NDC (New Distribution Capability) launched by IATA will enable the travel industry to transform the way air products are retailed to corporations, leisure and business travellers, by addressing the industry’s current distribution limitations: product differentiation and time-to-market, access to full and rich air content and finally, transparent shopping experience. Champa Magesh, vice president, Asia Pacific, Amadeus speaks to Steena Joy on the benefits of NDC and its impact on air content distribution
Why did IATA introduce NDC?
The airlines especially the Full Service Carriers (FSCs) are in a very highly competitive environment. From their standpoint they are looking at competing more effectively with LCCs and having to address their cost structure. Also travellers want more personalised experiences, they want to be able to get offers that are more customised and also which will provide them end to end services. So taking all this into account, airlines are trying to increase revenues as well as trying to boost loyalty with their travellers. And they are also trying to gain control in terms of their offer to the travellers. These are the objectives that airlines are trying to achieve in rolling out NDC.
How will it benefit the airlines? And the travel agents?
It is a change and of course for every change there is an opportunity. From an airline perspective, as I said earlier, this gives them an opportunity to offer more choices to the traveller. To provide a more personalised offering to travellers. More choices are always good from a consumer perspective because travellers are looking for choices, depending on the context of the travel like for example a traveller travelling with family may look for a fare package that includes baggage versus a student going away for a weekend who may be more cost conscious, doesn’t want to pay extra for baggage or seat allocation. So it’s about travellers having the choice to pay for what they want and for airlines to be able to make a personalised offer to them. And in airlines being able to do this helps travel agencies as well, because the whole area of merchandising opens up new revenue streams for them. Agents who can personalise these offers for the traveller can obviously charge for those services. Or provide a package which gives them greater revenue and also helps them retain the loyalty of the traveller.
I think there are definitely benefits to be had for travel agencies from looking at how they can effectively retail to travellers. So the BIG change and shift in the industry is that this is no longer about booking travel; it is about travel agencies considering how they can retail travel to the traveller because he is not just looking at the booking. Booking in itself is not complicated anymore from the traveller’s perspective because there are multiple ways of booking travel these days. But what travellers are looking for, and where travel agencies can add value is the end to end experience.
The industry seems skeptical of NDC?
This is perhaps because of how NDC was perceived earlier. Initially, NDC was seen as a way to change the business model but in reality, NDC is just a communication protocol. It’s a communication protocol standard in XAmow for API. Fundamentally, NDC in itself is nothing earth shattering – it is just an element of technology that has to be adopted. But there are other aspects of the change to be considered – what is the business model, how are the airlines going to deploy it, whose going to pay for it, how is this cost of change going to be funded, etc. these are all open questions and it needs industry collaboration. Because in any eco system you have multiple players like the indirect channels to the agencies, then the airlines, the technology partners like Amadeus, search engines, meta search engines, etc. and there needs to be collaboration, not just among the airlines.
How is Amadeus planning to collaborate?
We have already announced several pilots between travel agencies, ourselves and airlines where all three of us are working together. To pilot the NDC solutions, we are building and investing in the Amadeus travel platform which will enable not just the NDC but allow the NDC and the GDS and other sources of content to coexist together. And we are running pilots on a global scale and including travel companies with FCM, GTB, CWT, etc who are global but have a footprint in India. We are working with IATA as well and that way we are uniquely positioned because we host 130 airlines and work with many travel agencies so we are able to help facilitate that collaboration.
Content is getting fragmented there are multiple sources of content these days, it is not like in the 80s where the only source of content was the GDS and what travel agents not just globally but in India too need in order to be successful is to be able to access all that content and then be able to personalise it to suit their customers.