One of the most discussed and debated themes in commercial aviation is distribution. Specifically, IATA's NDC (new distribution capability) and ONE Order protocols have been getting a lot of buzz.
However, let's cut through the chatter and take a look at where the airline industry currently stands as far as implementation and practical use.
What is NDC and ONE Order?
Let's first take a step back and define the two terms. Previously on Kambr Media, we wrote a crash course on NDC which you can refer to for additional understanding.
To paraphrase from that article, NDC is a communications protocol created by IATA in 2012 aimed at streamlining the airline distribution process. Its aim is to improve the connection between airlines and third parties, such online travel agencies (OTA) and global distribution systems (GDS).
It's an XML standard that has been adopted that allows airlines and airline service providers to deliver rich content and ancillaries (such as baggage allowance and seat upgrades) directly to customers.
According to IATA, ONE Order is an initiative intended to simplify the airline reservation, delivery, and accounting systems by gradually phasing out the current booking (PNRs) and ticketing records (e-tickets and electronic miscellaneous documents, or EMDs).
"Together, NDC and ONE order make up IATA's new distribution standard, which keeps all relevant booking information in a single place, reducing distribution costs and enabling increased revenue through ancillary sales."
It is also an XML-based standard that combines these multiple records into a single retail and customer focused Order.
The purpose is to remove inefficiencies inherited from paper-based processes and facilitate communication between airlines’ order management, revenue accounting, and delivery providers.
Together, NDC and ONE order make up IATA's new distribution standard, which keeps all relevant booking information in a single place, reducing distribution costs and enabling increased revenue through ancillary sales.
If you're looking for additional information to consult, Lufthansa Systems does a good job of breaking it down in a simple way.
What is the Current Progress?
While there are too many to list here, a comprehensive list of airlines and their level of NDC certification can be found on the Duffel website.
While at first glance, there appears to be a lot of traction, the progress and adoption of NDC is a debatable topic. We won't go into all the details in this article, but we will shed light on some current use cases and developments.
Like in many other facets of the airline industry Covid has impacted NDC and ONE Order adoption and initiatives. As it's been discussed before, Covid has been a bit of a double-edged sword.
On one hand there has been the demand shock, but on the other hand, there has been the drive to adopt new technologies and practices.
"There was strong momentum toward NDC across the entire value chain before COVID-19,” said Yanik Hoyles, IATA’s Director Distribution. “Since then, many airlines, technology providers, and travel sellers have intensified this drive and maintained retailing as part of their core strategic priorities.”
Specifically, IATA has stated the 20% target for NDC bookings in the indirect channel was hit in June 2020, stemming mostly from domestic leisure bookings. Additionally, IATA had cited these developments:
- Between March 2020 and April 2021, the number of NDC certifications (airlines, IT providers, sellers) grew to 193 players, an increase of 18%.
- Several third-party distribution agreements have been announced among airlines, GDSs, and IT providers, some of which incorporate new commercial models reflecting landmark changes facilitated by NDC.
"There was strong momentum toward NDC across the entire value chain before COVID-19. Since then, many airlines, technology providers, and travel sellers have intensified this drive and maintained retailing as part of their core strategic priorities.”
Among IATA's latest initiatives are a new NDC Certification program and a new NDC standardization version.
IATA has moved away from the NDC Leaderboard in favor of the Airline Retailing Maturity (ARM) Index, which looks to the broader scope of airline retailing with an increased focus on value chain partnerships and value creation.
So far 48 companies have transitioned to the new index. The video below offers a quick look at the ARM index.
As for the NDC standard, On 10 March 2021, the Shop Order Standards Board selected the 21.3 release as the new standard (most implementers of enhanced distribution standards are on the 17.2 release of the NDC standard).
Releases subsequent to 21.3 will be backwards compatible to 21.3. This means that implementers may now choose to upgrade to this version knowing that future releases can be implemented in a simpler and more cost-effective way.
Getting airlines and tech providers on the same version will be crucial for IATA. As it stands now there are a number of different versions and levels of NDC being deployed.
As far as exact use cases with airlines there are several, but let's look at a few examples.
One of the biggest headlines was Finnair announcing its intention to go full NDC by 2025, starting in July 2022 with a series of measures in the European market. Finnair aims to transform the travel sector while improving customer choice and the customer experience.
While progress has certainly been made, only time will tell if NDC and ONE Order are the great distribution change-agents they're being billed as.