NDC - the basics
In a nutshell, how would you explain NDC?
NDC is an IATA-led collaborative industry initiative to define a new messaging standard between airlines and travel agents that will enable greater transparency and choice for consumers in comparison shopping.
Aren’t airlines selling their products to customers through different channels already?
They are. However, there is a clear difference between the amount of information provided today to consumers via an airline’s website and the global distribution system (GDS)/travel agency channel. Airline websites provide consumers with complete offers and are able to tailor those offers to meet the customer’s particular needs. This is similar to the experience customers have when accessing any leading retail website.
In contrast, in the GDS/travel agent channel, the agent and air traveler typically only receive information on the base fare and frequency available from the airline. Additionally, the airline cannot personalize the offer based on the customers’ frequent flyer status or what credit card they have, etc., because they do not know who the customer is until after the reservation is made. NDC is designed to eliminate this discrepancy by developing a common messaging standard that is robust enough to support both complete offers and the ability of airlines to customize those offers to meet individual traveler needs.
How will this be different from the current distribution model?
Today, the GDS responds to a request from a travel agent to compile an airline offer based on price and schedule by tapping into fare and schedule databases maintained by outside companies. This offer is put together anonymously outside the airline by intermediaries and the airline does not know who the customer is before a reservation is made. In contrast, once the data standard is in place, airlines participating in NDC will be able to make offers that meet the needs of the end user as identified by the customer, the agent, or another authorized third party. This enables both the airline as well as the travelagency to custom-tailor product/service offers.
How are industry stakeholders kept in the loop?
NDC is a collaborative project across the whole industry, comprising IATA and its members, GDSs, travel agents and IT partners. We continue to reach out to other stakeholders through the Distribution Data Exchange Working Group (DDX WG) where the difficult work of writing a new technical standard is being undertaken. In addition to IATA has created the Agents-Airlines Forum, IATA recently formed a new group, the Passenger Distribution Group Advisory Forum, to provide another communications channel for travel agents and travel technology systems providers to work with IATA on NDC.
The entire industry is moving toward XML—as exemplified Travelport’s Agencia product with Air Canada and its agreement with American Airlines. But in the absence of a single standard such as NDC, we will have a number of one-off proprietary, non-interchangeable solutions. Standards increase efficiency, encourage competition and reduce costs.
For the uninitiated, what is NDC and why does IATA think it’s needed?
NDC (New Distribution Capability) is an IATA-led, industry supported project to develop an XML-based (Internet language) data transmission standard for communications between airlines and travel agents in order to modernize the way tickets are sold and distributed through travel agents. At present the industry is operating on a pre-Internet standard that no longer meets the way people like to shop online. Consumers today expect access to detailed information about their purchase and a customized experience based on their likes and dislikes. They want to be recognized if they choose to identify themselves, by providing the frequent flyer number, for example. Airlines can do this on their own websites, because they use XML messaging standards, but systems used by agents are largely unable to accommodate modern selling. NDC is about setting the XML standards that will bring airline ticket distribution into the same 21st-century world wherever people shop for air travel.
What is IATA’s role in the NDC process?
IATA was created more than 60 years ago to develop standards to support a safe and efficient commercial air transport industry. Some of our most recent standards include electronic ticketing and bar coded boarding passes. On NDC, IATA’s role is to develop the XML based data transmission standard that will enable the vision of an NDC environment.
What are the main concerns the travel industry has with NDC?
NDC is a broad industry initiative with input from all participants in the travel value chain and the new standard will be open to all and is not mandatory. Like any major change program, it has also attracted strong opposition from certain vested interests. And unfortunately some of those opponents have used the opportunity to mislead those who are less familiar with NDC. But false claims that NDC will eliminate comparison shopping or that travelers will be forced to provide reams of personal data to receive a fare offer do nothing to address the real questions that agents have about NDC:
• What does NDC mean for the existing GDS-supported agency business model?
• How will travel agents be compensated in an NDC environment
• How much will it cost to change systems?
These are legitimate questions that IATA recognizes must be answered if NDC is going to become a reality. But it is the market, not IATA, which must provide those answers.
Is NDC an effort to establish a new business model?
1. NDC is an effort to establish a data transmission standard – nothing more or less.
2. Any changes to the existing model will be dictated by the market, not IATA.
3. This was true when IATA supported the industry in developing the EDIFACT standard almost 40 years ago and it is true today
If NDC is about a standard, why did IATA chose Open AXIS schema?
The Open AXIS schema was chosen over the Open Travel Alliance (OTA) schema for a number of reasons, including market readiness, scope, and governance.
- At the time of selection, the evaluated OTA schema had not been proven through use.
