The NDC (New Distribution Capability) standard, created by IATA, is a distribution standard in XML format aimed at facilitating the exchange of data between airlines and business travel agencies. NDC provides several capabilities:
- It allows airlines to publish and communicate more personalized and dynamic offers.
- It allows TMCs (Travel Management Companies) to offer travelers additional services (additional luggage, more room for legs, a more expensive meal, access to lounges in the airport, etc.).
NDC is a recent IATA standard. Although it is not mandatory, Airlines will one day need to comply with it, under pressure from indirect channels such as OTA (Online Travel Agencies) and GDS (Global Distribution Systems).
The most strategic advantage of NDC for airline companies is the ability to bypass the GDS and have access to the value-added information on the customer profile. Before NDC, airline companies published fares, schedules and availability information to GDS, TMC and OTA, and had virtually no contact with the end customer and no ability to provide the customer with tailored services, add-ons and specific prices.
NDC adoption is supported by both revenue increase and cost-cutting drivers. Capabilities that drive revenues include:
- Product attributes (differentiation): the ability to show competitive features that may be unique to the offer and therefore drive a purchase decision.
- Fare Families: displaying multiple price points, with increased value, may drive “upsells.”
- Ancillaries: displaying additional products (e.g., lounge access) may drive a purchase decision.
NDC is an opportunity for cutting costs, as it can be a trigger for modernizing often decades-old infrastructure and lowering supplier prices by increasing competition.
Airline companies adopt NDC mainly to stand out from the competition, and to increase revenue opportunities offered by additional products. They can use NDC in several ways, such as developing tailor-made offers for each customer account (flight + lounge, for example) and integrating third-party content (flight + shuttle service).
Target: 80% of passengers
The adoption of NDC is well underway. Over 40 airlines have already deployed, and two-thirds of the remaining are in the process of developing projects. Over 50 technology providers are now certified.
IATA hopes that by 2020, airlines representing 80% of passengers will have adopted the new standard, which is updated every six months. For some airline companies, NDC has become so strategic that they are reviewing their relationship with GDS such as Sabre, Amadeus and Portravel.
British Airways, and its subsidiary Iberia, for example, have decided to charge a fee of £8 for each reserved rate on systems that do not use a New Distribution Capability (NDC) connection. The supplement will come into effect from November 2017 on tariffs for all types of cabins and classes.
How to implement IATA NDC
NDC is a set of standard XML messages that allow the airline back-office to communicate with partners such as TMCs, OTAs, GDS and interline partner airlines.
The communication is done via an API, that is securely published and made available for external calls.
Publishing the IATA NDC API can be done easily via an API Gateway. You should consider the following capabilities when looking for an API Gateway product:
- A Gateway that integrates vertical and horizontal systems to provide an end-to-end solution
- It allows you to publish APIs easily and securely, to connect seamlessly your back-office applications together and with your customers and suppliers, etc.
- Allows you to publish APIs securely for consumption by user apps.
- It allows you to follow your customers’ engagement and monetize their usage.
Read more about an API Gateway in the modern enterprise.