The reality behind NDC: Why NDC won't break down the GDS oligopoly – yet

The reality behind NDC: Why NDC won’t break down the GDS oligopoly – yet

It sounds so easy to use NDC, but the reality is: Not too many bookings are being made. Why?

Airlines including Lufthansa, British Airways, Iberia and American have announced direct connect initiatives via NDC. They either introduced charges to book through a GDS or will be offering additional capabilities if booked directly through their NDC interface. When it comes to costs (or certain fares not being available in preferred channels) it affects everybody. It sounds so easy to use NDC, but the reality is: Not too many bookings are being made – especially for business travel. Why is that? GDSs won’t just give up the battlefield of simple bookings (call it ‘easily earned money’) and only deal with the complicated PNRs. While I am critical of the global distribution system “oligopoly”, the sustainability of the redrawn commercial and technological landscape that NDC could produce has to be questioned. The proposition of NDC means that a “formerly relatively lean distribution chain will become a complicated commercial landscape with numerous airlines, numerous TMCs (or corporations) and several technology providers – all being connected to each other on a technological, as well as commercial, level.”

Some travel history

Let me start with taking a look at the history of travel: Airline inventory is held in the Central Reservation System – CRS (which is today part of the Passenger Service System – PSS) and in the old days was made available by the Global Distribution Systems (GDSs) to agents via cryptic screens. The traveler actually used to call a travel agent to make a reservation.

With the success of the internet, at the end of last century, Online Booking Tools (OBT) were introduced and along with that, since not every OBT provider wanted to integrate with each GDS separately, GDS aggregators including ourselves emerged. While GDSs “spoke” (and still “speak”) GDS specific language, GDS aggregators translate that into a unified XML which remains constant across GDSs.


With the success of the internet Online Booking Tools were introduced and GDS aggregators emerged
With the success of the internet Online Booking Tools were introduced and GDS aggregators emerged. (Copyright: PASS Consulting Group)

What is NDC?

Now, what is NDC? NDC stands for New Distribution Capability. I was always told not to use “New” in any product name, because in a year from today or in 10 years, is it still considered “new”, but this is what IATA chose. NDC has two major aspects in my understanding. First, it is a new communication protocol that replaces a protocol which has been around since the 1980s (EDIFACT – Electronic Data Interchange for Administration, Commerce and Transport) with a new standard (XML – Extended Markup Language).

EDIFACT Message vs. XML document.
EDIFACT Message vs. XML document. (Copyright: PASS Consulting Group)

The first version of the IATA NDC schema was actually our XML schema which we created around the turn of the century. Developers today prefer JSON (JavaScript Object Notation) and rapid API development and run when they hear XML. Hence an argument can be made that this is not so “new” after all.

The other aspect of NDC is that airlines want to take control of the distribution, such as provide offers based on ‘who is asking’, price ancillaries etc. – in order to differentiate from each other. Example could be Michael Strauss, not a good client, let’s offer him no direct flights and only middle seats. Or, what Lufthansa actually wants to offer is Bavarian brewery tours for passengers with long stopovers in Munich. To achieve these wishes, airlines contracted with technology providers or started their own initiative to hook into CRSs and provide their own API (Application Programming Interface). This is now called NDC XML and at this time (Oct. 2017) there are approx. 18 versions around. As I mentioned, the 1st version was our XML schema, but it has changed a lot since then. Presently a new version comes out every six months.


If each airline has its own “interpretation” of NDC we´ll need a direct connect aggregator.
If each airline has its own “interpretation” of NDC we´ll need a direct connect aggregator. (Copyright: PASS Consulting Group)

If we look at the numbers, we have up to 500 airlines in various GDSs (there are actually 5,000 airlines worldwide and 30 currently considering NDC as an option) and one would have to develop and maintain a magnitude of various NDC versions with multiple airlines (up to 500). IATA (International Air Transport Association) promises to certify NDC connections, however, it remains to be seen how this will play out. As airlines want to use this vehicle to differentiate themselves and have no desire to be easily comparable with a competing carrier, I strongly believe each airline will have their own “interpretation” of NDC (even British Airways / Iberia decided to use a different approach than OneWorld alliance partner American; Lufthansa does not even use one of the published IATA NDC version but their own flavor of it). Security breaches are on the rise, and companies are trying to encapsulated their systems rather than opening them up. In this example, what used to be a closed environment of a few handful of CRS provider hooking into one handful of GDSs, who open themselves only to a limited number of authorized developers, now appear to open up APIs to everybody. This may be an ultimate risk that needs to be managed. GDSs also warn to be careful what you wish for: can airlines handle the traffic. In business travel, a look-to-book of 5:1 is maybe something everybody can handle, but are airlines prepared to handle traffic from numerous institutions worldwide, with numerous shopping request? Long story short, there is absolutely no way that every TMC or even every corporation can integrate with all airlines, which means we need a direct connect aggregator.

