What is New Distribution Capability? An NDC Primer for Travel Agents

New Distribution Capability—henceforth and forever known as NDC—has been a buzzword as of late in the travel industry . . . and that buzz is getting louder. So if you haven’t heard it yet, you will soon. How about now?

But let me be real: NDC is really freaking confusing. Even after digging into the subject, I’m still not 100% sure exactly what it is. In part, this is because NDC hasn’t reached fruition, so there aren’t a lot of examples of NDC technology out there to reference. But let me tell you another dirty little secret: I don’t think most people are 100% certain what NDC is (and I’ll go into that later).

But in this article, we’ll chat about what NDC is and what travel agents need to know about it (and, if I’m honest, probably stuff you don’t really need to know too).

What is NDC?

At its core, NDC is a standard of data communication between airlines and travel agents.It marks a switch from one data language to another — from Edifact to XML.

I think the easiest way to look at things is to think of Edifact as an old Model T car. It works and gets people from point A to point B, but there aren’t a lot of frills. XML is like technology-enabled cars, they’re able to do so much more! You can offer bluetooth, GPS, self-driving capabilities, crash aversion, the list goes on and on. The old Model T’s just don’t have the infrastructure to do that, even if the technology is available.

If you want to get into tech speak, NDC marks the transition from an older Edifact (known also as EDI) standard (which is more costly and cumbersome to update and change) to the more-accommodating XML standard. Unlike Edifact, XML defines a set of rules for encoding documents that is both human-readable and machine readable.

NDCs will optimize API connectivity between airlines and travel agents. Essentially it means that travel agents will have access to a full breadth of an airline’s product (including ancillaries like baggage fees, pre-assigned seats, boarding privileges, etc.) for a more streamlined purchasing experience. Right now, if a client wants to book pre-boarding or pre-pay for their luggage, the agent has to leave the GDS, which is tedious and inefficient. With NDC, the vision is agents will be able to shop for all these services in a single transaction at one place.

But no, seriously. What is NDC?

Nintendo is fun. I like Nintendo. My favorite game was the track and field game. Do you remember that old school track pad where you’d run and your pixelated avatar would move two beats behind you, jumping over hurdles and throwing javelins? That’s Edifact.

Then there was the evolution to Nintendo Wii. Much more sophisticated. You make your own avatar (yep, you can pick your very own track suit). When you play, time after time, it recognizes your profile and tracks your tastes, your progress, your times. Whereas the original Nintendo thinks every gamer is the same, Nintendo Wii is customized to the user . . . and that’s the capability of XML.

What does Nintendo have to do with booking travel?

Right now, when agents look up flights in the GDS or online, the results––while plentiful––mainly show route and availability information. This is all fine and dandy, but as airlines strive to differentiate their products with ancillaries (extra legroom, extra baggage fees, comfort class upgrades, meals etc.), agents need to be able to see more than just routes and availability. And the results certainly aren’t tailored to previous purchasing habits of the traveler. (That’s right, you have to wear the same track suit every time.)

Now, when an agent books an airline ticket, they (or their client) will need to go back and add-on ancillaries or change the booking according to that traveler’s specific wants and needs. Kind of a time suck.

But with the evolution of NDC, what pulls up when an agent searches for a flight in the GDS (or another intermediary) will be much more comprehensive. It will include options for all those ancillary goodies. But not only that, it will show pictures and fancy pop-ups so the agent can be more educated (and better educate their traveler) on the options. Plus it can tailor their offers according to a traveler’s pattern of preferences according to prior bookings (their profile). The offer will be able to bundle all of that good stuff to get ticketed in one go.  

It’s a more personalized experience. And that, my friend, is what it has to do with Nintendo.

What else is so fancy about NDC?

1. Personalized Shopping Experience: We chatted on this above. But essentially, when an agent searches in the GDS, the airline doesn’t know anything about the traveler who is shopping until after the ticket is purchased. But airlines want travel agents to have the opportunity to provide personalized offers according to option user profiles (including details such as Frequent Flyer or Corporate IDs) based on who is shopping, just as if they booked directly on their website with an account login.

