Preparing for an NDC Rollout

In their enthusiasm for the positive revenue and cost outcomes of a successful NDC strategy, airlines may overlook the need to plan certain practical elements of their NDC rollout. Failing to adequately plan can undermine the strategy's chances of success and/or time to market, leading to unmet financial goals, frustration among third-party channel partners, and dissatisfied customers. In this piece, we provide an overview of the essential elements of the NDC rollout plan that need to be determined in advance to achieve optimal results.

Aligning on the ”What”: Deciding which content to distribute

The first step in rolling out an NDC strategy is deciding what it is that the airline wants to distribute. This decision is foundational to the strategy but typically lies outside of the airline’s distribution team. 

Some airlines opt to offer a full-service product, while others provide ancillary options through bundling, and still, others offer fully unbundled fares with ancillaries available on an à la carte basis. Additionally, there's the consideration of whether products and fares will be priced statically using filed fares and product catalogues or dynamically using AI or machine learning algorithms. In most cases, airlines aim to enhance their offers with rich content, leveraging services like ATPCO’s RouteHappy to showcase their products optimally.

The airline must determine which products and fares will be exclusive to the NDC channel based on commercial or technological reasons. Similarly, it must decide whether and to what extent fares available via EDIFACT should be increased, removed or have additional fees or charges levied on them. These decisions can come with significant revenue risk and therefore often require considerable organisational alignment between departments with sometimes competing goals.

It is crucial, however, to address these challenging discussions proactively, as excessive volatility in the airline's content distribution decisions could disrupt or delay its NDC rollout.

Prioritising the “Who”: Identifying key third-party channel partners

One of the most challenging aspects of planning an NDC rollout is overcoming historical assumptions and practices. The prevailing commercial philosophies, distribution decisions, contracting processes, and technologies within the industry are typically based on the premise that all airlines should distribute all products through all channels to all customers at all times.

Contrarily, NDC serves as an enabler for implementing segmented product and pricing strategies that can be customised to the channel and customer at the right time.

This philosophy of segmentation should guide how the airline prioritises travel agencies participating in its NDC rollout. Certain travel agencies are happy to continue selling EDIFACT fares and, where these  fares are sufficiently high, the airline may find that acceptable. 

Identifying segments of travel agencies which are happy not to participate in the NDC rollout is an often-overlooked advantage, which helps airlines focus their efforts on the travel agencies that can generate the highest ROI from NDC-enabled content, such as à la carte ancillaries, bundles, and continuous pricing.

Given limited resources, it's impractical to roll out NDC to all third-party channels simultaneously. Therefore, prioritising channels with the greatest potential impact becomes crucial.

Next, it's essential for the airline to solicit feedback from these agencies regarding the successes and challenges they've experienced with NDC implementations across other airlines. This feedback serves as valuable input for the airline to make informed decisions about whether to pursue direct integrations or utilise NDC aggregators, and if so, which ones are likely to deliver the most volume quickly. 

Additionally, gathering feedback helps the airline assess whether involving GDSs in the NDC rollout is critical to its success, and if so, what the likely timeline and level of effort associated with a GDS integration would be.

Understanding the “Why”: Deciphering what drives third-party channel behaviour

Travel agencies are generally not interested in change for the sake of change. Many derive most of their revenue from sources other than airlines, making broad access to content their primary objective when it comes to sourcing air.  If the EDIFACT channel provides sufficient content to drive the desired results from the rest of their business, they are unlikely to make significant changes to their technology or operational processes. 

Changing travel agency behaviour usually involves some combination of content differentiation and financial incentives in favour of NDC-powered channels.  Of these two, content is typically the most powerful lever. Therefore, it’s crucial for the airline to understand which content is most critical to the travel agencies that are most important to its NDC ROI. This understanding can help the airline create a large enough gap between EDIFACT and NDC to drive the behaviour it desires from prioritised travel agencies without taking unnecessary revenue risk among other travel agencies.

Preparing for the “How”: Equipping for the NDC implementation

Before the NDC rollout begins, airlines must ensure that their technology and teams are prepared to integrate new third-party channels and operate at scale.

On the technology side, this involves having a comprehensive program planned which aligns the resources associated with all impacted systems on a single, cohesive project timeline. For example, an NDC API is not very useful to third party channels unless the promised content benefits have been enabled by the revenue management and shopping systems which lie beneath.  It is therefore common for NDC implementations to be one component of a much larger technology roadmap.  The same roadmap will typically call for important planning activities like ensuring any third-party technology NDC API provider is prepared to scale to support the integration timeline and transaction volumes it foresees.

Equally important are staffing considerations.  The airline’s NDC integration team must be staffed with people who understand travel agency processes so that they can translate business requirements for their internal and external technology teams. The airline should also have clear support and maintenance processes agreed in advance with its technology supplier. This entails identifying the teams responsible for providing onboarding support, as well as first- and second-level technical assistance to third-party channel partners and ensuring that these teams are adequately staffed and trained.

Planning the “When”: Providing adequate time for the rollout

NDC transitions do not occur overnight. It is a labour-intensive, channel-by-channel exercise which can take time and come with unpleasant surprises.  It is important that airline Distribution teams manage the expectations of their senior leadership accordingly.

Armed with adequate patience, an airline can give its travel agency partners sufficient lead time to prepare for the implementation of the airline’s chosen method of content differentiation.  Clear and transparent communications with travel agencies are key to success.  An airline should be open about what specifically it intends to do, and which NDC integration options will be available.  Then, throughout the time between the initial announcement and implementation of the airline’s content differentiation strategy, it is important to maintain open lines of communication with travel agencies to answer practical questions and ensure they feel supported.

In conclusion

The best NDC strategy can fail if its rollout is not properly planned. It is a complex endeavour that requires cooperation among numerous internal and external parties. Managing this complexity demands advanced planning and prioritisation. By fostering closer partnerships among its internal teams, NDC technology supplier, prioritised travel agency partners, and their third-party technology enablers during the planning phase, an airline can streamline the process to unlock the most benefits in the shortest amount of time without expending unnecessary resources.