New Distribution Capability

Has the time finally come for New Distribution Capability to be widely adopted? Or is it too late as the industry starts to move toward Offers and Orders? There probably are arguments to be made in the affirmative for each question. For now, we'll focus on what is NDC.  

The International Air Transport Association introduced NDC in 2012. Technically, NDC is a data transmission standard based on extensible markup language, or XML, that's designed to improve communication between airlines, buyers and everyone in between on the distribution chain.  

Non-technically, it's a way for airlines to control their distribution—and therefore distribution costs—and a way to provide a more "modern retailing experience," aka a more Amazon-like experience, for the end user that can include ancillary options, personalized offers and bundling. 

Traditionally, since the 1980s, corporate air purchases mostly have gone through the EDIFACT channel via global distribution systems when the purchaser uses a travel management company or online booking tool. As airline websites emerged in the late 1990s, and then mobile apps after the introduction of smartphones in the late 2000s, airlines have focused on more sophisticated strategies to get travelers to book directly with them or through indirect channels outside EDIFACT—and NDC provides that latter ability. (Note that tickets purchased through an airline's website are not NDC tickets, merely direct tickets.) 

Not all airlines offer NDC content, but more are beginning to. And though NDC is labeled an IATA standard, it's more a schema, and each airline can implement it in different ways. NDC also enables airlines to move to continuous pricing—some do, some don't—but we'll save what that means for another day. (For those interested in seeing which airlines and aggregators offer NDC, check out IATA's Airline Retailing Maturity Index Registry.) 

European carriers in particular embraced NDC much quicker than most U.S. carriers, and that, too, is changing. American Airlines and United Airlines now offer NDC, and Delta Air Lines is planning to introduce it in 2025.  

Of those airlines that provide NDC content, there generally have been two content strategies so far. 

1. An airline may remove some content from EDIFACT and make it available only via its website, a direct API connection or an NDC channel through an intermediary, like an aggregator or GDS NDC pipe. (The three main GDSs have created options for NDC offerings, and the list of airlines that have integrated with those GDS NDC pipes continues to grow.) 
2. An airline might leave existing content in EDIFACT but then create new offers available only directly or through NDC connections.  

Either way, TMCs and OBTs can miss content unless they have access through alternative technologies from EDIFACT. Each of these two strategies accelerated in 2023 and 2024 as NDC is what enables carriers to personalize amenities and seat offerings—and upsell to customers.  

Though corporate NDC transactions remain a small portion of overall ticket sales, they are growing each month as more TMCs offer NDC ticketing to corporate clients, and corporations are beginning to understand that if they don't have NDC turned on in their programs, they could be missing out on the best airline offers for their travelers.  

Not surprisingly, this "fragmentation" of content has led some end users to find better deals outside their travel programs if NDC offers are not available, thereby eroding confidence in OBTs and the travel program in general—not something any travel manager wants to deal with.  

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A DEEPER LOOK AT NDC
The Buyer Journey: NDC Upends Programs, Still Holds Promise
Part 1: The Fallout
Part 2: Rising Complexity, Limited Value – For Now
Part 3: The Changing Value Proposition

Listen to the Podcast
NDC Ecosystem Update
Hosted by BTN’s Donna M. Airoldi & Michael B. Baker

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Beyond higher ticket prices, this situation can lead to increased costs for corporations in the form of longer service times with agency representatives and loss of employee productivity. Some companies that moved quickly with technology and turned on NDC channels have realized significant savings, but these tend to be large companies with deep pockets and a lot of influence over their suppliers to push for solutions. Other companies are riding on these first mover technology coattails toward NDC functionality. 

Still, there remain some servicing issues at the agency level that require time and resources to address—and travel clients won't be immune from associated costs that will be passed back to them as service fees in this environment.  

In the long run, buyers believe their TMCs will work out the technology pieces to service NDC bookings, and the result will provide a better world of retailing and customization for business travelers, with all the product offerings available through the TMC platforms and OBTs.  

We aren't there just yet, however. Some clients—both corporate and TMC—that were happy with the status quo have voiced their displeasure with the way some airlines are moving to NDC and the accompanying fare fragmentation, which means pricing parity is a thing of the past.  

The consensus, though—even among the most frustrated TMCs—is that the more flexible retailing and customization options will be worth it in the end.