Ai Editorial: Preparing for the impact of NDC on business functions

25th July, 2019

A multitude of considerations need to be focused on by airlines before they embrace the NDC standard, writes Ai’s Ritesh Gupta

 

Benefits of NDC, a technology standard based on XML, continue to be highlighted and discussed, but the fact remains that embracing NDC is riddled with challenges.

In terms of where NDC’s adoption stands, an attempt is being made to attain a critical mass of volume of transactions. In all, 21 airlines have committed that by the end of 2020, 20% of their indirect sales will be made using NDC.

“Airlines, as an industry, haven’t at large taken a big leap in terms of being in control of the offer or even selling non-air products,” said an industry executive.

Beyond their own products, the industry is also pointing out that airlines can tap mobility as a service (MaaS) segment, offering an interconnected experience via their own digital assets covering all of the transportation requirements. But according to CarTrawler, only 59 of the world’s 473 airlines currently offer mobility services to customers.

Preparing for the NDC world

If airlines are going to create and distribute offers, what sort of impact it will have on their organization structure? What sort of investment is needed in systems, technology etc. for the same? How commercial relationships are going to evolve?

Companies having a minimum set of recognized capabilities to drive volumes of NDC transactions towards 2020 are going to be awarded NDC@Scale.  It is based on four main elements that are important to quantify the capacity to scale to volumes of NDC transactions:

  • Technical setup (ability to run an NDC API on Service Level Agreements (SLA) with performance requirements for areas such as response time, availability, available transactions per second, error management, etc.). 
  • Organization setup (work on support needed to connect new partners and to run the operations).
  • Use cases (consider the implementation of standardized messages workflows across the industry).
  • Capabilities (consider the coverage of key features (Shop, Order/Service/Pay) powered by an NDC API and the ability for airlines to replicate some features currently possible through the traditional channels (GDSs) as well as the ability to provide additional content).

Airlines Reporting Corporation (ARC) recently highlighted that NDC can have a significant impact on industry-wide processes, from ticketing to servicing, credit card billing and debit memos. ARC stressed on the importance of working out a business case with a cost-benefit analysis to evaluate return on investment for the entire organization.

There are several ways to market with NDC. Options include a direct connect, via a GDS, a non-GDS aggregator, a meta-search engine and a message hub. An important consideration from distribution perspective is going to be the chosen focus. For instance, with whom and how to work in case the objective is ancillary content or reduction in the cost of distribution. ARC also explained that airlines also need to consider the options available for an agency to “integrate NDC transaction data into their corporate booking tools, back- and mid-office processes, customer invoicing, post-ticket servicing and duty of care”; impact on commission, fare and corporate discounts and net fare mark-ups impact the NDC rollout etc.

From e-commerce perspective, if airlines are going to make the offer, and the indirect channel is going to approach the airlines (earlier in case of GDS, traditional filed fares and scheduling was used), then the impact of hits on an airline’s system needs to be assessed. On a positive note, the use of intelligent caching is already coming into play.

Similarly, airlines focused on NDC also need to look at technology-related (for e.g. normalizing content) and payment/ settlement related considerations (for e. g. which party is responsible for the authorization and billing for credit, debit and related forms of payment).

Another area is interlining.

Interline NDC is still the missing puzzle. Interlining is the sale of seats on an airline partner, to offer a wider network to consumers. Interline also covers the ability to cross-sell ancillaries. Read more about: “Why without interline, NDC is incomplete?”

 

A session about NDC  is scheduled to take place at the upcoming Mega Event Asia-Pacific, to be held in Kuala Lumpur (20 – 22 August 2019).

Event site: www.MegaAPAC.com

 

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