NDC (New Distribution Capability) is the silver bullet solution for the ailing airline agency business. NDC is the new messaging standard that enables transfer of airline content in real-time with ease between airlines and travel agencies. With a full-fledged implementation of NDC, travel agencies can sell ancillary products and services of flights more competitively with airline’s direct channels by utmost ease.
Why NDC for travel agencies?
Travel Agencies (TMCs, Consolidators, OTAs, Retailers) thrive mostly on the sale of airfares. While the demands of flyers are increasing, there is a steady fall in earning of travel agencies. Let’s take a closer look at the hurdles faced by travel agencies to offer the best service.
Change in Market Condition:
In today’s world, the most crucial factor to be successful is to stay relevant. Hence, the changes in the marketplace demand for a new perspective of serving travelers. Once upon a time flyers would be satisfied with just a seat and seat belt. But the trend has changed now. Flyer’s expectation has evolved over the years from commodity-based to value-based experience. This is partly due to the increased spending capacity of a customer as well as partly due to the introduction of long-haul flights.
To help flyers find the value they are seeking, airlines are evolving with a new business model. They have introduced ancillary-product focused model termed as ‘ branded fares.’ An airline ‘branded fare’ is a fare offered to flyers comprising various components such as extra luggage, Wi-Fi, meals, lounge access along with seats. These services have become very crucial for flyers to make a purchase decision. Ancillary products have helped airlines to increase their revenue while offering highly personalized services to flyers.
Change in Distribution Strategy :
However, by offering so many choices to flyers the booking process for travel agents and travelers has become complex. Digital channels have enabled airlines to alter their distribution strategy and sell directly to flyers. Also, airlines especially the LCCs (Low-Cost Carriers ) and ULCCs (Ultra Low-Cost carriers) who are the most prominent endorsers of such amenities are not available in the conventional GDS. This changed situation renders GDS as not the only store anymore to get all airline content.
Various channels of booking such as GDS (Global distribution system) and other third-party channels have mostly provided information to travel agencies only on fares and schedules of flights of different airlines and but not on branded fares. To serve their customers with their specific desirables, travel agencies are booking outside the GDS, directly from airlines site.
In such cases, the agents of a travel booking office would take hours to search through varying different sources to offer a personalized experience to their customers. Such bookings through multiple channels put a strain on processes such as accounting, reporting, and other mid-tier systems in an agency. This increases man-hours spent on a request and also complicates their internal process. Here are some of the observations from a survey conducted by the Atmosphere Research Group referring to travel agencies while booking branded fares:
- 30% of Travel agencies feel they are at ‘extreme disadvantage’ while selling ancillary airline products
- Booking ‘branded products’ directly from airline websites has been extremely time-consuming for 49% of respondents
- Agencies described the process of booking ancillary product as complex, limited, time-consuming and challenging
NDC: Empowering travel agencies
The changing landscape of the market condition and distribution strategy has led to the decline of the market share of Travel Agencies as Airlines gain the upper-hand now. However, with the introduction of the NDC as described at the outset, better days are now coming for the agency business.
As more and more airlines have already started adopting NDC for its ancillary distribution, it’s only right and reasonable for the travel agencies to embrace the revolutionary technical solution, NDC!