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1. What is NDC?

IATA’s New Distribution Capability (NDC) is a standard for communication of data between airlines and their indirect distribution partners, such as travel agents, online travel agents (OTAs), corporate travel agents, metasearch and aggregators.

NDC is a set of open technology standards based on XML which will give airlines the ability to distribute all of their content through third parties. IATA is driving the NDC initiative together with industry partners and are pushing the travel industry to transform the way airline tickets are sold by enabling more control over distribution, content and offers.

2. What is the context for NDC?

The speed at which airlines have embraced eCommerce using the Internet has been incredible. As a result, airline websites have become very sophisticated distribution channels, with incredible merchandising and visualisation capabilities.

At the same time as investing in eCommerce distribution, airlines have changed their customer propositions and upgraded their offering on the ground and in the air. Today, there is a much wider variety of products and services available on airline websites: early boarding, allocated seats, lie-flat seats, wifi, baggage, product bundles. In the air, airlines have invested in new equipment with new aircraft like the Dreamliner and the A350.

However, all of these capabilities and products upgrades can be in vain if they cannot be merchandised across the channels that airline distribute. Indeed, it can be argued that airlines can do three things on their own .com websites which are very difficult or take lots of time to do through other indirect channels like online travel-agents, aggregators, corporate travel agents. For example:

• Airlines can differentiate their products on their own channel through pictures videos using ‘rich content’ –  the name for pictures, videos or just text descriptions for the products, for example, seats. This is much harder on the indirect channels, as they rely on the backbone of legacy ‘green screen’ technology for distribution and display.
• Airlines can use their own website to communicate new brand and product information for a faster time to market. Merchandising and distributing brand and product information for use by OTAs and corporate travel agents takes a long time.
• Airlines can personalise offers if a traveller chooses to be identified through the website. By using personalised propositions, airlines can not only improve conversion but also apply dynamic capabilities such as A/B testing to define ‘on-the-fly what are best propositions that convert

As a result, the current indirect-distribution model does not enable an airline to display the full range of airline products on offer, nor customise a customer offer based on the type of customer requesting the product. In essence, one airline seat is the same as any other, when displayed as codes on a screen.

3. Why has the NDC Standard gained such industry support?

NDC is an industry-wide program that leverages the power of
standardisation. As IATA says, by being part of the NDC programme, ‘participants ensure that the supporting schemas are functional and can be used by all regardless of business focus, geographic location, size, target markets and individual commercial policies’.

The NDC industry standard facilitates a much more efficient and
effective airline distribution system that will benefit airlines,
corporate travel agents, GDSs, and travel start-ups.

And, the NDC Standard does not just stop there: it also provides the opportunity to address the end-to-end airline distribution process, e.g. shopping, booking etc., and to deliver enhanced customer experiences.

4. What is the state of play with NDC in 2019?

The IATA NDC registry is now comprised of more than 100 companies, including 58 airlines. For NDC to deliver maximum benefits to airlines and consumers, IATA are promoting NDC adoption from Jan 2018 to Dec 2020 through the creation of a ‘Leaderboard’ of airlines, who have committed to having at least 20% of their sales powered by an NDC API.

As of January 2019, the NDC Leaderboard has 21 airlines who have committed to processing 20% of their bookings volume through NDC by 2020. The NDC Leaderboard has also resulted in ‘strategic byproducts’ created by the programme as airlines are now using NDC to as inspiration for experimentation.

If we plotted New Distribution Capability on a hype cycle where would it be? Rising up the ‘Peak of Inflated Expectations’? Or perhaps collapsing into the ‘Trough of Disillusionment’? Or maybe, NDC is starting to gradually climb the ‘Slope of Enlightenment’?

Research by the OpenJaw Centre of Excellence suggests that in 2019, the adoption of NDC by airlines will continue to accelerate with the effective use of NDC standards to introduce new products and offers to travellers gaining traction. Given the results of the IATA NDC Leaderboard, OpenJaw believe that NDC has moved beyond the ‘Peak of Inflated Expectations’ and the ‘Trough of Disillusionment’ in the ‘Slope of Enlightenment’ of the Hype Cycle.

5. How does the NDC standard tie in with an airline’s Retailing Strategy?

NDC is not just a message standard, it is part of the building blocks to turn an airline into a retailer. Indeed, the spirit of NDC is well captured in IATA’s slogan – “Together, Let’s Build Airline Retailing”.

Becoming an airline retailer means expanding distribution channels and products, controlling the offer, enabling full transparency of the shopping experience, and product differentiation. In this process, airlines can unlock comprehensive retail capability. Today, the way airlines currently sell does not allow for differentiation against competitors. The NDC standard facilitates the distribution of product offers combined with rich content, to give customers and agents more
compelling information to differentiate.

6. How does NDC relate to a wider airline distribution strategy?

NDC is just part of an airline distribution strategy, but it’s not the be all and end all. Too much of the debate on NDC is whether it will or won’t bring benefits to airlines, travellers and the industry as a whole.

