The travel and airline industries are undergoing a significant transformation powered by the New Distribution Capability (NDC). As a revolutionary technology framework introduced by IATA (International Air Transport Association), NDC empowers airlines to offer tailored products and services directly through various distribution channels, including travel agencies. Accelya, a prominent figure in this landscape, has reported a remarkable increase in NDC adoption, with their volume doubling over the last year. This article examines the driving forces behind NDC growth, the challenges to further adoption, and the implications for both airlines and travel agencies.
Accelya’s success is indicative of a growing trend in the adoption of NDC, particularly among leading airlines such as American Airlines, United, and Lufthansa. Currently, the NDC share of all ARC-settled bookings stands at 20.3%, predominantly driven by Online Travel Agencies (OTAs). This demonstrates that airlines are increasingly recognizing the need to innovate their distribution strategies. However, corporate travel agencies remain hesitant, which raises an important question: What factors are influencing this slow uptake?
The disparity in adoption rates can be attributed to various misconceptions surrounding NDC and the perceived barriers to implementation. Travel advisors express concerns regarding the new technology’s complexity and the economic incentives tied to adopting it. As many agencies are accustomed to traditional systems, it is crucial to bridge this knowledge gap and highlight the benefits of NDC.
One of the central themes in the discourse surrounding NDC is the introduction of continuous pricing—a concept that allows airlines to present a more dynamic range of offerings in real time. These offerings are more relevant and tailored to customers’ needs than traditional legacy systems permit. Continuous pricing allows airlines to adjust their pricing strategies instantly, providing a direct response to market demand.
Moreover, NDC creates opportunities for airlines to package ancillary services in innovative ways. Corporations are beginning to realize how these bundles, specific to business travel requirements, can unlock new value propositions. As airlines enhance their capacity to provide a differentiated product, corporate clients may also feel empowered to demand improved services, thus encouraging a symbiotic relationship between airlines and travel agencies.
Educational Interventions and Industry Collaboration
Significant growth is underway due in part to the collaborative efforts between GDS providers like Sabre, Amadeus, and Travelport. Their ongoing developments in integrating NDC functionalities represent a pivotal shift for the travel agency segment. Successful implementation will require extensive training and education initiatives for travel agents to familiarize them with new capabilities, enhancing their confidence in using NDC systems.
Accelya’s commitment to addressing these educational gaps emphasizes the need to inform the market accurately about NDC’s benefits and functionalities. As travel agencies understand and embrace NDC, the increase in bookings and transactions through this channel is expected to follow.
Despite the optimistic outlook for NDC, challenges remain. Travel management companies (TMCs) have expressed concerns over the slower-than-expected rollout of specific servicing capabilities. While GDS technologies have laid the groundwork for NDC adoption, they must still address critical service aspects that streamline agency operations, such as transaction speed and user-friendly interfaces.
As noted by industry leaders, the pressure from TMCs and large travel agencies will continue to push GDSs toward delivering the essential tools they require. There is a growing call from entities like Amex GBT, which has outlined specific enhancements necessary for TMCs to fully capitalize on NDC opportunities.
The trajectory of NDC adoption in the airline and travel agency sectors illustrates a compelling narrative of innovation overcoming resistance. As the landscape evolves with the introduction of new technologies, the sustained collaboration between airlines, GDS providers, and travel agencies will be instrumental in shaping the future of travel distribution.
Ultimately, the success of NDC will hinge not only on technological advancements but also on fostering an environment of education and trust among all industry stakeholders. Embracing this change could lead to a more efficient and responsive travel ecosystem capable of better serving both corporate clients and leisure travelers alike. As we move forward, the focus on overcoming current challenges and maximizing the offerings of NDC will undoubtedly pave the way for a more dynamic and growth-oriented travel industry.