The complete guide to New Distribution Capability (NDC) for 2020
Over the course of the 18th century European politics, philosophy, science and communications were completely reoriented as part of a movement referred to by its followers as the Age of Reason, or simply the Enlightenment. Enlightenment followers in Britain, in France and throughout Europe questioned traditional authority and embraced the notion that humanity could be improved through rational change.
If we plotted New Distribution Capability on a hype cycle where would it be? Peak of Inflated Expectations? Trough of Disillusionment? Slope of Enlightenment? There have been considerable movements in the industry related to NDC in 2017 with a number of significant announcements from airlines that OpenJaw believe will move NDC into the Slope of Enlightenment.
Here at OpenJaw, we have identified the seven keys that will help airlines find NDC enlightenment.
- NDC is not just a message standard, it is about becoming an Airline Retailer
Looking past the implementation of the new message format to improve communications between airlines, and the industry, 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 and in the process unlocking comprehensive retail capability for your airline. Airlines spend a huge amount on product however the way Airlines currently sell does not allow for differentiation against competitors. NDC facilitates the distribution of product offers combined with rich content, to give customers and agents more compelling information to differentiate. NDC is not just a message standard.
- NDC is part of your Distribution Strategy, but it’s not the be all and end all
Too much of the debate on New Distribution Capability 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 it 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 needs to be a core part of an airlines Distribution Strategy.
- NDC encourages airlines to take more control of distribution
NDC encourages a rethink of an airlines 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. Take a large network carrier, they buy a 777-ER for $300 million USD, they take delivery, key in the tail number and seat map into the inventory system and then pay (most of the time exorbitantly) to get that inventory back out again in the form of an offer!
Many airlines have, to some extent, given away control over their brand and product, so to take control over the offer, airlines need to control the inventory and this is precisely what has to change if airlines want to succeed in the world of retailing. NDC is about taking back that control so that they are in full control of their inventory and can choose to distribute any way they wish on any channel without fear. For Lufthansa and BA, their moves are clearly not a publicity stunt, it’s about re-balancing control of distribution.
- Think big – define your NDC strategy
OpenJaw firmly believes airlines should implement the spirit of NDC, transform to become an airline retailer, take control of inventory and distribution channels, and think of New Distribution Capability as much more than a message standard. NDC also allows airlines to expand 3rd party direct sales and use the new message capability to differentiate your product. Challenge the current distribution model – think big.
- Start small – make a start
OpenJaw understand that figuring out where to start NDC is a challenge. An NDC journey should not only be about being compliant to the IATA standard but rather about transforming the airline’s distribution strategy and the benefits that brings such as enabling retailing across all channels, increased revenues by expanding distribution channels and products, and of course lower distribution costs. OpenJaw recommend to start small and then grow as the airline proves successful. There’s a trend in the industry 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.
- NDC is the future of Airline Distribution
The travel consumer has changed and are 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 to evolve into online market places where all the travel needs of a consumer are fulfilled. In this rapidly changing landscape airlines need to guard against commoditisation and need an effective way of distributing and differentiating their products while addressing customer needs in whichever channel or touchpoint they prefer. NDC facilitates this and opens up new possibilities for airlines. Airline Distribution is evolving and the future looks a lot more like NDC than traditional retailing and distribution.
- Find an ‘enlightened’ New Distribution Capability partner
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 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. At the heart of the t-Retail NDC is Offer and Order Management capabilities that enable shopping, booking, payment, and servicing. Additionally, the powerful t-Retail Platform rule engines complements the NDC capabilities by providing full control of the retailing strategy to the airline.
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. With OpenJaw t-Retail, you 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
At OpenJaw, we know what matters most in travel, so we have created the most powerful technology platform in travel today: t-Retail. And it gives airlines, OTAs and loyalty brands everything they need to retail all travel products to increase revenue and enable redemption.
References: Enlightenment, History.com (2009). Retrieved from http://www.history.com/topics/enlightenment [Accessed Date: 9 October 2017]