{"id":18422,"date":"2022-12-16T11:01:59","date_gmt":"2022-12-16T05:31:59","guid":{"rendered":"https:\/\/cigniti.com\/blog\/?p=18422"},"modified":"2022-12-21T11:59:10","modified_gmt":"2022-12-21T06:29:10","slug":"airline-retailing-new-distribution-capability-ndc","status":"publish","type":"post","link":"https:\/\/www.cigniti.com\/blog\/airline-retailing-new-distribution-capability-ndc\/","title":{"rendered":"Transforming Airline Retailing with New Distribution Capability (NDC)"},"content":{"rendered":"

It will not be an overstatement to say that some of the most revolutionary breakthroughs have been driven by and taken place in the aviation industry. Decades ago, jet engines catapulted the airline industry out of capacity constraints, enabling it to carry many more travelers. The deregulation of the airline industry provided flexibility and freedom for players to set competitive ticket prices. Together, these allowed airlines to democratize and commercialize travel, but the immediate challenge was reaching out to a large customer base and selling efficiently – Travel Distribution.<\/p>\n

The transformation of Computer Reservation Systems (CRS) into Global Distribution Systems (GDS) was the breakthrough that provided much-needed momentum to overcome distribution challenges in the 1960s and 1970s. With travel management companies and organizations like IATA becoming part of the ecosystem, the value chain grew more robust, creating one of the most critical economic drivers.<\/p>\n

Today, however, the challenges faced by the airline industry are different, thanks to a newer, more complex equation. The challenges comprise a multitude of airline business models, a wide range of distribution channels, and an empowered group of customers and travelers with varying tastes and needs. To thrive in today\u2019s competitive market, airlines must reach out to customers with personalized offers and engage them throughout to maximize lifetime value. This requires a paradigm shift in retail thinking in the travel industry.<\/p>\n

If we look at how the retail industry evolved and thrived in today\u2019s world, it was by gathering information about the customer’s tastes and preferences at every touch point. The airline industry wanted to emulate this by collecting traveler data from the point of inspiration to the point of return.<\/p>\n

\"Evolution<\/em><\/p>\n

Exhibit: Evolution of travel distribution and airline retailing<\/em><\/p>\n

New Distribution Capability (NDC)<\/strong><\/p>\n

The conventional distribution technologies introduced in the 1970s posed greater challenges for the industry later. Airlines were limited in their ability to access information about the traveler and their tastes and preferences, which was required to create personalized offers. Traditional airlines that relied on GDS were overshadowed by newcomers who leveraged the internet to sell unbundled products directly to the customer. This continued until the International Air Transport Association (IATA), the body of travel industry standards, came out with the NDC program to create a level playing field for all.<\/p>\n

\"How<\/em><\/p>\n

Exhibit- How NDC benefits the stakeholders<\/em><\/p>\n

How NDC transforms airline retailing<\/strong><\/p>\n

NDC is an airline distribution standard that was introduced in 2012. It is technically an XML-based data-sharing protocol that allows airlines to dynamically package products and ancillaries. Being flexible and not constrained by any software or hardware, XML provides airlines with considerable scaling opportunities to reach rich content directly to the market, be it travel management companies, agencies, or aggregators. This provides several key benefits, including:<\/p>\n