New Distribution Capability (NDC) is a travel industry-supported program launched by IATA for the development and market adoption of a new, XML-based data transmission standard (NDC Standard).  The NDC Standard enhances the capability of communications between airlines and travel agents. The NDC Standard is open to any third party, intermediary, IT provider or non-IATA member, to implement and use.​​​

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Today, airlines are offering a wide variety of products and services on their websites to appeal to the business traveler in the United States such as early boarding, preferred seating, a day pass for an airline lounge and so on. But TMCs using GDSs may not be aware of the full range of airline products on offer, and airlines cannot customize the offer based on who is making the request. The NDC Standard will enable the travel industry to transform the way air products are retailed to corporations, leisure and business travelers, by addressing the industry’s current distribution limitations including product differentiation and time-to-market, access to full and rich air content and transparent shopping experience.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Benefits of NDC:

NDC encourages airlines to take more control of distribution and encourages a rethink of an airlines inventory control and channel distribution strategy. Many airlines have lost control of their inventory and are dependent on 3rd parties both commercially and technically to get access to it.

Airlines say they are investing hundreds of millions of dollars in upgrading their products, with lie-flat seats, wifi on international services, new aircraft and so on – and yet the legacy indirect-distribution model does not support product differentiation – so one business class seat looks like any other, when it’s displayed as codes on a screen. However, the GDS providers say they have the capability to display rich content with images and info – it’s up to the airlines to supply them with the relevant data.

New Distribution Capability allows the distribution of airfares and ancillaries through third parties which is being developed by airline association IATA. It is a new way for them to connect with airlines could open up innovative solutions to deliver air content to clients.

Many airlines have given away control over their brand and product, so to take control over the offer, airlines need to control the inventory and this is precisely what has to change if airlines want to succeed in the world of retailing. NDC is about taking back that control so that they are in full control of their inventory and can choose to distribute any way they wish on any channel without fear.

NDC is the future of Airline Distribution : The travel consumer has changed and are becoming their own travel agents as they have as much or sometimes more information than traditional travel agencies. The changing nature of the travel consumer is spurring Metasearch and the larger Online Travel Agencies to evolve into online marketplaces where all the travel needs of a consumer are fulfilled.

In this rapidly changing landscape airlines need to guard against commodification and need an effective way of distributing and differentiating their products while addressing customer needs in whichever channel or touch point they prefer. NDC facilitates this and opens up new possibilities for airlines. Airline Distribution is evolving and the future looks a lot more like NDC than traditional retailing and distribution.

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Challenges of NDC:

Despite being a great opportunity, NDC has a few drawbacks that slow down its adoption across all major carriers.

NDC is not really a standard. The use of XML instead is supposed to be a standard, but in reality, the implementations are different and depend on the IT provider. So, there is no real “standard” for all. That means that if every airline would plug into their own NDC pipeline, there would be countless API channels impossible for OTAs and TMCs to integrate with.

Travel agents going directly to the airline could end up with more costs being passed on to the traveler, because the economics of NDC. There is the possibility that airlines might start charging TMCs for queries as well as bookings.

Distributors won’t leave the GDS pipeline. Travel agents are still more likely to use GDSs because they don’t require any changes and still generate revenues. For OTAs and TMCs a switch to NDC means additional expenses which don’t guarantee any benefits. Today, NDC adoption remains a premium option, rather than a necessity.

For NDC to be successful and reap the benefits for the stakeholders, it needs to be adopted by a critical mass of airlines. Currently the airline IT environment needs to be modified to facilitate the creation of the offer. Airlines have to develop within their PSS on top, both an Offer and Order Management System. Those systems will enable the airline to create the offer and process it until ticket issuance and payment.