Will GDSs become the NDC aggregator?

Let’s take a step back: Ideally it would be the easiest if the GDSs would just unplug the EDIFACT pipeline and plug in the NDC pipeline. However, not all airlines will migrate to NDC at the same time which would mean a transition period and among the challenges, there is also the unresolved problem who does the ticketing: ATPCo airlines ticket in the GDS, while NDC API bookings are ticketed with the airline. And that’s besides commercial aspects. Consequently, this won’t happen overnight. Despite the fact that TMCs request GDSs to evolve, as usually all the TMC infrastructure is built on top of GDSs, this may only be a solution for the future and it is not something which is available today. Some TMCs see the effort to switch to NDC similar complicated as a switch of the PSS system of an airline.


It would be the easiest if the GDSs would just unplug the EDIFACT pipeline and plug in the NDC pipeline. But who does the ticketing while transition period: ATPCo airlines ticket in the GDS, while NDC API bookings are ticketed with the airline.
It would be the easiest if the GDSs would just unplug the EDIFACT pipeline and plug in the NDC pipeline. But who does the ticketing while transition period: ATPCo airlines ticket in the GDS, while NDC API bookings are ticketed with the airline. (Copyright: PASS Consulting Group)

Some airlines suggest to wait if the GDSs pick up the pace, but if a solution today is needed, we are stuck to the Direct Connect aggregators.

Unfortunately, it doesn’t stop here: We also have Low Cost Carriers (LCCs) – and there is about 150 of them, and there already have emerged LCC aggregators for low cost carriers – which is a tough part as some of these LCCs can only be integrated via website screen scraping.

Aggregator of the aggregators

Now we have the GDS aggregators, the Direct Connect aggregators and the LCC aggregators (and this is just for air) which means we need the aggregator of the aggregators.


If we have GDS aggregators, Direct Connect aggregators and the LCC aggregators we´ll need an aggregator of the aggregators.
If we have GDS aggregators, Direct Connect aggregators and the LCC aggregators we´ll need an aggregator of the aggregators. (Copyright: PASS Consulting Group)

We also need a multi-source Agent Desktop now, because not all bookings can be serviced by GDS cryptic screens anymore. In addition, we cannot close our eyes to the internet age we live in, which means we have mobile interfaces, chatbots, artificial intelligence leading to virtual agents, and things we probably cannot even imagine today. And, we have Midoffice, Backoffice, Expense Management and Travel Risk Management / Duty of Care provider, who used to get their information from the remarks of the PNR database of the GDS, but now since not all PNRs reside in the GDS, and GDSs (at least some) have made it very clear that passive segments are not an option for direct connect bookings (or at a minimum they come at a cost), we may also need a Super-PNR (SPNR-) Database.


Mobile interfaces, chatbots, artificial intelligence etc. will be the future and will pose new challenges.
Mobile interfaces, chatbots, artificial intelligence etc. will be the future and will pose new challenges. (Copyright: PASS Consulting Group)

It seems to be a battlefield

People approach and tell me that I should be so happy as we are well positioned to become this Mega-Aggregator, but I always respond that I’m not. First, this seems to be a lot of time and resources wasted to develop something which is already to some extent here. Then there is no money in this: distribution cost is going down – even if airlines wanted to pour more money into distribution (which they don’t want to), there are more players on the field who want to get a piece of the pie. It is also a big gamble as the minute airlines and GDSs agree on full content deals and hooking the pipe into the NDC pipeline all this goes away. And, it seems to be a battlefield. We have been “Switzerland in a war zone” for almost two decades: It has never been easy to be neutral in a world of 3-5 GDSs. Now we are talking about way more players and each in competition with each other. Farelogix used to be in the business of becoming the big aggregator (as they had the technology because they built on our technology), but lost all their leverage when they lost their GDS agreements. Now from a value chain perspective, they have only a small presence as an airline API provider. This does not mean they are small or irrelevant to the business in total. To be one of the NDC provider and enable ancillary shopping, interlines etc. is still a huge undertaking.

