While two-thirds of airlines have at least begun the process of using NDC technology to digitize their third-party merchandising capabilities, only 27% have begun the holistic approach of digitizing their order processing, servicing and settlement capabilities.
That's according to a new study from Atmosphere Research Group.
"There is progress," Atmosphere founder Henry Harteveldt said in an interview. "And as I say in the report, the only thing that moves fast at an airline are the airplanes."
Atmosphere surveyed 78 airlines online and conducted phone interviews with 28 retailing professionals for its "Future of Airline Retailing" report. The study was supported by Accelya, a leader in developing digital merchandising and order-management solutions for airlines.
Proponents of modernizing airline retailing aspire for the industry to sell airline products and service orders via digital platforms that have similar capabilities to online retailers like Amazon. On the sales side, that means using a wide selection of product images. It also means personalizing search query responses through the effective use of a customer's previous purchase history as well as other customer metrics.
The industry is moving slowly in this direction with the aid of IATA's NDC distribution technology.
On the order-management side, IATA and other modern retailing advocates envision a world in which one customer record replaces the passenger name record (PNR), e-tickets and ancillary purchase records (called electronic miscellaneous documents or EMDs) used in today's process. Doing so will make it easier for airlines to service and settle orders and easier for airlines and travel agencies to do ticket exchanges and to service customers during disruptions, said Accelya chief customer success officer Tye Radcliffe.
IATA calls the order-management piece of the process One Order, while the industry cumulatively refers to the entire streamlined process as Offer and Order, or modern retailing.
A 2023 study by consulting firm McKinsey found that airlines could realize up to $45 billion in new value by 2030 via widespread implementation of Offer and Order.
"What Offer and Order does is level the playing field for travel agencies," Harteveldt said. "It gives them access to the same offers that customers get in the direct channel."
The Atmosphere Research study found that while just 27% of airlines have taken steps to begin the holistic Offer and Order transformation, 44% believe they'll make the transition by 2028. Conversely, 38% expect to continue with the existing legacy system until at least 2029.
Harteveldt sounded uncertain about whether so many airlines will achieve Offer and Order in the next three years.
"It's good to have goals. You need to have goals to stretch and try to achieve them," he said. "They may not be fully Offer and Order, but they will be well on their way in 2028."
Another key finding of the study is that airlines expect the portion of their bookings that are NDC-enabled to reach 21% by 2028 compared to just 7% in 2023. They expect legacy GDS bookings, enabled by Edifact technology, to drop to 14% of total bookings by 2028, down from 33% in 2023.
Harteveldt said he thinks that could happen, but that depends on the improvements that GDS companies make.
"It takes two to tango. I think if the GDS companies do make progress, then yes, that shift can take place," he said.