Everybody is talking about NDC (New Distribution Capability), it has become the buzz word in today’s travel industry.
I would like to invite you to meet the players from the flight distribution chain, in a few simple words.
The distribution of airline tickets through the GDS, although efficient, disrupted the relationship between the airlines and their buyers. It led to airline tickets turning into commodities, which led to price competition alone.
Therefore, just like any other seller out here, the airlines sought for differentiation through their services, packages of services and price points. They needed a more varied offer to better address the passenger needs and move away from commoditisation.
This required a new distribution model, giving them the opportunity to better present their offers such as features to upsell and cross sell as well as the opportunity to incorporate customer preferences.
IATA proposed the NDC XML communication standard to eliminate the chaos that could occur into the distribution chain if each airline would have its own protocol to distribute.
Therefore, it is fair to say this movement is fuelled by the airlines who have a direct interest for differentiation of their services.
Next, we have the OTAs that enable the end users search and book flight tickets online. Interested in better serving their passengers, the travel agencies and the TMCs that issue flight tickets for offline and business travellers through booking systems are also users of the new distribution model.
Who else is out there in the chain? The travel tech providers, who are not directly involved in selling flight tickets, but are developing booking solutions for travel agencies, OTAs or TMCs.
The booking system further interconnects with other software (like mid/back office solutions) that make possible the A-Z distribution as we know it today, so the effect of the change brought by the NDC standard is at least as impactful as in the case of the airlines. The tech providers however are much more exposed, as they need to carefully weigh what to invest their resources in, to stay relevant in the software industry.
So, we have the complete chain – the airlines, the buyers and the tech providers. They all need to take a step forward, meet one another, learn about each other’s systems and see how they could reorganize efficiently according to the new established order.
* The writer is head of software development at dcs plus
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