Plus, let’s not forget that GDSs have already secured their own spots in the new world: Amadeus for instance has the CRS/PSS Altea, own LCC CRS Navitaire and are in business as a LCC aggregator with Pyton. They also have their own GDS, own Agent Desktop and two OBTs (E-Travel and Cytric), along with GDS aggregation capabilities from PASS. On the remaining items (mobile etc.) they partner or acquire. Finally, Amadeus has also successfully cannibalized itself by bypassing their GDS and hooking Cytric directly into Altea (the PSS of Lufthansa) for Siemens and Volkswagen.

Commercial challenges

This is only the technical landscape – so, now if we look at some commercial aspects it becomes even more worrisome:

Commercial Challenges.
Commercial Challenges. (Copyright: PASS Consulting Group)
  1. It takes a number of agreements for each direct connect. For Lufthansa for instance we have an agreement with their technology provider Farelogix, but also one with Lufthansa itself to be allowed to technically access their system and our clients need a content agreement with Lufthansa, to be allowed to see and book the inventory through us.
  2. Source agnostic Agent Desktops are not easy to develop – as we are doing this right now, we know this first hand. Historically TMCs have burned a lot of money in such endeavors: CWT’s Symphonie was estimated to cost $15-$20 million annually. American Express GBT’s Travelbaan was reported to have cost $100M and BCD’s Renaissance cost around $20 million and millions annually to maintain. All these Agent Desktops have since been sunset. Obviously, today’s technology allow better commercials, but still it is a challenge. In addition, some of the GDSs prohibit an Agent Desktop that compares their rates with other content.
  3. While I’m sure there are trips which can be better maintained by NDC, there are also trips which will be a nightmare when they have segments of different sources – such as one leg is a GDS booking, the next one a Direct Connect Booking, the 3rd one a low cost carrier. How do you shop these? How can you compare apples to apples? Where are those trips ticketed – most likely in different systems. Add robotic ticketing to the mix or interline/codeshare bookings. I’m not sure if this has all been tested yet. But even if this all works, have fun with a change of plan of your traveler. Exchange in multiple sources will be interesting to see how far this can be automated. And then you obviously need to support this via different channels. While the bookings may be done through the OBT, the change may be requested through mobile. That’s all going to be addressed by artificial intelligence?! Good luck with that! Another concern is speed: The ATPCo pipe has proven to be fast and effective – any API will need to have similar speeds, similar resistance, up time of 99.9 percent or more.
  4. Another issue is the business model. All this new technology will have to be developed and such development costs. While the airlines say they want to inject the same amount of money, just the industry shall distribute it differently as needed, this may be a challenge: It seems like there are more players (such as the aggregators, but also the technology provider of the airline API), which means less money for more entities. American says it already (in 2017) distributes 4 million tickets via NDC (which in fact is only 2% annually of their carried passengers). But even if this number significantly increases it will never reach 100%. Let’s assume 80% of tickets are distributed direct, how expensive must the distribution of the remaining 20% become in order to maintain all this legacy (but working) technology. I cannot see GDSs being able to cut costs by 80%. Or maybe the PNR in the PSS needs to become more expensive as most airlines are hooked into their PSS which coincidentally is also provided mostly by the same GDS companies. Not to forget that TMCs may face a challenge as they may have goals to achieve with GDSs. If they do not achieve those goals they may receive less bonuses (incentives, commissions, and/or overrides) from the GDSs – hence a shift to NDC may jeopardizes their GDS revenue. This might be a risky undertaking and require some technology to maximize their profits (or better minimize their losses).
  5. And finally, it all comes down to what airlines and GDSs agree upon. Let’s assume we figure this whole picture out and find it lucrative for everybody, and all of a sudden, some new leaders from the airlines and GDSs sit at a table and agree on GDSs to hook into NDC themselves and all the other endeavors fade away. Lufthansa for instance mentioned that the harsher stance they took is mainly to force GDSs to catch up with technology. Delta continues to provide full content to GDSs as they feel building out lots of direct connects “sounds like recreating what is there” (which sounds different to their stance in 2011).

