Quo Vadis NDC?
There is a time for every innovation and now it is the time for NDC. That is what the IATA keeps sermonizing since 2012. But is this still correct or are we already heading to the next step – One Order? This blog tries to identify the position of the transformation process for airlines into the era of modern distribution technologies.
What happened since 2012?
For all those airlines who are still sticking to GDSs and struggling to move to web-based technologies: Yes, we are already close to a decade after the introduction of New Distribution Capabilities (NDC).
The simple answer to the question of what happened is: a lot! In an early phase after the introduction, most of the airlines were cautiously prototyping in their hidden chamber. When suddenly the big players (Lufthansa, British Airways, United Airlines …) announced that they have setup huge NDC programs to overcome their legacy systems. Since then the wave began to roll.
Where are we now in 2019?
One airline after another gained certification after certification. Until right now, 75 Airlines gained NDC certifications; around two dozen of them already level four (the highest). Lufthansa and China Southern Airlines earned even the first One Order certifications. Obviously, something is changing and the big players are in the front row of this change.
New Distribution Capabilities is not anymore an undiscovered theoretical field that only a few airlines tackle with minor innovation projects. We are at a point where airlines massively trying to shift traffic from their legacy systems onto web-based distribution channels. It is not a secret that Lufthansa, for example, removed all their light tariffs from the GDS channel and is only selling those via direct distribution channels.
Where are we going?
Of course, it will still take some time until NDC becomes a commodity in an airline's distribution architecture. However, we are getting closer to the point where not having a stabile direct distribution channel established will be a huge disadvantage for an airline. Especially for all the premium carriers with a high GDS sales percentage.
Furthermore, direct distribution channels not only enrich product and content visualization or decreases the GDS expenses but also enable the airline to build a One Order backend architecture. The One Order concept of having orders and offers instead of PNRs (Passenger Name Record), Tickets and EMDs (Electronic Miscellaneous Document) will revolutionize the aviation industry.
The key aspect for airlines on their way to One Order is to implement a distribution strategy. It is not enough to simply buy some NDC solution from any tech provider and hope that it is going to fit the own IT architecture. To be able to use the full potential of NDC and One Order it requires a mind-set change within aviation companies. It is necessary to align on the objective to digitalize distribution channels over all company functions. To survive in the competitive aviation market nowadays you need to set up a reliable strategy towards NDC and One Order with a trustworthy partner now before it is too late.
Please feel free to contact us if you are facing challenges in this area or visit us at the IATA Airline Retailing Symposium in Bangkok on the 29th until 31th of October.