How can the passenger experience be enhanced throughout the process, from shopping for a ticket to completing the journey? This one question is radically changing the way the airline industry operates. With shifting operating models and cut-throat competition, airlines are under constant pressure to reduce fares to attract customers. Product differentiation and customer experience have become the key sources of competitive advantage.
Airlines are looking for ways to address customer needs and generate additional revenue in the form of ancillary services. Customers can choose a preferred seat with more leg space, priority boarding, additional baggage, meal preferences, onward journey options, customized entertainment, and a lot more. While airlines make such services available, passengers seek more flexibility in how to purchase such services, as well as customization to their preferences. This calls for the ability to view and compare the air travel product – just as we compare products on an e-commerce site.
A Window to an Improved Passenger Experience
New Distribution Capability (NDC) is an initiative backed by the International Air Transport Association (IATA) that looks at streamlining the passenger’s booking experience. According to IATA, more than 60% passengers make their bookings through travel agents. Traditionally, travel agents have accessed ticket information from the global distribution system (GDS). However, with optional services becoming a core part of every fare, travel agents also need to contact the airline for a complete list of optional services. The GDS may provide only a part of the available options, making it difficult for the travel agent to quickly confirm all relevant ancillary services and respond with the fare details to a passenger. Additionally, not having access to a customer’s preferences right at the outset makes it difficult for an airline to customize the offer.
The NDC program helps address these issues by bringing a single unified standard to help all stakeholders—airlines, GDS providers, and travel agents—communicate the airline product to the passenger in real time. NDC is not mandatory but airlines will benefit from adopting it. It allows airlines to simplify their back-end processes—fares will be created and returned as offers to the passenger in real time and, therefore, will not require filing of various fares (eliminating filing-error related potential losses). Dynamic and real-time fare offers will also reduce revenue integrity checks, as offers will be in sync with the orders finalized. What’s more, airlines can get access to all passengers’ preferences at the start of the sales cycle, enabling them to offer personalized bundled fare options, thus increasing the potential for ancillary revenue.
In a scenario where an airline cannot provide the fare for the entire route, airlines can choose to obtain fares from their interline partners to provide a combined single fare to the passenger. In this case, the interline rate is predetermined as the fare for the route, thus eliminating the need for proration and the possibility of potential disputes.
Most importantly, NDC will also enable travel agents and travel management companies to compare offers in real time based on fares and value provided. All of this, will help passengers choose a product that not only fits their wallet but also gives them the experience they are looking for.
NDC Adoption Takes Off
As per the IATA’s 2015 pilot report, more than 10 airlines have already delivered live transactions and 16 pilot airlines have shared their results publicly. These airlines have tested various scenarios of NDC modules and validated new sets of ancillaries such as WiFi, meals, lounge access, special services, and duty free. The first deployment included order management messages. For instance, in the case of British Airways, NDC has helped travel agents transparently display and sell airline products and services and ancillaries (such as seating and excess baggage). It has offered customers more options to choose from while they are booking a flight. Technology partners of a few airlines have also initiated changes in their fare distribution systems. The IATA’s focus this year is to have 20 NDC deployments, and understand the challenges and opportunities for corporate buyers and travel management companies.
What kind of experiences have you had with the NDC program implementation? Tell us in the comments section below.