With NDC capability, the traveler can choose to save account information on their profile (this is not required, rest assured for the traveler hesitant to throw around personal information), which will customize the search results. For example, maybe wifi is included for corporate traveler Stephanie, but infrequent leisure traveler Mary has to pay $12 for wifi on the flight—with NDC, that will change the pricing results for each purchaser before Steph and Mary even decide on the flight.

2. Rich Content (i.e. pretty pretty pictures): With NDC comes the ability to display pictures and product detail. This will help airlines better market their ancillaries (wifi, meals, seat selection, fast boarding etc.) so customers can compare several items (and airlines) at once. For travel agents, this can arguably make it easier to communicate with their client about product differentiation beyond price and schedule.

And speaking of product differentiation . . .

3. Product Differentiation and Product Time to Market (Airlines Are Special Snowflakes): Airlines have difficulty differentiating themselves when clients are driven to focus just on price and schedule.

This is especially true with aggregators and metasearch engines that dump a ton of offers for every search, and a $4 increase in a ticket price can mean an airline’s fare will be bumped to page two or three of the search—even if that $4 gets you better meals, more baggage, or legroom. (Yep, this is why travelers who book through OTAs spend so many hours on so many different websites comparing prices). 

But with NDC, it will be easier for airlines to market their product in a way that better articulates the value of the product to their customer whether it be through a metasearch engine like Expedia, or a GDS system like Amadeus.

4. Streamline Content for Consistency: NDC will also give airlines complete autonomy over content and pricing through various distribution channels (their site, GDS, OTA etc.), as well as give them the ability to customize their offers based on the information they know about the customer.

In our chat with Yanik Hoyles, Director of NDC Program for IATA, he stated that, “In the world of NDC/API connectivity, you’re enabling the airline to have one single source of content, which if you want of course, you can push in a consistent manner through all the channels. So the customer will have a much more consistent experience.”

In a blog post from the IATA symposium Hoyles refers to NDC as “both channel agnostic and business model agnostic.” This means that NDC will be able to communicate the data—their products—through any channel that is NDC capable (less work for them).

These above items are particularly exciting for airlines, who will be able to better market their products to their clients (yep, that’s you!).

What does NDC look like in operation?

NDC won’t look one certain way for everyone (more on that later). Airlines will be able to choose what they show and how they implement NDC. That said, IATA provided a tutorial where Hoyles  narrates and illustrates what is possible with NDC, giving travel agents a look at what the shopping experience could look like on the ground.

The caveat here is that the video does not depict an active or actual program—rather it gives a demo of what NDC may look like in the future:

Frankly, after watching it, you may wonder why you read this far, but I promise that this article will have fireworks at the end.

How will NDC help travel agencies?

NDC is meant to help airlines woo customers—which in turn will help travel agents woo their customers—through more targeted marketing. It’s also intended to help travel agencies by streamlining the offer and order management.

Hoyles elaborated on how NDC can help facilitate the booking process for travelers and travel agents alike: “Ultimately, [NDC] will mean that the customer will have a much more transparent and consistent shopping experience. . . . The customer will be able to compare a lot easier. Because if he sees a price in business class on British Airways from Paris to NY via London and another price from Lufthansa from Paris to NY via Frankfurt, today all you can see is a flight and a price. Whereas tomorrow the customer will be able to compare what the seat looks like, what’s offered, the fast track, the lounge, the points, the mileage you earn etc.”

NDC has potential to streamline a travel agent’s workflow, making booking an airline ticket more efficient—especially for corporate agents. Of course, this convenience and transparency will also be extended to travel consumers that book online as well.

At the end of the end of the day, it’s tough to offer a “verdict” on NDC since much of it is not in action. Whether or not NDC will shift consumer behavior from booking air through a travel agent to booking online remains to be seen. For travel agents (especially corporate agents) interested in exploring some ideas of how NDC might impact their business, they can check out this GBTA webinar on Wed., Dec. 6th, “How Changes in Airline Distribution Will Impact Your Travel Program.” 

This all sounds nice. What are we waiting for?

