The travel industry is witnessing a significant transformation, particularly concerning the distribution methods employed by airlines and travel agencies. At the forefront of this change is the New Distribution Capability (NDC), a format designed to enhance the airline booking experience. A recent analysis revealed noteworthy growth in NDC volume, reflecting its increasing relevance in a market traditionally dominated by legacy systems. Accelya, a market leader in NDC capabilities, reported that their NDC volume doubled in the past year, with notable airline clients like American Airlines, United, and Lufthansa leading the charge. This surge indicates a pivotal moment for the industry, although challenges and hesitations persist within certain sectors.
The numbers associated with NDC adoption paint an optimistic picture. With NDC accounting for 20.3% of ARC-settled bookings last year, primarily driven by online travel agencies (OTAs), it is clear that the new system is quickly gaining traction. Yet, the corporate travel segment remains somewhat reluctant to embrace this change. Tye Radcliffe, Accelya’s Chief Customer Success Officer, highlights that year-over-year growth of 146% suggests a promising trend toward broader acceptance. However, the corporate travel community, in particular, lags behind in this adoption wave.
The slow uptake among leisure agencies and corporate travel advisors is attributed to various misconceptions surrounding NDC’s capabilities. A critical aspect of fostering growth lies in educating industry players about the benefits of NDC. The notion that NDC can streamline processes and unlock valuable content is not yet universally accepted. As Radcliffe mentions, the conversation surrounding NDC must transition from mere adoption metrics to demonstrating its inherent advantages over legacy technologies.
Despite the benefits presented by NDC, economic incentives play a crucial role in driving engagement from travel agencies. Some experts argue that without a compelling economic rationale, agencies will struggle to transition to NDC. However, Radcliffe points out that substantial content and continuous pricing options are starting to emerge through NDC channels. This innovation provides airlines with the flexibility to present tailor-made offerings to customers, thereby making a compelling case for agencies to pivot toward NDC.
The ongoing development of ancillary offerings also poses significant advantages for corporate clients. Companies are beginning to appreciate how NDC facilitates creative pricing structures and tailored bundles, elements that were challenging to integrate within legacy systems. As corporations recognize these possibilities, they are likely to foster a greater push toward embracing NDC solutions.
Global Distribution Systems (GDSs) are also undergoing changes to meet the industry’s transition toward NDC. With players like Sabre, Amadeus, and Travelport intensively working on NDC integration, Radcliffe expresses optimism that a large volume of transactions will soon funnel through these platforms. For many agencies, the GDSs serve as a vital gateway to access NDC offers. The enhancement of services offered by these established systems is essential for a seamless transition to NDC as it would enable agencies to operate with efficiency and confidence.
Yet, there remain pressing concerns regarding the service quality related to NDC offerings. Industry insiders acknowledge that while shopping and booking capabilities have improved, there’s still a need for more sophisticated servicing features. The demand for transaction speed and accuracy is paramount as agencies require swift access to complex offerings that NDC promises to deliver. Companies like American Express Global Business Travel (GBT) have underscored these needs, listing over 100 capabilities that are critical for GDSs to prioritize in their NDC development.
The NDC evolution represents a critical junction for airlines and travel agencies alike. While challenges remain, particularly concerning the perceptions and operational capabilities associated with NDC, the momentum is building. As more players enter the market and traditional systems adapt to these innovations, the potential of NDC can no longer be overlooked. Education, collaboration, and adaptability will be essential to unlocking NDC’s true capabilities, ensuring that the airline distribution landscape continues to evolve in ways that benefit all stakeholders involved. The journey toward embracing NDC is fraught with challenges, but it also promises a new era of personalized and efficient travel solutions.