International Air Transport Association (IATA) senior vice president, industry distribution and financial services, Aleks Popovich, addresses the misperceptions surrounding IATA's New Distribution Capability
IATA’s New Distribution Capability (NDC) represents a unique opportunity to modernise air travel distribution. Currently, airlines use Internet programming language (XML) on their websites and are able to offer travel consumers an online shopping experience similar to what they can find on retail websites such as Amazon.com.
However, the Global Distribution Systems (GDSs) use a less flexible pre-Internet message protocol. This legacy infrastructure cannot efficiently support modern retailing practices such as personalised and customised offers. An airline that offers some extra leg room or a special meal option cannot entice the customer with this added value when selling through travel consultants because the GDSs cannot currently present that information effectively and attractively.
Furthermore, in most cases, the airline does not know anything about the customer until the reservation is made, making it difficult to personalise the offer, as is common in most Internet retail activities.
That’s where NDC comes in. NDC is an IATA-led collaborative industry initiative to define a messaging standard that will enable retailing opportunities through the indirect channel similar to those available on airline websites.
Using an XML-based standard, NDC will enable a dynamic, vibrant marketplace that is not possible with today’s closed proprietary systems.
The NDC foundation standard was approved in October 2012. The next step is to conduct trials, which could begin as early as April. NDC will bring to travel consultants the ability to offer travellers the same products and services they often can only find on an airline’s website.
But there are some misperceptions that need to be addressed:
Customers will not have to surrender their privacy to compare fares or services and amenities.
But consumers will benefit by providing additional information. In this regard, buying air travel through NDC will be no different than other shopping experiences, such as grocery and department stores providing discounted offers to “club members”. Furthermore, airlines will have to conform to privacy laws and regulations concerning the collection and use of personal data – just as they do today.
It will be possible to compare fares using NDC and the intent is not to cut GDSs and travel consultants out of the system.
There is a content aggregator role in NDC to enable comparison shopping. Additionally, NDC will help travel consultants add value to their clients by allowing for comparisons of product and service options that today is only available on individual websites. It will facilitate the easy sale of ancillary products.
NDC welcomes broad participation of the travel consultant community in the development of NDC standards and determining business requirements.
IATA has and continues to engage with all participants in the travel chain including travel consultants, agent associations, airlines, GDSs and other technology providers. Furthermore, no airline will be required to participate in NDC.
Change always brings challenges. NDC will bring change. And the market will determine which aspects of that change are valuable to customers and offer business opportunities to the value chain.
NDC will lead to a better-informed shopping environment for air travel that will deliver value to passengers and create business opportunities across all aspects of the industry. And building it on principles of transparent standards, openness to innovation, fully informed consumer choices and collaboration across the value chain will make for a better tomorrow.