While it is true that NDC has the potential to disrupt the GDS’s, it is not realistic or even sensible to think that they will disappear. The idea that network airlines can handle their comprehensive distribution needs with the significant volumes on their own is neither practical or feasible. There’s still a place for GDS’s, and NDC will bring welcome transformation of the existing capability they provide.

Think of NDC as GDS 2.0.

What NDC does bring is ‘new’ capability to the airline that they haven’t had before to directly connect to third parties. It will also bring about new age GDS-like aggregators such as Skyscanner. Is NDC the be all and end all? No, but it must be a core part of an airline’s distribution strategy.

7. How does NDC help airlines ‘take back control’?

NDC encourages airlines to take more control of distribution by encouraging a rethink of airline inventory control and channel distribution strategy. Many airlines have lost control of their inventory and are dependent on 3rd parties both commercially and technically to get access to it.

As an example, let us look at a network airline: when they take delivery of a new aircraft, they begin by adding the total number of available seats into their airline inventory system. Paradoxically, the same airline then pays to get that inventory from the GDS in the form of an offer to their customer. In other words, when retailing via indirect channels, airlines are paying a distribution fee to do and then cannot display their products the way they want.

To take back control over their brand and product, airlines must control their offer and control their inventory and can choose to distribute this inventory any way they wish on any channel. NDC offers the capability to deliver this.

8. How can you define an NDC strategy?

From working with numerous airlines on their NDC strategy, OpenJaw has defined a 7 Step NDC Checklist to help airlines define their NDC Strategy:

1. Understand the objective is not rolling out the NDC Standard. The objective is to transform themselves into an airline retailer by understanding the mindset of retail.
2. Define what you, as an airline are looking to achieve?
3. Set two types of goals – macro and micro
   Set a macro goal – “X% of my sales through new channels by Y date”
   Set a narrow goal – “I will move X% of traffic from .com referrals to direct booking”
4. Define where do you want to end? NDC  is not the goal, it’s the
   means – Airline retail is the goal.
   + Think in terms of the narrow goal (e.g., getting a connector up that works for Skyscanner)
   + Think in terms of the macro goal (e.g., having a retailing platform for multiple consumers)
5. Define where would you like to Start, and know what is your minimum feature set for Day 1?
6. Define what markets that you wish to start with? For example..home market with high volume, or new markets?
7. How can you deliver value quickly throughout this journey? The aim is to get to market, get some data, decide again from there and
   iterate from there.

9. Where do you start with your NDC Strategy?

The travel consumer has changed and is becoming their own travel agents as they have as much or sometimes more information than traditional travel agencies. The changing nature of the travel consumer is spurring Metasearch and the larger Online Travel Agencies (OTAs) to evolve into online marketplaces where all the travel needs of a consumer are fulfilled.

Aggregators and OTAs such as Trip, Skyscanner, Booking.com and Airbnb have created an expectation of how travel can be researched, priced, purchased and experienced.

The distribution ‘game’ is moving on: indeed, it can be argued that airline distribution is evolving and the future looks a lot more like NDC than traditional retailing and distribution.

In this rapidly changing landscape airlines need to guard against commoditisation – or face a struggle to keep up.

So where to start?

The key is just that: to just start. In particular, start small and then grow as the NDC strategy proves successful. The current popular NDC strategy is to create a Branded Store Front e.g. with Skyscanner. Additionally, consider a Direct Connect with B2B Partners such as a Travel Agency or Travel Management Company. For advanced airlines, a Developer Portal based on the NDC API will help enable 3rd party innovation.

About OpenJaw and NDC

By choosing OpenJaw for your airline’s retailing strategy of Air and Non-Air Products, your airline can launch NDC and then continue to expand the retailing strategy to the full range of travel products including Air Ancillaries, Hotel, Car and Attractions.

At OpenJaw, we know what matters most in travel, so we have created the most powerful technology platform in travel today: t-Retail. The OpenJaw t-Retail NDC enables airlines to distribute offers to any channel directly using the t-Retail NDC API whether with a Metasearch provider, Online Travel Agency or by creating a Developer Portal for 3rd party innovation.

With OpenJaw t-Retail and it’s NDC API, airlines can:

• Control the offer with the completely open and flexible platform and powerful business rules engine
• Retail all the travel products from a single platform
• Expand the retailing across channels and touchpoints
• Lower distribution costs e.g. through cost-effective Fare Search

OpenJaw has been involved with NDC since the inception of the programme and is Level 3 NDC certified. OpenJaw is actively working with IATA to evolve the NDC standard as well as being a strategic partner for IATA’s ONE Order programme.

OpenJaw is proud to partner with blue-chip carriers such as Cathay Pacific Airways who selected OpenJaw Technologies as their NDC partner to significantly enhance its customers’ experience across all channels.

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