Increased revenue and customer satisfaction are two important KPIs that drive the success of any airline or travel agency. Airline distribution systems help achieve those KPIs to a great extent. Distribution channels are an easier way for airlines to market their services and get fresh insights on what their customers need.
GDS (Global Distribution System) and NDC (New Distribution Capability) are two of the most commonly used indirect distribution channels. Though GDS is still widely used, many within the industry believe NDC can soon replace GDS systems. While there are benefits and limitations to both, it can’t be denied that NDC offers better value in the long run.
For those still apprehensive about implementing NDC, this guide would hopefully bring to light some of the advantages NDC brings to the table. In order to identify which distribution channel works best, we need to get down to the basics and understand why they emerged in the first place.
History of GDS
In the 70s, Airline carriers competed with each other to be the go-to airline for thousands of passengers. As a result, their content was unevenly distributed across CRSs (Central Reservation Systems). Naturally, this didn’t make it easier for travel agents. The US Transportation Department required airlines to share their content equally across all CRSs. Many CRSs broke away from the airlines they partnered with to become independent, leading to the rise of GDS systems.
What does GDS offer
- Connectivity to different airlines in a single interface
- Inventory on flights and amenities
- Access to ancillaries
- Analysis reports
Major GDS providers
History of NDC
There were some downsides to GDS, especially in terms of revenue management. The use of an old data transmission standard known as EDIFACT made it difficult for airlines to distribute their ancillaries without relying on third party service providers. This was a real problem, as airlines generated their profits mostly from ancillaries. Travel agents lost commission for tickets booked through GDS due to presence of surcharge fees. Traditional GDS systems are also known to be complex. The error of margin could be very high if agents used these systems without adequate training.
IATA introduced NDC as an alternative to traditional GDS systems. it used a simpler XML based data transmission standard to improve communication and content distribution between airlines and travel agents. Agents could either directly access content from an airline’s website or use an NDC aggregator to get a holistic view of the services provided by multiple airlines.
What does NDC offer
- Product differentiation through rich content
- Better pricing structures
- More access to customer data
- Personalised fares and discounts
- Compare fares and ancillaries
Limitations with NDC
NDC uses XML to allow airlines to distribute their content. Although this is a simpler alternative to the EDIFACT protocol, this data transmission method is still not unified enough. Its implementation can vary depending on airlines and their IT providers. The different interpretations of the standard can make it difficult for travel agents to know which NDC version they need to integrate with.
What’s in the pipeline for NDC
The Airline Retailing Maturity (ARM) Index launched in 2021 by IATA, is an extension of NDC and One Order. It gives airlines and other industry players a better look into their current retailing capabilities. Before the introduction of the ARM index, any airline or IT provider that wanted to show full retailing capability needed to get a host of certifications such as NDC, One Order, Dynamic Offer Creation and Future of Interline. The constant upgrades to NDC versions meant that this process was not only time consuming but also a difficult one. The ARM Index clubs all these capabilities into a single certification. IATA plans to encourage more travel sellers, airlines and IT providers to be ARM Index certified.
The new NDC version 21.3, brings in more payments and servicing capabilities. IATA believes many airlines will integrate the latest NDC version within their systems by next year.
Shift to NDC: Major GDS players are joining in
Amadeus, Sabre and Travelport are already actively integrating NDC within their systems. Though, it's a start, plans are well underway for the three GDS providers to partner with more NDC airlines and gain better retailing capabilities.
Verteil Direct Connect (VDC)
The airline retailing landscape is still complex. Embracing new technology in an industry that is over a hundred years old is not easy. Holding an ARM Index certification, Verteil offers all the capabilities travel agents need in overcoming the complexities of the airline distribution system. Verteil Direct Connect - our NDC offering provides full visibility into NDC content of over 33 airlines. Our intuitive B2B platform and API throws open a whole new opportunity for travel agents to give their customers a more unique travel experience via our full Airline Retailing capabilities.
At present, NDC sets out exactly what it’s meant to do - improve the retailing experience of customers while ensuring airlines and travel agents profit at the same time. The question of whether GDS systems would be completely phased out is a difficult one to answer. But given the limitations it puts on airlines and agents alike, it’s likely to be replaced by newer and better distribution channels like NDC soon.
Want to reach out to us?
If you are from an airline, into corporate travel, or a travel agent, we would love to tell you more about how Verteil Direct Connect can help you.
Please write to us on firstname.lastname@example.org for further information.
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