Guest Post: How Iata's New Distribution Capability will reshape the way airlines sell

As adoption of NDC accelerates post pandemic, Infiniti Software Solutions' Shano K Sam sets out why Iata's data standard will generate more revenue while improving customer satisfaction

Ever since the advent of the Iata's New Distribution Capability (NDC) data standard airlines have been captivated by its promise of enabling them to personalise offers in real-time. 

Notably, with NDC connections, airlines have developed the ability to recognise individuals or corporations during the time of the search, even if the search originated through an intermediary. 

Consequently, airlines have been able to showcase rates and bundles to the booker based on their preferences and offer dynamic pricing in response to market demands. 

It is also worth noting that with NDC, airlines no longer need to depend on GDSs to compile offers on their systems for agencies although all the major GDSs are embracing NDC. 

Given that NDC promises hyper-personalisation and easier distribution of all elements of the ticket sale, let us look in greater detail at how this will help airlines. 

Deliver frictionless booking experiences to customers 

Currently, travellers must go to many different places, such as the airline website, travel agency websites, etc, to fulfill all their travel needs. 

For instance, a person who purchased a flight ticket via a travel agent must access the airline website to pre-book seats. However, when NDC implementation is done at scale, travellers can directly purchase ancillaries and seat upgrades from the travel agency, ensuring a seamless booking process.

Differentiate yourself with rich content 

Since many airline bookings arise from third-party distributors, airlines are at a disadvantage if they can only display fares and schedules. 

This lack of differentiation causes many airlines with superior service, better ancillaries, great loyalty programs to lose out. 

NDC solves the issue by equipping airlines to offer rich content, such as product descriptions, video, sound, images of the seats, augmented/ virtual reality presentations of the aircraft interior, that help passengers make an informed decision. 

Airlines can even showcase their positive reviews, differentiate their loyalty tiers, and highlight their promotional offerings.  

It is worth mentioning that this ability to feature rich content on the websites of travel agencies and travel management companies will go a long way in driving revenue from increased ancillary sales for airlines. 

Offer hyper-personalisation based on customer persona at an individual/ trip level

With NDC, airlines can bring personalised services to all their passengers and sales channels, especially the third-party ones. 

Due to the enhanced information exchange that NDC enables between agencies, airlines, and distributors, passengers can get offers based on the context, making purchasing decisions easier.  

Crucially, airlines can have more autonomy on who sees what fare options and extras, paving the way for personalization and dynamic pricing. 

For instance, customers can get special fares based on their loyalty, which is determined by previous buying behavior. Also, different corporates can be given access to tailored bundles that suit their specific needs. 

Optimise revenue with dynamic pricing

Traditionally, a third-party provider was responsible for distributing most airlines' fares. 

Due to the presence of an intermediary, airlines had no way of sharing dynamic pricing or personalised packages based on customers' history and personal information. 

However, NDC brought a radical shift in revenue management, allowing airlines to change and adjust prices themselves. 

Crucially, machine learning algorithms will be at play, constantly gathering data on customer willingness to pay along a continuous price curve. Without a doubt, this will drive higher load factors and revenue yields. 

Bypass the GDS and cut down on distribution costs 

GDS companies often charge high fees for listed vendors, leaving airlines with abysmal profit margins. 

With NDC’s introduction, airlines can get around the GDSs and share dynamic content directly with travel management companies, online travel agencies, and travel search engines, lowering the distribution costs substantially.  

Airlines moving to NDC is an excellent strategy for the long term, given the increased pricing flexibility and the ability to upsell ancillaries.

Conclusion

NDC's most significant advantage is the personalization and dynamic pricing capabilities it can offer airlines. 

In collaboration with the right implementation partner, airlines can use the new standard to provide valuable services, such as ancillaries to customers and expanded content offerings, even on third-party distribution sites, driving revenue growth and customer satisfaction. 

About the author

Shano K Sam writes about how airlines can maximize revenue, streamline operations, and save costs when it comes to the booking, customer support, and post-ticketing process. You can reach him at shano@infinitisoftware.net  and read his work on https://www.grouprm.net/blog/ or https://www.infinitisoftware.net/products.php