The Pros and Cons of NDC: What Airlines and Travel Agents Should Know

The New Distribution Capability (NDC) is reshaping the travel industry, offering innovative ways for airlines and travel agents to interact with customers. While its potential benefits are undeniable everything has its own challenges. 

Understanding the pros and cons of NDC is essential for stakeholders to maximize its advantages while mitigating its disadvantages.

In this blog, we discuss the benefits and drawbacks of NDC while examining its impact on airlines, travel agents, and the travel ecosystem at large.

Understanding NDC: A Quick Overview

Before diving into the specifics, let’s clarify what NDC entails. The New Distribution Capability is a set of standards developed by the International Air Transport Association (IATA). It enables airlines to distribute their products directly through travel agents and other third parties in a more dynamic, personalized manner.

Unlike traditional Global Distribution Systems (GDS), which limit the types of products and services airlines can display, NDC allows airlines to offer richer content, personalized bundles, and ancillary services, providing a direct distribution model.

The Pros of NDC for Airlines

‍

1. Enhanced Revenue Opportunities

With NDC, airlines can offer personalized fare bundles, ancillary services, and promotions tailored to individual travellers. By moving beyond the rigid constraints of GDS, airlines can upsell premium services like extra baggage, in-flight meals, and Wi-Fi. This direct approach allows airlines to increase ancillary revenue and improve profitability.

2. Improved Customer Relationships

Through NDC, airlines gain a direct connection with their customers. This enables them to understand traveler preferences, customize experiences, and build long-term loyalty. For instance, an airline can recognize a frequent business traveler and offer exclusive perks or personalized recommendations.

3. Richer Product Content

NDC allows airlines to showcase their offerings more effectively. Instead of just displaying flight schedules and fares, airlines can include detailed descriptions, visuals, and even videos of their products, creating a more engaging shopping experience.

4. Cost Savings on Distribution

Traditional GDS systems charge airlines significant fees for distributing their inventory. NDC bypasses these intermediaries, allowing airlines to reduce distribution costs and reinvest those savings into customer service improvements or technological advancements.

The Pros of NDC for Travel Agents

‍

1. Access to Comprehensive Content

NDC equips travel agents with more detailed and dynamic content directly from airlines. This helps them better understand airline products and recommend the best options to their clients, enhancing their value proposition.

2. Ability to Customize Offerings

With NDC Deals, travel agents can create personalized travel packages for their clients, combining flights, ancillaries, and other services into tailored bundles. This customization improves client satisfaction and builds loyalty.

3. Competitive Edge

As airlines increasingly adopt NDC, travel agents using the platform gain a competitive edge. They can access exclusive deals, richer content, and faster booking processes, differentiating themselves in a crowded market.

4. Faster and Seamless Booking

By integrating with NDC, travel agents experience real-time data updates, reducing errors and ensuring accurate bookings. This streamlined process benefits both agents and their customers.

What Is the Disadvantage of NDC for Airlines and Travel Agents?

While the benefits are significant, there are also challenges associated with NDC adoption.

1. Implementation Costs

Adopting NDC requires significant investment in technology, staff training, and system integration. For smaller airlines or travel agencies, these costs can be prohibitive.

2. Compatibility Issues

NDC standards vary between providers, leading to compatibility challenges. Travel agents may struggle to integrate multiple NDC systems from different airlines, creating inefficiencies.

3. Limited Reach

While NDC offers direct distribution benefits, GDS platforms still dominate the market and provide access to a vast network of travel agents and corporate clients. Airlines relying solely on NDC risk losing this widespread exposure.

4. Dependency on Technology

NDC’s reliance on advanced technology means that system downtime or cybersecurity threats can disrupt operations. Airlines and travel agents must invest in robust IT infrastructure to ensure reliability.

5. Reduced Transparency for Travel Agents

NDC empowers airlines to control their inventory and pricing directly, potentially reducing the transparency agents rely on for price comparisons. This could lead to customer dissatisfaction if agents cannot find the best deals.

NDC Pros and Cons: A Balanced Perspective

Pros:

• For Airlines: Increased revenue, direct customer relationships, dynamic content, and lower distribution costs.
• For Travel Agents: Richer content, customization opportunities, competitive advantage, and real-time data access.

Cons:

• High implementation costs and compatibility challenges.
• Limited reach compared to traditional GDS systems.
• Increased reliance on technology and potential transparency issues.

NDC for Airlines: A Paradigm Shift

For airlines, NDC represents an opportunity to redefine how they distribute their products. It’s not just a technological upgrade but a shift toward customer-centric service. By embracing NDC, airlines can enhance their brand image, foster loyalty, and adapt to changing consumer expectations.

However, this shift requires careful planning, collaboration with partners, and investments in technology and training. Airlines must weigh the long-term benefits against the initial challenges to ensure a smooth transition.

NDC for Travel Agents: Adapting to Change

For travel agents, NDC is a double-edged sword. While it opens doors to better content and customization, it also disrupts traditional workflows. Agents must embrace digital transformation, invest in training, and adapt to a more dynamic and competitive landscape.

By collaborating closely with airlines and leveraging NDC’s capabilities, travel agents can position themselves as indispensable partners in the travel ecosystem.

The Future of NDC in Airline Distribution

NDC is not a one-size-fits-all solution, but its potential to reshape airline distribution is undeniable. As more airlines and travel agents adopt the standard, collaboration and innovation will be key to addressing its challenges.

The future lies in striking a balance, leveraging NDC’s advantages while retaining the reliability and reach of traditional systems. Airlines and travel agents that navigate this balance effectively will be well-positioned to thrive in an ever-evolving travel landscape.

Conclusion

The New Distribution Capability (NDC) is turning out to be the game-changer, offering airlines and travel agents unprecedented opportunities to enhance their offerings and improve customer experiences. While there are challenges to overcome, the potential rewards make NDC a vital component of the travel industry’s future.

By understanding the NDC pros and cons, airlines and travel agents can make informed decisions, ensuring they stay ahead in a competitive market. Embracing NDC is not just about adopting new technology; it’s about transforming the way we travel, one connection at a time.

‍