- A key criterion was full and unconditional governance to IATA. This requirement was fully met by Open AXIS and only partially by OTA
- Whereas Open Axis was focused on air travel, OTA also addressed non-airline travel shopping.
Having made the decision, we are confident that a standard that will benefit the entire industry will be delivered.
We are engaging with OTA to explore a path to cross-compatibility between the two standards.
This would allow us to capture the best of both worlds.
Why does IATA need approval from the US Department of Transportation to implement Resolution 787, the foundation resolution for NDC?
Under the “Provisions for Conduct of IATA Traffic Conferences”, IATA is required to file any and all resolutions and agreements coming out of its various conferences with the US Dept. of Transportation.
What is the status of the filing with DOT?
IATA filed its application for approval of Resolution 787 in March 2013 and its Reply to Comments in June 2013. Although there is no deadline by which time DOT must make a decision on the application, IATA expects DOT to issue a decision before the end of 2013.
NDC and consumers
How will NDC benefit consumers?
Consumers will have more choice and access to products and services being offered by the airlines. NDC enables airlines to present complete and personalized offers via both the direct (airline websites) and indirect channels. Consumers will be able to compare and contrast complete offers from various airlines.
Importantly, will NDC be of benefit for the end-user, the traveler? If so, in what way?
NDC is all about giving travelers, who still buy 60% of their tickets (by value) from travel agents, access to the same choices and flexibility that they are offered when they browse an airline website. At the moment, if an airline is offering a roomier seat, or the chance to upgrade a meal, or purchase airport pick-up, or many other kinds of additional personalized touches, they have to go to the airline’s own website. Comparison between the costs of these services cannot be done at a glance.
With NDC, the travel agent or the online shopper will be able to see all the options available, check photos, descriptions and reviews, and compare the costs among different airlines. So instead of just being able to see the base fare and schedule, travelers also will be able to compare the full value of the offer and make a more informed purchase decision. It is all about empowering the consumer in the same way that they have been empowered through the experience of shopping with Amazon or eBay.
In addition, NDC will enable airlines to recognize the loyalty of customers who would like to be identified, through a frequent flyer number for example. But it is important to emphasize that there is no obligation for a customer to identify themselves – this aspect is entirely voluntary.
Could NDC lead to higher ticket prices for consumers?
NDC is about defining a new messaging standard between airlines and travel agents. NDC does not define a business model and will not affect the commercial policies set individually by airlines and agents. However, the intent of NDC is to create an environment with greater transparency and choice, by providing airlines and agents with the ability to offer more products and services to customers than currently are available through the indirect channel. In an NDC environment, air travelers will be able to compare and contrast the full value of the airline’s offer, not just the base fare.
Greater choice for products and services through NDC should result in increased competition. Increased competition among suppliers usually results in lower prices for consumers.
Additionally, the NDC data transmission standard will open up the airline distribution market to much needed competition and new entry, which could lead to lower distribution costs. Historically consumers have benefitted when airline cost inputs declined.
Isn’t the goal of NDC to eliminate fare filings—so fares can’t be compared?
NDC will not require airlines to file fares, but fare filing will still be possible in an NDC environment and IATA expects many airlines will continue to use the fare filing system. But travelers will be able to compare airline offers with or without fare filing. The only difference is that instead of the offer being put together through external databases, the airline generates the offer and pushes it directly to the agent/customer through an aggregator. An advantage of this system is that offers will be made in real time, eliminating the problem of cached data, which often leads to situations where the fare is no longer available when the consumer tries to make a reservation. Also, not all airlines file fares today--but it is always possible to compare the fare of an airline that does not file fares—or participate in travel agent systems, by visiting its website.
Is it true that airlines do not want consumers to see their ancillary products and fees prior to booking?
Airlines want the ability to showcase all of their ancillary products and fees prior to booking so that customers can select those things that add value to their trips. Airlines have made major financial investments in passenger experience products and improvements, which they use to differentiate themselves from their competitors. In order to sell a product, one must be able to market that product. One of the main drivers of NDC is the ability for airlines to not only sell but also present the full scope of their products to consumers.
Will consumers still be able to compare ticket prices with NDC?
Adoption of NDC will enable comparison shopping among airlines, just like today, but with the ability to compare the full scope of the airline’s product offer in addition to the base fare.
Is NDC an effort to introduce dynamic pricing, whereby one person may get a different fare based on their characteristics
We have had dynamic pricing of airfares since captive
airline deregulation began in 1978 (i.e. for 35 years) NDC will not change that.
We might introduce a reference to the concept of price differentiation; it may happen, as it does today, that two people seated next to each other paid different prices. This may be owing to a number of reasons, such as, type of fare and booking class, corporate or government fare, walk-up or advance fare, restricted or unrestricted, etc. NDC supports price differentiation but does not influence it.
