American Airlines’ NDC transition and the distribution evolution
American Airlines has announced they will move forward with their controversial plan and begin to “offer [their] best available third-party public channel content only through New Distribution Capability (NDC) connections” from 3 April 2023. Additionally, although travel retailers can continue to view these fares in EDIFACT after this date, they will need an NDC connection to book and ticket these fares.
The airline has stated that the use of NDC technology as an alternative distribution channel is routed in their focus on the customer:
“The customer is at the centre of what we’re doing, and this type of change is needed to drive forward better customer experiences even where significant investment is necessary.”
So how did we get here?
A brief history of airline distribution
1940s – Manual ticketing with travel agents providing customers access to multiple airlines.
1964 – IBM and American Airlines developed the first computer reservation system (CRS) Sabre.
Late 1990s – CRSs started to become independent businesses, expanding their networks to become GDS providers. The main GDS providers included Sabre, Amadeus, and Travelport and were used widely.
Mid 2000s to present – Airlines began exploring NDC technology as an alternative distribution channel. NDC is a messaging standard developed by the International Air Transport Association (IATA) which “enhances the capability of communications between airlines and travel agents and is open to any third party, intermediary, IT provider or non-IATA member, to implement and use.”
The benefits of transitioning to NDC
NDC allows for more flexibility, personalisation, and a reduced dependency on legacy systems in the retail and distribution space. Airlines’ transition to NDC gives them more control over offerings and enables them to provide bundles, capitalise on ancillary revenue, help to increase customer satisfaction, and more.
The airline listed the following as the benefits for travel retailers and customers:
- Increased customer choice.
- A more efficient booking experience.
- Greater ability to differentiate content on more than just schedule and price.
- Purchase ancillaries seamlessly at the time of shopping.
- Access to Enhanced offers that are relevant and tailored to the customer.
- Automated support and notification for involuntary schedule changes (as opposed to requiring manual input from travel retailers).
What does this mean for GDS providers?
One interesting consequence of the NDC transition, as outlined in an article by Skift, is it forces GDS providers to innovate. The article refers to comments made by Jorge Diaz, CEO and founder of airfare aggregator AirGateway, saying that “we could call NDC an obligation to be dramatically innovative.”
American Airlines explained that three major GDS and several travel tech providers will be ready to provide connections to American’s NDC content by 3 April having signed long-term distribution deals with Amadeus, Sabre, and Travelport. However, the airline also highlighted that “like any significant technology transition, some providers will offer more servicing features and functionalities in their initial releases than others.” This emphasises the opportunity for the innovation in the distribution space as a consequence of the NDC transition.
What do you think of American Airline’s NDC evolution and how this will impact the distribution landscape?
Article by Jess Brownlow
