NDC is a response to 3 challenges that exist in today s airline distribution eco-system:
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- Asher Arnold
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2 NDC is a response to 3 challenges that exist in today s airline distribution eco-system: Airlines don t have the ability to distribute their products across the travel agent channel without being,owing to the limitations of the current 3 rd party distribution architecture Travel agents can t easily access many airline products that are available on airline websites The customer experience is not consistent depending on where they search for travel and not rich when shopping through travel agents. This has ramifications 2
3 IATA was created in 1945 to set industry standards that facilitate safe and efficient air travel (e.g. e-ticketing, bar-coded boarding passes, common use airport kiosks, etc.) In the case of NDC, working with our travel value chain partners, IATA has developed a standard that enhances the data communications capabilities between airlines and travel agents. In other words, NDC is the modernization of 40-year-old data exchange standards for ticket distribution that were developed before the internet was invented. The approach consists of using XML (Internet) language to support the delivery of rich content such as the ability to buy ancillary products and services in travel agency and other third party systems. The NDC standard will also enable customers to be recognized and receive personalized offers, or shop anonymously, as they choose. The primary driver for NDC is the revenue opportunity. NDC will unlock value through the travel agent channel by providing it with features and content it cannot (or is difficult to) access today. Key revenue drivers: Product attributes (differentiation): ability to show competitive features 3
4 that may be unique to the offer and therefore drive purchase decision Fare Families: displaying multiple price points, with increased value, may drive up sells Ancillaries: Displaying additional products (e.g. lounge access) may drive purchase decision NDC provides the capability for all these features to be pushed out to the travel agent channel. Of course, there are some potential cost benefits (but once again not the main driver). Key cost drivers: Moving from a 40-year old legacy infrastructure to an internet environment will make change much more cost effective NDC should facilitate new entry, which should increase competition and drive down costs NDC also provides the airline with the opportunity to consider cost reduction opportunities in the areas of ticketing, payment and revenue accounting 3
5 With the release of 17.2 in September, significant stability in the standard has been achieved. The standard will continue to evolve in response to feedback from users and increased technical capability. The structures of 18.1 (to be released in the first half of 2018) and 17.2 are very similar, but in 18.1 the names are aligned to airline industry best practices. 113 airlines have said they are planning to adopt the NDC standard, up from 86 last year, and 44 airlines have deployed NDC, meaning they have performed live transactions through an NDC channel either directly with a travel agent partner or via an aggregator. 55 IT providers and aggregators are NDC certified, up from 36 last year. At the World Passenger Symposium in October, all three global distribution system (GDS) providers Amadeus, Sabre and Travelport confirmed that they will achieve Level 3 NDC Certification as aggregators the highest level of certification by the end of
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9 IATA has published Taking the Reins, the Story of How Passionate Travel Managers Created a Vision of the Future of Business Travel Aviation. It is the story of a group of travel buyers who said, This is what we want, now let s go make it happen! This extensive report documents the process that led to the generation of 60 ideas for airline products and services that an NDC environment could enable. This paper also sets the foundation for a vision of a new airline - buyer relationship, which consists of a model with nine core components for a more strategic value chain collaboration. 8
10 Hackathons are a great example of how NDC, by modernizing the communication protocols between airlines and travel agents, creates opportunities for new entrant developers to build innovative solutions around the NDC standard. Hackathons are a great opportunity to build our relationship with the developer community - fundamental to the successful development of the technology driving the adoption of NDC. Recent Hackathons: Dublin May 2017 Silicon Valley hosted by LinkedIn (25-27 August, 2017) Paris hosted by Ecole Polytechnique (20-22 October, 2017) Videos are available on IATA s Youtube Channel 9
11 Video featuring Arvis Solution by App in the Air. Click here to watch the video: 10
12 We are now coming to the end of our first 5-year cycle of NDC encompassing the launch and development of the standard, and the pilot phase. From 2012 to our priorities included: Creating the foundation standard Obtaining US Dept. of Transportation approval for resolution 787 Raising awareness and building an NDC community of airlines and IT suppliers to pilot and demonstrate the standard Delivering a robust standard to the industry We have also driven airline capability and we will end the year with over 45 airlines that have been certified as NDC capable. For the next phase we are going to work across the entire value chain to help airlines and their partners (travel, agents, corporate buyers and technology companies) to drive a critical mass of NDC transactions. 12
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