IATA's New Distribution Capability (NDC) has received a lot of attention recently. It should. This represents a unique opportunity to modernize air travel distribution toward a customer-centric retail experience. And that's good news for everyone in the travel distribution value chain, especially the consumer.
Today, there is a gap between the travel shopping experience on an airline website and the information that is available through travel agents (traditional and those operating online).
If you visit an airline website, you have access to a lot more information about the various product offerings, and many airlines have options to customize that product. Recognizing a passenger's travel history, the airline might even be able to make a special offer that adds value to the trip.
But for the 60% of airline tickets (by dollar value) that are sold through travel agents, the purchase decision is made with much less information. An airline that offers some extra legroom or a special meal option cannot entice the customer with this added value because the GDSs cannot currently present that information effectively and attractively.
Why the gap? Because whereas airline websites display and differentiate their products, the legacy GDS model cannot support the pace of airline innovation: baggage allowance, premium economy, etc. NDC is about building the technology standards that will help to close the gap.
The airlines need and want this gap to be closed. They asked IATA to do what it does best -- develop standards -- to support this much-needed improvement.
How do we close the gap? To boil the task down to its most basic element, it is about developing a standardized method for airlines to describe their products and the options available. And once the global standard has been developed, innovators (today's players and tomorrow's new entrants) will have the certainty that they need to invent options for best using that information to meet the needs of travelers.
The foundation standard was approved in October. Now we are working on XML standards to support its implementation.
There is an excitement in the industry about this project, and rightly so. NDC will be the biggest enabler of innovation in air travel distribution since the e-ticket. But there are some misconceptions that need to be addressed:
First, there are fears that we are developing NDC in isolation. Nothing could be further from the truth. We couldn't do that even if we wanted to. NDC is far too complex.
That is why we have engaged with subject matter experts from GDSs, travel agencies and technology providers on the standards throughout the process. We have also enabled forums for public debate and discussion, such as the recent World Passenger Symposium at which visionaries and experts from all stakeholder groups engaged in open and candid discussions.
There are also concerns that we are trying to cut the GDSs out of the system. False.
There is a "content aggregator" role in NDC, which is essential to enable comparison shopping. GDSs are participating in the standard-setting process. And given their industry knowledge and know-how, they are well placed to take advantage of the innovation that NDC will make possible.
Likewise, concerns that NDC will limit consumer choice are not true. The aim of NDC is to provide more information so that better-informed decisions can be made and passengers can derive greater value from their travel experience.
Not every airline will necessarily be involved in every new innovative product offering that comes from NDC. But even today, some of the industry's largest airlines do not participate in GDSs or have only limited availability.
NDC makes no assumptions about business models. It could provide the opportunity to develop an attractive environment for all business models.
Finally, there is the fear than NDC has a hidden agenda to undermine travel agents. Incorrect.
NDC will help travel agents add value for their clients. It will enable comparisons of information that are today only available on individual websites. It will facilitate the easy sale of ancillary products. And by enabling the traveler to be identified even when booking through a travel agent, the airline has the opportunity to add value to the traveler experience.
Change always brings challenges. Consider the enormous work involved in transitioning to e-tickets last decade. But no one would argue that consumers are worse off for not having to carry a paper ticket.
As an enabler of innovation, NDC will bring change. And the market will determine which aspects of that change are valuable to customers and offer business opportunities to the value chain.
I am convinced that NDC will lead to a better-informed shopping environment for air travel that will deliver value to passengers and create business opportunities across all aspects of the industry.
Building it on principles of transparent standards, openness to innovation, fully informed consumer choices and collaboration across the value chain will make for a better tomorrow.
Eric Leopold is IATA's director of passenger services.