Travel Technology for Dummies: What Is NDC?

Shop (search & price of flights, seats, baggage and services) as part of the Offer Management System (OMS):

• Air Shopping: Request Offers for flights on a specific route/date combination (Flight Search using search parameters);
• Offer Price: Reprice Offer and request upsell offers to account for e.g. updated exchange rates (OfferPriceRQ is always requested using References such as OfferID, OfferItemID);
• Service List: Request available Ancillary Offers; The ServiceList returns chargeable ancillaries. Additional SSR requests can be entered via Augmentation Point;
• Seat Availability: Request Seatmap with prices (if applicable);

Book (create, retrieve & modify orders) as part of the OMS:

• Order Create: Create the booking (if FOP – Form of Payment – is included, documents may be issued automatically). FOP is the trigger for ticketing in Order Create or Order Change;
• Order Reshop: Reprice existing Order, repricing taxes/fees;

Pay (travel documents issuance, retrieval and payment):

• Order Change: Send payment detail (FOP) and trigger payment/ticketing along with EMDs;

Other items such as airline profile & misc. stuff can follow after these steps.

Accomplishments Expected with NDC

With the help of NDC, airlines are primarily trying to differentiate one from another, however, there are a few additional achievements.

Personalization: such as enhancing loyalty with personalized pricing offers (e.g. frequent flyer status may enhance an offer by tier or service experience), but also by enhancing its CRM to be able to propose tailor-made offers which could lead to improved look-to-book ratios and strengthen customer loyalty for future sale. From a customer perspective: Relevant content (“Understand me!”), smart content (“Recognize me!”), complete content (“Service me!”) and easy (“Facilitate me!”).

Differentiation: ability to show competitive features that may be unique to the offer and therefore drive purchase decisions.

Merchandising: displaying additional products (ancillaries) à la carte or bundled (for instance: Wi-Fi or lounge access may drive purchase decisions and/or generate additional revenue for the airline).

Rich content to inspire: instead of a seat on an airplane, airlines want to sell an experience fitting their brand. In the traditional channels, traditional airlines were unable to differentiate their products, which eventually caught them in a commodity trap and a race for the cheapest fare. Especially with low-cost carriers, it is hard for traditional airlines to compete. In the old days, the business and first-class clients presented airlines with lucrative profits, but prior to Covid-19, the back of the aircraft paid the bills. In today’s world of high resolution image or video information at everyone’s fingertips, lie-flat seats, an appealing meal, a top-notch modern cabin, or just a cleaner, truly sanitized and/or social distancing accommodating interior can only be sold via rich content and attractive product presentation. Airlines sell via impressions on their websites, so they need to be able to reach the traveler the same way through their indirect sales channels. In a post-Covid-19 world, this might be even further important as traveler want to see how they can sit in a distance to the neighbor and what measures have been taken to avoid contamination.

Dynamic continuous pricing conductive to modern offer management: flexible prices for products or services based on competition, supply and demand which do not require fare filing. With that said, airlines might have to file fewer fares as if they rely on classic dynamic pricing, hence the current fare filing processes can be simplified and therefore the airlines use this argument to gain NCD traction saying it leads to lower costs.

Control the offer/sale: as the airline produces the offer and is responsible for booking and ticketing, it manages more closely how its product is sold with less risk of interference. Hence, numerous revenue integrity checks may become redundant. In an NDC world, the airlines also carry the true PNR (or order for that matter), and not just a copy of the GDS PNR like in the traditional ATPCO based distribution channel. This fact seems a little scary for the classical GDSs as they lose control (and actually need to find out, how to get the real truth back into their system and synchronized the airline order to their system) – a fairly new thinking process for the GDSs. Not so much for the aggregators (incl. ourselves), as aggregator always had to worry about where the true PNR (or order in the new world) is stored and synchronize prior to making adjustments to the order. For classical GDS aggregators not much changes, as all they have to worry about is if they create a PNR in a 3rd party system called GDS or an order in a 3rd party NDC system of an airline.

Flexibility of the sale: in the past, airlines were restricted in their flexibility to sell. The selling capabilities are simplified with NDC, new products can be introduced much faster (Time to Market), offers can be bundled to the liking of the airline, and upselling (e.g. fare families) by, for example, displaying multiple price points, with increased value, may drive additional business and better sales of higher class features to the airline. All this comes at a downfall, as it obviously makes it much harder for the consumer to compare apples to apples. I guess it comes down to the Travel IT provider to come up with smart solutions to compare – such as the Next Generation Storefront (NGS) by ATPCo’s Routehappy in order to bring consistency to how product offerings are displayed across the airline distribution ecosystem. The disadvantage is only that every such technology comes at a price, and the content is only as good as it is maintained – which is not always dead-on. I’m still trying to picture how advertising financed user generated content (UGC) can wrap this up. In a post COVID-19 world, such content also needs to include COVID-19 testing, border control and vaccination requirements at the time of booking.

Interlining: NDC promises simplified interlining along with a transformation into a revenue opportunity. When an offer needs to be completed by a partner, this can be done dynamically. The partner can make its own offer for their part and seamlessly integrate into the Offer Responsible Airline (ORA). Airlines may not need to file interline agreements as before. Interline settlement disputes could disappear as settlement values are communicated and agreed upfront at time of shopping. However, I consider this also debatable, as then each airline could have to integrate with each other and that might also cost and create conflict. Just imagine, a traveler being able to have two free pieces of luggage with one airline but only one piece on the other airline. Until this all is working seamless with all aggregators, I can see passengers being stranded, where an airline requires that passenger to check or gate-check his luggage at a stopover. In the end, it is up to the airline to decide and one can say: at least now, an airline who wants to integrate with one another can do so.

Reach: increasing reach such as tapping new sales channels geographically and digitally; Reach may be a controversial benefit as it is obvious that GDSs have a pretty high reach. Why else would the largest US domestic airline (Southwest) who has historical not been in the GDS enter the GDS world? IATA claims that direct connect and new aggregators may increase the reach. On the other side, with the multiple adapters to be built, “reach” – especially in the beginning of NDC is debatable and seems rather like a theoretical marketing claim by IATA.

Complexity Reduction: according to IATA, standardization means a common API, which could mean less complexity. This argument I’d like to challenge: IATA proposes two new versions per year, some airlines might adopt new versions, other not. In addition, the standard is not unified and each airline may interpret certain structures differently. Example: A stopover entertainment program by Lufthansa in Munich (e.g. visit a brewery) might be differently implemented by American Airlines to visit the Cowboys in Dallas. Now we have a multidimensional IT challenge: aggregators have to integrate x airlines using y versions of NDC with z interpretations of certain fields.

Payment innovations: with airlines in control of the payment, airlines might further cut costs by introducing payment instruments such as PayPal, Bank transfer, Pay by installment, Air Miles, or Cash to avoid the up to 3% credit card fee.