Pricing strategies will pertain to the airlines & prices regulations
How will NDC affect privacy rules and regulations concerning passenger data and how will this information be handled by airlines?
The privacy protection of data received using the new data standard will be the same as
the protection afforded data provided to the airline through its own website or traditional
travel agents (subject to local laws). Nevertheless, IATA recommends that airlines adopting
the Resolution 787 data standard review their individual privacy policies to ensure that they
unambiguously include data received from search requests seeking personalized offers.
Will passengers be required to provide personal information in an NDC environment in order to receive an offer from an airline?
No. Passengers will not have to provide any more information than they provide today when using an online travel site or speaking to travel agent. If consumers choose to provide personal information—a frequent flyer number, for example—NDC will enable personalized offers.
Why does Resolution 787 contain examples of personal data that passengers could be asked to supply? (e.g. marital status, gender, date of birth)?
Resolution 787 is focused exclusively on the development of a new XML-based data transmission standard. The standard will include all fields that could be requested (not mandated) by airlines or others to authenticate the customer now or in the future. This avoids the need to continually revise a standard as laws and regulations or business practices evolve.
In an NDC environment, passengers will not be required to provide any more information than they currently do to receive an offer. The best evidence of that is today’s airline websites, where passengers only have to identify themselves as adult, child or active military (in the US) to receive an offer. It is not in the airlines’ interest to require passengers to authenticate themselves prior to being issued an offer. Airlines are promoting NDC to broaden the opportunity to present offers to passengers, not restrict it.
NDC plainly states that consumers must “authenticate” themselves in order to search for air travel, and airlines will require personal information from consumers.
NDC does not stipulate what information must be communicated but merely establishes a standard data format to communicate whatever information consumers, airlines, and agents may want to transmit.
Airlines, agents, and anyone else in the market today has the capability to request or require personal information at any point in the shopping process. NDC has no impact on that capability. NDC does not change the treatment of personal information in the market today.
However, NDC does enable those who choose to provide information access to a more customized experience across all airlines. Just like on an airline website or in many other shopping activities today.
Will IATA retain travelers’ data at any stage of the NDC-enabled shopping process?
IATA is developing the NDC standard, but it has no role in the shopping transaction between the end customer, the travel agent, the airline and any intermediate technology provider(s). Therefore IATA has no involvement in the collection of any traveler data.
What privacy rules will govern how passenger information is handled in the US? Are there any privacy laws or regulations that apply?
The privacy protection of data received using the new data standard will be the same as the protection afforded data provided to the airline through its website or traditional travel agents under 49 USC 41712. Airlines currently post their policies on their websites and they may already be written in such a way as to include personal data received using the new standard. Nevertheless, IATA recommends that airlines adopting the 787 data standard review their privacy policies to ensure that they unambiguously include data received from search requests seeking personalized offers.
What privacy rules will govern how passenger information is handled in the EU? Are there any privacy laws or regulations that apply?
In the EU passengers’ personal data are protected by national privacy laws implementing the principles set out in Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data. This Directive is being revised and the proposal is to change it into a directly applicable EU Regulation. However, until such time as this new Regulation is adopted, the various EU countries’ national laws continue to apply.
Passenger information collected through NDC will not be treated differently than any other processing of passenger information today. The criteria for making a data processing legitimate will still be the consent of the data subject (i.e.—the passenger), or the necessity of the processing for the performance of a contract. This is unchanged and reflects today’s practice for on-line shopping, including on airlines’ own websites.
NDC and travel agents & corporate travel buyers
How will NDC benefit travel agents?
NDC enables airlines to provide agents with dynamic access to the various ancillary services offered by airlines. Agents in turn will have the ability to present broader value to clients via customized complete offers. Broader content access will also enable agent innovation and potential new revenue streams.
How will travel agents receive the best offers for their customers?
Adoption of NDC by the industry will result in better-informed customers as airlines and third parties are able to display more information on flight options and services than is currently available through the indirect (GDS/travel agent) channel. Additionally, customers expect to receive personalized offers when they shop online. This will be consistent with what consumers have come to expect when shopping with other leading retail websites.
How will NDC ensure that travel agents are not circumvented?
The vision of NDC is to provide a superior communications channel between airlines and travel agents. It is a fact that the websites developed by airlines for direct sales offer customers a more content–rich shopping experience, compared to what agents are provided through the GDS channel.
Absent a new XML language standard such as NDC, the gap between the merchandizing capabilities of airlines in the direct channel versus the indirect channel likely would increase further to the detriment of travel agents and travelers using the indirect channel. Accordingly, NDC brings significant benefits to travel agents allowing them to better sell and market airlines’ products and services, thereby creating more value for their clients.
