The introduction of New Distribution Capability (NDC) has marked a significant shift in the way airlines and travel agencies conduct their business. Accelya, a leader in this domain, reported a remarkable growth in NDC volumes, which more than doubled in the past year. Industry giants such as American Airlines, United Airlines, and Lufthansa have embraced this model, while Delta Airlines remains in the developmental phase. Despite these advancements, there remains a palpable sense of hesitation among travel advisors, particularly within the corporate travel sphere. This article delves into the nuances of NDC’s progress, its driving forces, and the ongoing challenges it faces within the travel sector.
NDC is not just another technological upgrade; it represents a comprehensive transformation in airline distribution strategies. Unlike the legacy systems that have restricted pricing flexibility and inventory transparency, NDC offers carriers a better opportunity to present customized offers and dynamic pricing to a variety of market segments. However, as Tye Radcliffe, Accelya’s Chief Customer Success Officer, pointed out, the integration of NDC continues to encounter resistance, particularly from the corporate travel community. This scenario invites a thorough examination of why these stakeholders are reluctant to fully adopt the new framework.
Radcliffe suggests that misconceptions regarding NDC’s functionalities play a significant role in hindering its widespread acceptance. The lack of awareness about NDC’s potential benefits, especially among traditional travel management companies (TMCs), may lead to a paralysis of decision-making. The industry must prioritize educational initiatives tailored for travel advisors and agents, ensuring they are well-informed about how NDC can enhance their service offerings and operational efficiencies.
Driving Factors Behind NDC Adoption
According to Radcliffe, the driving force behind NDC’s growth can be attributed to the availability of meaningful content and the emergence of continuous pricing. Continuous pricing allows airlines to set real-time fares based on demand, a capability that legacy systems simply cannot support. The integration of advanced technologies has fundamentally reshaped how airlines structure their pricing, allowing for the inclusion of ancillary services that were previously clustered under static prices.
Cory Garner, a consultant specializing in NDC, emphasizes the need for agencies to be incentivized to transition to NDC. The economic advantages presented by NDC—such as increased revenue through ancillary sales—can pave the way for its adoption. Nevertheless, the immediate gains must outweigh the costs and complexity associated with making the switch for airlines and travel agencies alike.
The future of NDC looks bright, particularly with the efforts of prominent global distribution systems (GDSs) like Sabre, Amadeus, and Travelport. They are prioritizing the integration of NDC capabilities, working tirelessly to deliver solutions that meet the evolving needs of agencies. Radcliffe believes that once TMCs see that GDSs can provide meaningful and user-friendly NDC solutions, we can anticipate a flood of transactions through those platforms.
However, this optimistic outlook is accompanied by caution. Concerns about servicing capabilities remain prevalent in discussions about NDC. While Radcliffe acknowledges significant progress, he notes that challenges still exist, specifically concerning some agencies‘ ability to access certain functionalities quickly and efficiently.
As the landscape of NDC continues to evolve, it is essential to recognize and address critical gaps restraining its potential. For instance, agencies await the enhancement of specific servicing capabilities from the GDSs, as highlighted by Amex GBT’s recent report that outlined over a hundred necessary improvements. Streamlining transaction speed represents just one area where GDSs need to focus their efforts to ensure a seamless user experience for travel agents and their clients.
Moreover, the collision of legacy systems and innovative distribution methods presents a complex challenge that the industry must confront. As TMCs navigate this evolving landscape, they must balance the allure of new technology with the practicality of existing systems.
The journey of NDC is characterized by remarkable growth tempered by significant hurdles. While the potential of NDC to revolutionize travel distribution is undeniable, the path to widespread adoption rests on effective education, streamlined technology, and ongoing diligence to address the lingering concerns within the travel community. The ongoing dialogue between airlines, GDSs, and travel advisors will be critical in shaping the future of NDC, making it a pivotal focus for all stakeholders involved.
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