Solutions instead of protectionism

I’m a big advocate of breaking apart the GDS oligopoly, but it needs to make sense and not just create a ridiculous amount of extra work. I believe we better get our act together sooner rather than later and work on solutions instead of protectionism. It seems like we totally underestimate the power of a few major players in the internet world (Amazon, Apple, Google, Facebook and Microsoft). A simple comparison: GDSs regard the ownership of the PNRs as a major USP – and to some extent, this can even be considered double dipping with charging for the same PNR in the PSS as well as the GDS and potentially other locations. And what is a PNR? A text record of not even 1 KB? You can store pictures up to 5 GB with any cloud provider for free. Hence, I can easily store more than five Million trips at one cloud provider – more trips than I will ever take – not even considering I just need the upcoming trips stored and can abandon the ones which have been completed. Maybe it would be wise to understand that a PNR is not the property of a GDS but the property of the traveler.

Even wiser would be to do something with all that data that is being collected and/or encourage startups to see how anyone can benefit (obviously anonymized in order to take security and privacy concerns in consideration). The box mobile, chatbot, artificial intelligence is completely underrepresented in my graphic. This will be the future – to ask Alexa or Siri to book your hotel room on your upcoming trip and show in virtual reality amenities on your TV screen in order to make an informed decision. A CRS, GDS or even PSS may still be considered rocket science by some individuals today, but like in the music industry, don’t expect the world never to change.


Picture credit: Shutterstock

9 thoughts “The reality behind NDC: Why NDC won’t break down the GDS oligopoly – yet”

  1. KKI

    There is a conceptual problem with NDC. A new technology (and it doesn’t matter whether it is XML or JSON) does not mean a new business model. If you want to disrupt the GDS “business model”, you need to come up with “a new business model” (a.k.a. business model innovation). EDI or XML or JSON – these are technically all similar, one might be easier or harder for a bunch of developers to grasp but that’s it. To change the distribution channel, intermediaries and who gets what part of the money is a totally different problem. Think about Uber: it’not about the mobile app alone – it also changes the supply-demand model, fixed costs vs. variable costs, and the like. That’s what I fail to see with NDC.

    1. Michael Strauss

      Michael Strauss Post author

      Agreed – one should separate technology from commercials. However, in many cases technology is used to disrupt the business model. This usually is okay, if it simplifies life for the user, but it asks for trouble when it makes life more complicated.
      I fail to see many things imporve from a user perspective in the travel industry. If I only want to sleep on a trip, why do I pay for somebody else’s wine, scotch and dinner? This is not addressed. What has been addressed over the past decade: a higher price for my ticket, while fuel got cheaper, bags and seat reservation cost extra, leg room got smaller, the list can go on – you name it..
      Nokia and Motorola dominated cellphone voice communication, Blackberry data – none of these companies is being heard of today. While the carriers (AT&T, Verizon, T-Mobile, Vodafone, etc.) are still around, their dominance subsided to data package transportation. In the old days Steve knocked at the carrier’s door – today it’s the other way around. Let’s see if airlines become AT&Ts and GDSs/etc. Motorolas.

  2. Jeroen Martron

    Thanks Michael. Good article. It is true that there only 30 airlines considering or developing NDC which might go up to 60 airlines. However, big part of the 30 airlines are pre-dominantly strong European airlines which makes it currently a pre-dominantly European discussion in the first place. All big European markets are hit with this ridiculous GDS surcharge. (I prefer by the way the AA approach much better) . But isn’t the whole idea of airlines to be able to control pricing, enable contextual search, personalized offers, actually becoming retailer meanwhile trying to reduce indirect distribution ?

    1. Michael Strauss

      Michael Strauss Post author

      Dear Jeroen,

      Thanks for this comment. Very good thoughts! No matter who I talk to, I hear negative about either model – the AA approach or the GDS surcharge.

      Ultimately, I believe neither the suppliers nor the distributor care about the other entities’ challenges. Nobody wants to lose; everybody wants to control. Hence, each entity tries to control what it can control. Consequently, we are (or were) in a lock state, and it all draws a bad picture to the user.

      The traditional commission model ( will eventually be changed. With regards to direct vs. indirect distribution: Over 50% already today usually goes through the supplier’s website (a.k.a. direct distribution – compare the graph As I mentioned already back in 2015 when Lufthansa first announced the GDS distribution charge, I still believe GDS surcharges are some extend a method to bring the GDSs to the negotiation table (check the graphic how a few bookings can save millions: and/or force them to innovate. And it seems to work – as Sabre announced on the very same conference I gave this speech that they will significantly increase their investment into new distribution capabilities (

      Question is only, if it is too late, if XML (and something we at PASS initially developed 17 years ago) is the right medium (I would not call it “new”), and what IATA makes or made of it. The API needs to remain constant as long as possible (not 2 new versions a year). How can one drive user experience if you have to keep up with changes constantly? Innovation happens on the front end (mobile, chatbots –, artificial intelligence, virtual agents, etc.). And the frontend startups are currently locked out, as they cannot get their hands on PNRs and GDS access – unless they have a big TMC backing them. Hence, is not the user who decides what is good or bad – unlike other industries it’s still big corporations/TMCs. If you want to innovate on the backend, one may consider going to totally new ideas – like #blockchain?

