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How ready is NDC, asks Phocuswright

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New Distribution Capability (NDC), an XML standard launched about 10 years ago by the International Air Transportation Association (Iata), has been a hotly debated topic, especially in the last five years. Designed to enable airline service providers to deliver rich content and ancillaries to their customers, no other air distribution standard has been so overhyped while delivering confusing, often conflicting messages. Is NDC about GDS bypass? Is NDC about normalising direct and indirect channels? How about giving airlines the ability to merchandise their products and control the quote? Most importantly, is NDC triggering a major financial restructuring of the industry?

Phocuswright shares five new developments on the business side of NDC, with a specific concentration on the corporate travel market.

Follow the money: At this point in NDC development, the airlines' underlying goals centre more around pricing control than the desire to lower GDS fees.

All three GDSs are making progress on new, multi-source desktops, but to date, there is limited capability for implementing mixing of NDC and non-NDC content

 

 

Incentives vs. blind segment awards: The pursuit of a so-called "private channel" has been underway for many years. The private channel relationship involves four entities – the corporation, the TMC, the airline and the GDS – in bilateral agreements. It is this private channel concept that now permeates NDC channels, eliminating incentives tied to segment production.

The complicated path forward: All three GDSs are making progress on new, multi-source desktops, but to date, there is limited capability for implementing mixing of NDC and non-NDC content. Specific examples include Amadeus/Air France/KLM Agreement; United Airlines Announcement with SAP Concur; and Delta Airlines and Sabre Agreement.

Stakeholder impact: The most impacted are the corporation (for corporate travel), The TMC, OTA or leisure travel agency, the GDS, and the airline.

The future of airline distribution economics: Most parts of the value chain that depend on GDS aggregation technology have been pleased with the turnaround in attitude toward NDC in the last four years. But as previously highlighted, the GDSs are still lagging in support capabilities, and the United/Concur and Air France-KLM/Amadeus announcements illustrate how workarounds are still the standard.

What is the central goal of NDC, and will it ultimately be useful to the corporate customer?   

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