The aviation industry is constantly evolving, and airlines are always on the lookout for modern technologies and strategies to enhance their operations and increase revenue. One such development that has been gaining momentum over the last decade is the implementation of IATA’s New Distribution Capability (NDC) Standard. NDC is poised to revolutionize the way airlines distribute their products, offering numerous benefits for everyone in the travel ecosystem.
Does your CEO understand the winds of change that NDC brings? In this blog post, we want to talk about how airlines can benefit from NDC.
What is NDC?
NDC, or New Distribution Capability, is a technology standard developed by IATA to modernize airline distribution systems. It aims to improve upon the legacy global distribution system (GDS) used by airlines for ticket distribution with a more flexible, dynamic, and customer-centric approach. NDC enables airlines to have greater control over their products, offers personalized and targeted content to travelers, and enhances the overall booking experience.
Benefits of NDC
- Direct Distribution: One of the key advantages of NDC is that it enables airlines to sell their products directly to travelers. By doing so, airlines can gain valuable insights into customer preferences and behavior. This direct distribution model allows airlines to offer personalized and tailor-made travel experiences while retaining control over their offering.
- Ancillary Revenue Generation: NDC allows airlines to showcase their ancillary products and services more effectively, such as seat upgrades, baggage options, and in-flight amenities. By integrating these offers into the booking process, airlines can easily generate additional revenue streams and improve their bottom line. NDC’s flexibility also facilitates cross-selling and upselling opportunities. According to Ideaworks, ancillary revenue had reached $102.8 billion in 2022.
- Dynamic Pricing and Offer Customization: NDC empowers airlines to implement dynamic pricing strategies, tailoring fares and offers based on individual customer profiles and market conditions. This flexibility enables airlines to optimize revenue and maximize the value of each customer transaction. Additionally, NDC facilitates the creation of personalized bundles and packages, allowing travelers to customize their itineraries according to their preferences.
- Enhanced Customer Experience: NDC supports a seamless and personalized booking experience for travelers. Through NDC-enabled applications and platforms, passengers can access real-time availability, receive targeted offers, and enjoy a smoother booking process. By leveraging NDC, airlines can deliver a more customer-centric approach, building stronger relationships with travelers and fostering loyalty.
Necessity of NDC Adoption
The aviation industry is undergoing a digital transformation, and NDC plays a vital role in this transformation. The following factors highlight the necessity of NDC adoption:
- Changing Customer Expectations: Travelers today expect a seamless, personalized, and intuitive booking experience. By adopting NDC, airlines can meet these expectations, offering a more customer-centric approach that aligns with the digital era.
- Competitive Advantage: As more airlines embrace NDC, those who fail to adopt the standard risk falling behind their competitors. Early adopters will have an advantage. NDC provides an opportunity for airlines to differentiate themselves in a crowded market and gain a competitive edge by offering innovative products and services.
- Cost Optimization: NDC enables airlines to optimize costs associated with distribution. By reducing reliance on third-party intermediaries, airlines can streamline their operations, eliminate unnecessary fees, and allocate resources more efficiently.
Statistics Supporting NDC Adoption
- IATA reported that 10% of travel agency air sales were via NDC in 2022.
- According to the BCG X IATA Report, 42% of leading airlines expect to begin reaping the benefits from NDC in 2023-25.
- It is projected that 15% of global air capacity will be distributed via NDC, with the IATA leaderboard airlines committing to 20% or more.
- McKinsey estimates that by 2030, the airline industry could benefit by $15 billion through incremental NDC development.
It’s generally accepted that airlines must deal with a broad range of issues. From economic confidence to geopolitical events, there is little that doesn’t play on Airline CEOs’ minds as they pursue lower unit costs and higher operating flexibility. A highly consolidated distribution ecosystem has inhibited most Airlines’ ability to innovate and leverage opportunities presented by digital commerce. NDC, the IATA sponsored standard, presents a once in a generation opportunity for Airline CEOs to digitally transform their businesses and recapture their fair share of value. – Rakshit Desai, CEO of TPConnects
How can TPConnects help?
We are an IATA-certified, global, travel content aggregation and distribution technology company. We help airlines and travel agencies to distribute retail travel products through our NDC solutions. Our solutions are designed to provide a seamless, end-to-end integration with airlines and travel agencies, allowing them to offer their customers a more personalized and efficient travel experience.
Our NDC solutions are built on the latest technology, providing a scalable and flexible platform that can grow with your business. We have a team of experts to support you right from understanding your needs to delivering a solution.
Some of our Airline Customers are: EGYPTAIR, Air Cairo, Gulf Air, Eastern Airlines, SriLankan Airlines, Air Mauritius, Finnair.
Contact us to learn more about how we can help you on your NDC journey.
For CEOs in the aviation industry, understanding the significance of NDC and embracing its advantages is paramount. NDC not only enhances customer experience and generates additional revenue but also provides a competitive advantage and enables cost optimization. By partnering with TPConnects, airlines can get the right solution that helps them achieve their objectives. The time to embrace NDC is now!
In our upcoming blog post, we will be taking a closer look at ONE Order, the transformative concept that is revolutionizing airline passenger management by replacing the traditional PNR (Passenger Name Record) and E-Ticket systems with a single, customer-centric approach. We will explore the fundamentals of ONE Order, its benefits, and its implications for the future of air travel.
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