Delta pauses NDC development, 'doubles down' on existing distribution strategy

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With experts predicting it could be up to three years before the airline industry recovers, it's no surprise that some airlines are rethinking their distribution strategy.
With experts predicting it could be up to three years before the airline industry recovers, it's no surprise that some airlines are rethinking their distribution strategy. Photo Credit: Shutterstock

Delta Air Lines is pivoting from its New Distribution Capability (NDC) strategy to concentrate on its pre-existing distribution ecosystem.

Prior to Covid-19, the carrier had a two-pronged strategy of working with partners to "display and merchandize" its products and implementing IATA's NDC standard to make enhanced content available.

Speaking to Sabre as part of a partner interview, Jeff Lobl, managing director of global distribution strategy for Delta, said the airline is now "pausing" the NDC side of its program.

"What we've found, because of Covid, the amount of development resources and also potential disruption of some of that on the NDC side, we're pausing on that for the time being and doubling down and working within the existing ecosystem we currently have and making sure we can do the best job possible with the infrastructure we already have."

Later in the interview, Lobl talked about looking at the whole ecosystem and being able to better reward innovators in the space.

System reboot

He added: "As we think about how to do a better job rewarding the innovators, it has given us a chance to look at the ecosystem itself and the commercial model that exists within that ecosystem and we see some opportunities there. It's really sort of a commoditized structure that we have in our commercial models right now and it doesn't really give enough of a reward to the innovators so we're working really hard to get that reoriented."

Even during the crisis, he says, there is a lot of innovation out there creating better product choice for consumers.

"We're seeing a lot of encouraging signs of agencies really investing in that, seeing it particularly on the leisure side and there are some exciting enhancements coming through with the Next Generation Storefront initiative."

Lobl added that many corporate agencies, currently reliant on existing booking tools, also want to be part of the developments, saying airline sees great opportunity there as well.

With experts predicting it could be up to three years before the airline industry recovers, including losses of $84 billion in 2020, it's no surprise that some airlines are rethinking their distribution strategy.

Still, others are continuing to follow the NDC path, with Air France-KLM announcing its plan to pursue NDC through a partnership with Amadeus.

In a statement, Pieter Bootsma, chief revenue officer for the carrier, said: "NDC is a key innovation for Air France-KLM as it allows Air France-KLM customers to benefit from more attractive and customized offers, such as continuous pricing and tailor-made bundles. This agreement is an important step in our distribution strategy, completing our existing NDC distribution network."

Agencies wishing to access the NDC content will need to sign bilateral agreements with both Amadeus and Air France-KLM, and the airline is adding a surcharge on NDC bookings made via the Amadeus Travel Platform.

Following a pilot with agencies, content will be available in two phases starting in Q4 with NDC bookings available via Amadeus API and access via the GDS' front-office technology in the first half of next year.

Javier Laforgue, executive vice president and head of airlines distribution and global sales at Amadeus, said Air France-KLM is one of the airlines that is more advanced in the NDC journey.

"It developed some time ago its own NDC engine and have succeeded in implementing that on its own direct channels as well as with some third part GDS and NDC aggregators."

Commenting on the bilateral agreements to access content, he adds that it's one of the "possibilities."

"We believe that with this framework that we have agreed with Air France is that we have achieved a sustainable framework that provides value to all the parties involved in the travel distribution chain."

Laforgue said that with more pressure on everyone because of the Covid crisis, certain initiatives will continue to be strategic for some airlines.

"NDC is one of them, clearly not for all airlines but for airlines of the profile of Air France-KLM or other large European players, NDC will continue to be a strategic investment and we expect it will be somehow protected within the limitations that the current crisis is going to bring forward for everyone."

Source: PhocusWire

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