IATA’s NDC in 7 Questions
The IATA’s New Distribution Capability (NDC) is the best new standard initiative to help those in the travel industry transform the way air products are retailed. The NDC is currently a work in progress, with an expected completion of transition of late 2020. The new initiative shows great promise to help those in the industry to improve revenues and profits.
Yet there are some who still have little knowledge about these revolutionary new standards. So, here are seven questions and answers to help you out.
1. What is the insight of NDC?
The NDC was a collaborative effort from many of those in the travel-industry including airlines, travel management companies, corporate buyers, online travel agencies and technology players. All of these great companies have combined experiences and insights to build a communications suite that is functional and usable by all in the industry.
It doesn’t matter what your business focus, geographic location, size of the organisation, the target market or the commercial policy; the NDC is the best standards system for those selling air products, particularly airlines, to enhance revenues.
2. What does NDC provide?
The NDC is an XML messaging protocol that has allowed the airline industry to revolutionise communications in the industry to sell products better through digital channels. Using NDC, you can take enriched content of what your airline offers and distribute that to selling partners and customers conveniently and quickly.
By placing the focus on the products through enriched content, you can sell the unique benefits of your products and differentiate yourself from the market. This pulls your specific target market more towards your brand and this will help build revenues.
The time to market for air products is much quicker than traditional routes. As soon as air products are available, they can be communicated to corporations and travellers (leisure and business) and sold. Therefore, it improves the cash flow of your business through effective selling of products.
At the same time, NDC allows you to focus your marketing efforts. You can concentrate on marketing your air products to the right customers, with the right rich content that will appeal to them.
3. How does it boost revenue?
Not everyone is the same. There are some travellers who want specific offerings and those that aren’t interested in what you have. Airlines need to bypass marketing to those who aren’t interested as this just wastes marketing budgets. With NDC, you can choose your products and personalise marketing to make it more effective and less expensive and present these offers to the right travellers.
In addition, the current GDS system being used within the airline industry increases costs. The NDC standards will lower these. Therefore, the airline industry could redistribute financial assets to other marketing campaigns or provide improved services to customers.
4. What are its benefits on customer loyalty and customer engagement?
Customers demands are changing and, just like with all other industries, digitalisation of how goods are bought and sold are causing significant changes throughout the world. For instance, travellers look for specific air products and can use OTAs and tech giants like Google to find exactly what they want. This often means that airlines lose potential revenue to OTAs and Google Flights who offer deals for flights.
The new standards will allow airlines to disrupt this pattern by allowing products to be sold directly to the customer. The system allows for the travellers to have personalised offerings and different products can be offered to individuals. Personalisation has been shown in many industries to improve customer retention and loyalty, which makes for better revenue and easier sales in the long term.
5. How does it help airlines?
The possibilities for an airline are substantial with this new standard. Not only can airlines take standard air products and distribute those products directly to the individual travellers. This bypasses the OTAs and offers airlines higher direct sales, which can provide better profit margins.
This process is helping airlines to take back control over the distribution of products, the marketing of air products and their channel distribution strategy.
Customers can be directly offered personalised bundles that can include tickets, seats, ancillary services. Airlines could also sell these separately, depending on the strategy of the airline and their goals.
As airlines can bypass GDS and OTAs, they can offer better deals to customers and market directly to them. This builds trust and loyalty with customers that leads to a higher customer lifetime value.
6. What does it offer for passengers?
The IATA’s NDC offers passengers a more satisfying journey. Customers generally have a two wallet mindset when they’re travelling. The first wallet is about the availability of the and price of the flight. Customers are looking for a great deal. With NDC, airlines can offer this through cost-saving.
The second wallet is about the experience of the journey. This is where airlines can improve their revenues. Airlines have an excellent opportunity to sell throughout their interaction with customers from the booking of particular seats to the meal offered onboard the flight. These can be high-margin upsells that can offer a chance for airlines to improve profits for a flight and increase passenger satisfaction.
If the airline can offer great product bundles or upsell air products and this improves customer satisfaction, then the customer is going to enjoy their experience more. As a result, they’re happier with the airline and this will improve loyalty.
7. How does it affect the airline industry?
IATA’s NDC is a game-changer for the airline industry. No longer is your airline constrained by selling products that third parties control the sales off. You can now showcase the products you want exactly how you envisage them being sold. Therefore, you can target the right customers, set expectations and satisfy them better.
Airlines will see a significant rise in revenues through the selling of air products more effectively. The industry will see better margins through direct, personalised selling of products to customers. Currently there are 22 IATA members who are adopting NDC standards and the potential results are looking very promising.
With NDC, all airlines will be able to see a reduction in marketing and selling costs while also improving direct marketing to customers. This offers a more streamlined and pleasurable buying experience for both airlines and travellers. Airlines will also benefit from greater customer satisfaction rates which will turn travellers into loyal customers, helping airlines to be more profitable in the current challenging economic environment.