As the travel industry limps back to normal after what has been its most significant setback since 9/11, several airlines have seemingly found the cure to their financial distress—deploying IATA’s XML-based distribution standard, the New Distribution Capability (NDC).
Airlines and travel agents have primarily driven NDC adoption to optimize their revenue by providing personalized offers and packages to travelers.
However, many players in the industry are yet to jump on the bandwagon and adopt NDC, meaning they are losing out on substantial revenue gains.
As you read on, we make a case for why adopting NDC early on is an excellent idea for the entirety of the travel industry, including airlines and travel agents.
Why reinventing distribution is the need of the hour.
For airlines across the world, cost reduction and profit enhancement are crucial for sustained operations. According to the International Air Transport Association (IATA) reports, airlines will end up with highly unhealthy returns on investment once they’ve paid off their debts.
The critical factor that makes NDC adoption a necessity is that distribution is among the costliest expenses an airline takes on. The industry seeks to bring down distribution costs by paying roughly USD 4 in booking fees per flight to Global Distribution Systems (GDS) operators.
However, this has done little to alleviate airlines’ woes when it comes to their bottom line.
Moreover, add-ons, such as in-flight Wi-Fi & meals, and premium seats that airlines depend on for enhanced revenue, are tough to sell through an indirect channel.
How NDC will be a game-changer
By implementing the NDC standard early on, airlines will be equipped to capture a large percent of the market because they can serve customers better and operate effectively in the following ways:
- Pricing and content autonomyUsing the new XML standard, airlines can develop their own APIs to provide customers with dynamic pricing and customized travel packages based on individual preferences. Doing so is impossible when airlines depend on a third party to publish their pricing. Another aspect of NDC that allows airlines to personalize the shopping experience is the availability of comprehensive customer data, which was previously in the hands of OTAs and GDSs
- Differentiation capabilitiesWith the GDS, airlines can’t offer ancillaries, a key driver of their revenue. However, the NDC allows for rich content offers, discounts, and ancillaries that enhance the customer experience.
- Reduced dependence on outdated passenger service systems (PSS)By switching over to the NDC, airlines can cut down distribution costs substantially because they are no longer reliant on one of the legacy passenger service system monopolies that charge exorbitant rates. NDC further provides excellent value for money. It can allow airlines to bypass the GDSs and distribute directly via travel management companies, metasearch engines, and online travel agencies, all while delivering rich content.
What NDC adoption means for travel agencies
Without a doubt, adopting NDC will give travel agencies an edge over their competition because it provides them with rich content, including images and videos that allow for greater personalization and simplicity for travelers. Also, travel agents can benefit by offering dynamic pricing, ancillaries, bundled offers, and specially negotiated offers.
Besides, travel agents have the benefit of providing customers with an integrated platform for them to search, compare, and book their preferred travel services no matter how individual airlines implement NDC.
Aside from this, travel sellers can provide exceptional customer support to travelers around the clock. A few of the notable services are notification for flight schedule changes, ancillary selection, etc.
NDC adoption will be the way forward for airlines that want to boost customer loyalty and distribute their offerings better. The enhanced retailing ability it provides will go a long way in helping airline companies and travel agencies end their streak of low profitability and emerge victoriously from the pandemic.
To gain the full benefit of NDC adoption and outperform your competition, reach us at [email protected]