      Thank you again for the fruitful thoughts,

  3. Levi Brackman

    What seems to be missing from this conversation is Google. They already have the ability to offer search and relatively accurate and bookable content that can be booked directly on the airlines sites. Thus, the technology to aggregate is here for the most part.

    1. Michael Strauss

      Michael Strauss Post author

      True – and with the acquisition of ITA software ( they have one of the best air shopping engines. They could definitely be a game changer and I mentioned Google in the solutions section as a threat to the legacy distributors. It remains to be seen how ‘accepted’ they will be in business travel, but for leisure – definitely. Google is also probably the only entity who could break down another oligopoly: hotels by Priceline/ and Expedia (but why should they as long as Google receives a check each year from both of them in the amount of $2 Billion). So, Google does a little bit quietly in the background – just so that they do not jeopardize their advertising revenue, Apple already filed a patent for RFID check-in in 2009 (, Microsoft is working on an Outlook integration, Facebook is pretty well positioned for Chatbot technology (, and for Amazon it would be just the logical next step to shop for travel through Alexa. Hence my argument: we better get our act together soon.

  4. Michael Strauss

    Michael Strauss Post author

    Hi Folks,

    I get asked a lot of times about the difference between a GDS and a CRS, what a PSS is, what ATPCo and OAG have to do with this and why it matters for NDC? I was trying to answer some of these questions in the comment section of my Blogpost “What is a Passenger Service System (PSS)”. Check it out:


  5. jude

    can you expand on the Lufthansa using their own flavour? at the time of writing they gained Level 3 as an airline using 15.2 and shortly upgraded to 17.2 afterwards.

    1. Michael Strauss

      Michael Strauss Post author

      Dear Jude,

      Sorry for the late reply due to the holidays. Great question – and you may be right.

      NDC Level 3 – a real standard?
      On paper, if every airline is NDC Level 3 compliant, one should be able to copy the integration to Lufthansa 1:1 over to British Airways and American – right? However, there is only a subset of fields (= features) mandatory for each airline to comply with (and it remains to be seen whether even that subset implementation can simply be copied).

      Differentiation means Options:
      A significant part is optional and up for interpretation. If Lufthansa wants to offer brewery tours for long stopovers in Munich (or a visit to the FC Bayern), what’s the equivalent for American in Dallas? A tour through the headquarters of the Chicago Cowboys in Frisco? And, will the airlines make sure they all use such provided optional fields in the same manner?

      GDSs mandated zero Differentiation:
      GDSs made sure that a seat is a seat – and that came with its own challenges: one provided a business class seat at an angle while the other one had a lie flat seat – but in the GDSs it looked the same. There is no ideal solution to the problem (and there never has been). In the past all looked the same but it wasn’t, in the future all looks different and comparison shopping will almost be impossible. Airlines need to differentiate and travelers need to understand the differences. Technology can help to some extent, but it is a business challenge that needs to be changed.

      Business Travel needs comparable Options:
      Especially for business travel a solid set of comparable features need to be available. It may be that airline brand differentiation becomes the major factor, however, then we have the problem with the hubs which are dominated by one airline. Every corporation will need several airlines to do business with extensively.

      TMCs need to join the party?
      This is once again an area where TMCs probably need to sit at the table, as they know what subset of air ancillaries and features are important to their business clients. However, TMCs have not been part of the discussion so far as their eggs were in the GDS baskets who paid them large sums in the past. These days, I can see TMCs starting to realize NDC and carefully evaluating it (quietly to not jeopardize their GDS relationships).

      Future of NDC:
      Hence, I expect version 17.2 not to be the last one – and still major changes ahead. Also, NDC will still learn lessons – as they did with the totally overloaded Air Shopping message of their earlier versions, which gets closer and closer to the way business was conducted in a pure GDS world.

      I look forward to a fruitful discussion on this topic – anybody wants to join: pls. feel free to do so!


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