What Is NDC and How Will It Affect Travel?

Launched and developed by the International Air Transport Association (IATA), NDC is a new standard of transmitting data that will allow airlines to distribute their content in real time – content such as travel extras like booking baggage, Wi-Fi and meals on flights, and special offers.

Airlines right now have the ability to push their new offers right away on their websites – things like a new premium economy cabin or a new baggage product. But for travel agents, it takes a long time to find these offers, and in most cases, they’re unable to find them.

Right now, when a traveler buys a ticket through an airline’s website, the airline can present offers through a frequent flyer number. But if that traveler were to book with a travel agent, information on these offers is not known to the travel agent. What NDC does is it replicates the content from their website to the travel agent’s channel, which should benefit the traveler.

Pushing this content through the intermediary to the travel agent, however, is very difficult because the tools are ancient. While the NDC system may mean more that the travel agent can offer, switching to this system from the current GDS system may mean additional expenses for the travel agent that require them to make changes to their business model. For now, NDC is a premium addition for online travel sites, not a necessity.

But what happens when the airline leaders who are gearing up go mainstream with NDC?

American Airlines has created a deadline of sorts on the whole NDC transformation when it announced to travel agencies and frequent flyer customers that it would be connecting to the new technology beginning April 3, 2023. This means 40% of its fares will only be available to companies who have made the transition from GDS to NDC technology.

As other leaderboard airlines adopt similar practices, this will force more off-system bookings in 2023. This will increase costs, reduce visibility, break travel policies, and present care-of-duty risks and will likely go unnoticed because companies don’t have the data tools to track out-of-system bookings.

The American Society of Travel Advisors (ASTA) is urging American Airlines to delay its plan to implement NDC until the end of 2023. The organization stated that more than 160,000 Americans work at travel agencies across the country and that “more work needs to be done if NDC implementation is to be achieved in a manner that promotes healthy competition and avoids massive disruption to air ticket distribution.”

ASTA President and CEO Zane Kerby has said:

“Withholding such a substantial portion of its fares from critical independent distribution channels will have a serious negative impact on the traveling public, corporate travelers in particular.”

According to Traxo, Inc., provider of real-time corporate travel data capture, although NDC has been around already for a few years, it’s still in development and far from perfect, and there are risks posed by expected higher levels of out-of-system, non-compliant flight bookings as NDC finally becomes mainstream in 2023.

From a technical point of view, NDC is an XML-based coding language system, and although this language is supposed to be standardized, its implementation is dependent on the IT providers of each airline. This means that there is no actual “standard” to base it on. If each airline uses its own system, this will create countless connecting channels making it impossible for online travel agents to integrate the new technology.

Andres Fabris, CEO and Founder of Traxo, said:

“Other major US carriers, such as Delta and United, are carefully watching with keen interest to see how the industry reacts to AA’s deadline.”

“In 2023, we’re going to see more airlines offering more content solely via their NDC channels, as American Airlines will do from April onwards. Such actions mean corporate travelers will be forced to go out of system to book those fares. Such out-of-system bookings can pose significant challenges to TMCs and corporate travel managers as this ‘leakage’ not only often results in higher travel costs, but also reduce visibility of spend and control over policies.

“If corporations and agencies are not successful in booking away from AA, and AA’s direct market share remains neutral of shifts positive, it is highly likely other carriers will soon follow with NDC mandates and deadlines of their own.”