This is the part where I bring in about 10,000 caveats. NDC isn’t something the travel industry can rush into even if they want. In 2012, IATA approved of the airplane-model-sounding “Resolution 787in support of the NDC standard. In 2015, IATA launched an NDC certification program for airlines, aggregators, travel management companies (TMCs) and travel sellers.

The NDC standard itself is not static. Since then, IATA has released five different versions of the standard and is expected to release two more versions in 2018. So the investment to achieve NDC booking nirvana has been a long-term development.

Here’s a few other complexities about NDC:

1. NDC isn’t required. Airline and travel organizations are not required to implement NDC. The risk of not getting on the bandwagon is that they won’t be competitive with airlines and aggregators who are NDC certified in the long run.

2. There’s no unilateral implementation. How participating travel companies implement the NDC standard, ironically, is not standard. There’s no mandate on how NDC is to be implemented—that’s up to the individual company. So even if a travel organization is NDC certified, it will look different from organization to organization.

Not only are there different versions of NDC, but there are different levels of NDC certification and capability. Different organizations are NDC certified or capable at different levels. This means that when travel agents and consumers go to book tickets on sites with NDC capability, it won’t look the same from site to site.  

3. The NDC technology is expensive. Really really expensive. Enough said.

Who is developing this technology?

Of the 44 airlines who are pursuing NDC, 37 are doing both offer and order management—the highest level of the standard. In order for aggregators to have access to this airline data, they too will need implement the NDC standard in order to have access to and offer these products to their customers . . . lest they allow airlines to incentivize travelers and agents to book direct, bypassing OTAs and aggregators.

American Airlines (fully NDC capable) is an example of an airline that wants to incentivize agents to book through NDC capable channels. To do so, they’re offering a $2 commission to agents per segment. Whether that’s enough of an incentive to steer agencies to develop their own NDC capability or to steer them toward an NDC-capable third party remains to be seen. If the 12 thumbs down and 0 thumbs up on this Travel Market Report article on the topic are any indication, agents are going to need a larger incentive.

Travel agents who really want to geek out and study up on participating travel organizations, you can check out IATA’s NDC registry to see if your agency or your host has relationships with any of its participants. 

GDS and NDC

For many travel agents, GDS is where the rubber will meet the road when it comes to NDC capability. Only more recently did GDSs get on board with NDC capability. Hoyles touched on the NDC progress of three major GDS programs:

  • In early October, the chief executive of SABRE, Shen Menken announced at The Beat Live that in 2018 SABRE would be certified at level 3 as an aggregator.” 
  • “At the World Passenger Symposium Amadeus, stood up on stage for tens of minutes explaining they will be live as an aggregator, level 3, in 2018 . . . They also said that the reasons for their decision was that there’s now many airlines engaging in NDC strategies across the world. Second, that they saw that the standard was now robust enough for them to start industrialization. And they’re going to start working on 18.1 which will be released in Jan.”  
  • Travelport also made a very similar statement, the only difference is that Travelport said that they may even be certified by the end of 2017.”

This means that travel agents who use GDS should see the fruits of NDC in practice within the next year.

Next steps for travel agents

At this point, most readers can breathe a sigh of relief—the kinds of travel agencies that would consider investing in NDC technologies are mostly large (massive) international travel agencies and OTAs.

So what’s most important for smaller and mid-sized agencies is to be aware of NDC developments. If you want access to this technology, you will want to seek out airlines and aggregators who can access this content and book through those channels.

Hoyle recommended that travel agents who are interested begin having conversations with their various distribution partners—whether they’re aggregators or GDSs—and discuss how they can partner to enable access.

If an agent is hosted, they can ask their host what might be around the corner in terms of how they’re cultivating relationship with NDC-certified providers.

Since NDC is still in development, there’s a heckuva lot still up in the air, and much of NDC capability is more speculative than in practice. But that will change. At this point, you should be proud of yourself. Relatively speaking, if you made it through this article, you’re an NDC expert.

But I’m curious to hear from you. What is your your understanding of NDC, and what kind of conversations is your agency beginning to have on that subject? Comment below! Long live NDC geek-fest!

And oh yeah . . . I didn’t forget about the fireworks I promised. Behold the glory:

 

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