Is IATA´s NDC Really the Bad Guy?

Last time we introduced you to the New Distribution Capability (NDC) which was adopted during IATA’s Passenger Services Conference in Abu Dhabi in October 2012.

We already stated our opinion, that the excitement regarding the NDC is mainly “much ado about nothing”, as Shakespeare already titled his comedic play, which was published in 1623. Now we would like to go a little bit further into detail and clarify our position on the main arguments of the discussion about the NDC.

Let´s start with the first argument, often heard in public discussions. This would be that the NDC will make the GDSs redundant. Well, as seen today, it is already possible and a current method to sell tickets without collaboration with the GDSs: About half of the tickets are sold by the airlines via the direct channel. Added to this, please be aware that there are airlines (e. g. Easyjet), that sell their tickets exclusively over their website and not via the GDSs.
As the U.S. Department of Transportation (DOT) is not the advocate for the GDSs, in our opinion it is not the task of the DOT to make sure the GDSs survive. Besides, we are convinced that the GDSs are flexible and creative enough to improve their business case with newer technology: The NDC. Not least because they also operate successfully throughout the entire distribution chain: They run reservation-, distribution- and sales- systems.

The second point you often hear about would be, that due to a lack of transparency caused by the NDC, there won´t be any more comparability for customers, which would result in rising prices. We however see a gain of transparency, enabled by the NDC. Today it appears that a traveler has more transparency when using a GDS, than using the direct channel. Nevertheless, the transparency is only based on prices and not yet on features. Additionally it is provided by only three GDSs, which can influence buying decisions. It seems to be very unreasonable to give all this market power to only three profit-oriented companies, doesn´t it?

We think that a new standard could enable third-party aggregators to provide transparency by company offers from airlines based on features in combination with prices. This in turn causes advantages for the travelers: The needed transparency would increase, so that they could easily pick and choose and most important, compare the offers between different airlines. This would introduce middle ground from the two extremes: Full transparency only on price, provided by GDSs, versus complicated comparison provided by direct distribution through suppliers websites.

As a third argument, the data privacy also is a relevant keyword in the discussion, whether the NDC should be approved by the DOT or not: It is criticized, that the privacy of the traveler would be compromised by the NDC. As entering personal information is and needs to stay optional, we really cannot see any disadvantages for the travelers. Besides, the GDSs are already working on the possibility to exchange frequent-flyer information to make discounts accessible. With the Web 2.0 or Social Media, we even take a step forward and say that data privacy in the internet age needs to be addressed in a global scale by governments and other institutions. It’s really absurd to think that the travel industry can resolve these matters alone.

All in all we feel very confident that everything will stay in the way it is now and that the only change will be more transparency and the option for third-party supplier to come up with innovative business models. People who want to be more flexible, will get the opportunity to search for personalized offers – those who don’t can just skip this option and search without entering personal information. This all will be made possible by a new and safer standard, which we are delighted to support.

Image by chanpipat

This Post Has 2 Comments

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    Rached Arfaoui

    Great Article Michael. thanks for keep posting interesting articles about airline industry that i keep sharing with my people

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