiar tune with standardized protocols, ensuring harmony across different systems.

Challenges of GDS:

1. Limited Customization: GDSs offer “one-size-fits-all” fare options, lacking the ability to jazz things up based on individual tastes.
2. Dependency: Leaning too heavily on GDSs can jack up distribution costs for airlines and cramp their style in fare management.

NDC Fares

NDC Fares are the new kids on the block, brought to you by IATA’s New Distribution Capability. This fresh set of standards is here to remix airline distribution with modern flair, offering more flexibility and personalization. NDC lets airlines drop their latest tracks—fares, extra services, and even rich media—directly to travel sellers, sidestepping the old-school GDS channels.

Advantages of NDC:

1. Personalization: NDC is all about personalized playlists, delivering tailored offers and experiences for each traveller.
2. Innovative Offerings: Airlines can drop innovative fare products and extras, from bundled packages to dynamic pricing, making the customer experience a chart-topper.
3. Direct Connectivity: NDC encourages direct collaborations between airlines and travel sellers, speeding up content distribution.

Challenges of NDC:

1. Integration Complexity: Rolling out NDC is like setting up a home studio—it requires significant tech investments and integration efforts.
2. Data Privacy and Security: Direct channels mean you gotta keep that personal data under lock and key, ensuring privacy and security compliance.

In summary, while GDS is your go-to for a classic, reliable platform with extensive reach, NDC is the up-and-coming star offering enhanced personalization and flexibility—with some added tech complexities. Travel managers and agents need to understand these grooves as they navigate the evolving landscape of airline distribution.

Why Are Airlines Moving to NDC?

Airlines are hopping on the New Distribution Capability (NDC) bandwagon to ditch the clunky legacy systems and take charge of how their content is sold. Right now, most airlines are still stuck using third-party channels like ATPCO and EDIFACT. These old-school systems give digital travel players—think online travel agents (OTAs), metasearch engines (MSEs), and even your local high street agents with an online presence—a one-stop shop for airline content. But here’s the catch: these centralized systems tie airlines’ hands, making it a snail’s pace to roll out new products and services. Imagine trying to offer guaranteed in-flight Wi-Fi through these systems—yep, it’s like pushing a boulder uphill.

Meanwhile, airlines’ own websites are living their best lives, thanks to advanced IT shopping technologies that let them whip up and control traveller offers directly. This direct approach means personalized and snazzy fare options that legacy systems can only dream of. Enter NDC, the superhero aiming to bring this level of control and effectiveness to all distribution channels, giving airlines a more dynamic way to flaunt their offers.

But let’s not pop the champagne just yet. NDC is like a toddler learning to walk—lots of potential but still wobbly. Airlines are grappling with multi-airline search queries from digital travel players. Today’s travellers are like detectives, scouring multiple sites with endless parameters to snag the best deals, swamping airlines with a tsunami of queries. NDC promises to handle these like a pro, but scalability issues need ironing out for it to really shine.

Despite the hurdles, NDC’s potential to craft personalized, innovative travel experiences makes it a tantalizing leap for airlines aiming to boost customer satisfaction and operational efficiency.

How Does NDC Affect Business Travellers and Travel Managers?

The rollout of NDC is shaking things up for business travellers and travel managers, transforming airline offer distribution.

For business travellers, NDC’s knack for offering personalized, dynamic fare options jazzes up the travel experience with services tailored to individual whims and fancies. Think bundled packages, dynamic pricing, and customized upselling opportunities that make work trips far more pleasant.

Digital travel players like OTAs and metasearch engines are the rock stars of popularizing and retailing airline products. They help travellers find the best destinations and flights, backed by hefty marketing budgets and cutting-edge tech. But to stay ahead of the game and satisfy niche audiences—from social media aficionados to obscure search queries—they need seamless access to standardized, comprehensive airline data. NDC steps in like a hero, enabling airlines to offer innovative products that meet the unique demands of business travellers.

For travel managers, NDC is a mixed bag of opportunities and challenges. On the one hand, it offers inventive fare structures and increased customization that can fine-tune company travel policies and budgets. On the other hand, it complicates things with integration and scalability hurdles that can be a real headache. Implementing NDC demands significant IT investments and adaptation efforts—no small feat. Plus, while NDC aims to provide instant, extensive data access to digital retailers, engaging travellers at the start of their search journey is still a tough nut to crack due to scalability issues. This gap might lead to missed revenue opportunities for airlines and more complexity in travel management.

There is Still a Need for Information About NDC

Despite the efforts to trumpet New Distribution Capability (NDC), it seems there’s still an information black hole among travel industry stakeholders.

Surveys show that a whopping 71% of travel buyers are still left scratching their heads about NDC, unchanged from previous assessments. This quest for enlightenment crosses all borders, with Asia-Pacific and Latin America particularly thirsty for more intel.

Sure, we’ve seen progress, with the percentage of travel buyers who say their Travel Management Company (TMC) is clued in and sharing NDC plans rising from 32% to 45%. But let’s be real—it’s a patchy spread. North America-based buyers are the happiest campers, with 55% feeling well-informed by their TMCs, a stark contrast to other regions.

This persistent thirst for knowledge highlights the pressing need for ongoing education and support, ensuring travel buyers can fully unlock the magic of NDC and ride the wave of the evolving travel market.

Are NDC Fares Cheaper?

While many believe NDC fares are a ticket to cheaper flights, it’s not all black and white.

NDC, or New Distribution Capability, promises to slash distribution costs for airlines by cutting out the middleman—those pricey Global Distribution Systems (GDSs) like Amadeus, Sabre, and Travelport. Sure, these GDSs charge a pretty penny but they also give airlines access to a vast network of travel agencies. By sidestepping GDSs, airlines can save on distribution costs, which could mean cheaper fares for you and me.

But hold your horses; it’s not just about saving on those pesky fees. NDC also lets airlines play the personalization game, rolling out the red carpet with dynamic pricing models. This means fares could swing wildly depending on your traveller profile, booking history, and the whims of market demand. So, you might snag a deal, or you might not.

Plus, with more control over their offerings, airlines can bundle services or dangle exclusive deals directly through their channels, leaving traditional GDS-driven platforms in the dust. So, while NDC might help shave off a few bucks, the real impact on pricing depends on a mix of airline tactics and market shenanigans.

Supercharge your business travel game

Using modern travel management platforms like TruTrip can turbocharge your business travel game. These savvy platforms harness New Distribution Capability (NDC) to serve up personalized, dynamic fare options, and give you VIP access to comprehensive airline data. Travel managers and business travellers alike can make decisions with the precision of a Swiss watch.

With cutting-edge tech and user-friendly interfaces, TruTrip turns travel planning, expense management, and policy compliance into a breeze. Streamline your operations, cut costs, and say goodbye to travel headaches. Ready to experience the magic? Tempah demo atau try a free trial today, and watch TruTrip transform your corporate travel into a first-class experience.