NDC provides a standard that connects an agent with NDC Airlines using services of aggregators. However, the matter of “travel agents circumvention” is not a technical issue, related to NDC, but a commercial issue, related to the value added by the travel agent.
What are the settlement options in the NDC environment going to be?
IATA expects the settlement options, including IATA BSP to accredited agents, to remain the same as today.
Will all travel agents have identical inventory/fare availability in an NDC environment?
These are commercial decisions made by airlines, not related to the technical standard that is used. In the current environment, customers do not have the ability to carry out neutral comparison shopping through the indirect (GDS/agent channel). That’s because today not all carriers make all their fares available in the GDS channel. Furthermore, a number of airlines, including many LCCs, do not participate in GDSs at all.
As an improvement on today’s world, NDC will enable full price transparency on complete airline offers as well as on the base fare. Rather than competing only on base fares, NDC will result in airlines competing vigorously across the spectrum of products and services, something that can only make the overall travel experience more rewarding.
Will there be any fees chargeable either directly or indirectly to the travel agency distribution channel to get access to the NDC content?
As is the situation today, it will be up to each individual airline to determine the commercial terms they wish to associate to the distribution of their products.
How will NDC remove ADM’s from all airlines that are operating in an NDC-environment?
In today’s world, it is the travel agent who constructs the offer using the GDS without real time references to the airline. The presence of an intermediary increases the risk of pricing errors, which can result in ADMs for travel agents. In an NDC world, the offer comes directly from the airline, which enables the airline to take over responsibility for the pricing of the product. As a result, we would anticipate a reduction in the need to raise ADMs. Simply put, NDC eliminates some of the processes and circumstances that lead to an ADM being issued.
In an NDC environment, who controls the PNR?
As the airline is generating the offer, it will be responsible for the life-cycle management of the airline PNR. The agent or relevant third party will manage the customer record containing the full itinerary (may include multiple air segments as well as hotels, ground transportation etc.). The air segment of that full itinerary will be a copy of the airline PNR. The travel agent will continue to have the ability to service the customer as it does today and NDC has no impact on the legal status of the seller. However, the question is, why does it matter?
Our member airlines believe that today agents provide value to customers and that tomorrow this will only be enhanced by NDC. This is what this is all about.
What are the benefits NDC will bring to Corporate buyers?
Access to a broader range of products and services to be offered to their customers for similar/lower cost (i.e. free Wi-Fi, or targeted lounge access).
Ability to better inform their customers of “a-la-carte” services to ensure the best extras have been included in order to enhance the travelers experience.
How can corporate travel buyers participate in the configuration of NDC?
NDC welcomes the contribution of corporate buyers to ensure that the NDC standard is aligned with their needs and those of corporate travelers. Travel managers are encouraged to participate in an IATA corporate travel workshop to help IATA understand their needs and input. They may also engage with an airline partner and a TMC, and ask them to set up an NDC pilot together.
NDC and GDSs
How will NDC benefit GDSs?
NDC will enable GDSs to have broader access to airline products and services. Standardizing on an XML platform will enable the GDSs to better meet the needs of their clients.
Are the GDS capable of delivering this expanded content today?
Airlines feel that they are today not able to present their full products and services via the agent channel because of the limitations inherent in the existing EDFACT standard. We don’t need to debate GDS capabilities in this regard. We are not seeking to replace or denigrate GDS solutions or offers. Our goal is to enhance airlines’ ability to deliver products and services through the agent channel by developing an open XML based data transmission standard. History has demonstrated that a standard approach to data transmission is good for the entire industry.
Can a Travel agent continue to work with my GDS in an NDC environment?
NDC is a data transmission standard.
NDC envisions a strong role for an aggregator – the GDSs are best positioned to provide that capability if they chose to do so.
Today, GDSs are facilitating the transmission of full content between select airlines and agents. We see this as totally consistent with the NDC vision.
Using XML is not a unique idea. GDSs use more XML than most airlines.
We agree that both GDSs and also airlines use XML, for the same reasons NDC is focused on this standard: more capabilities, more flexibility, and faster time to market.
The fact that GDSs use XML does not obviate the fact that a common XML data transmission standard is superior to today’s common EDIFACT based standard.
Sabre already supports 80 airlines in selling their ancillaries.
We are thrilled that Sabre is reportedly supporting airlines on distribution of their ancillaries.
But this does not take away from the fact that a common, modern standard is a good thing.
However, it does beg the question as to why Sabre feels the US Government needs to stand in and mandate that airlines sell ancillaries through the GDS.
NDC and airlines
What will it cost for airlines to update their distribution systems to accommodate this new data transmission standard?
The upcoming pilots will help identify the costs associated with an airline becoming NDC enabled.
Can any airline implement NDC?
Yes, any airline (small/large, full service/LCC) can adopt NDC.
What is the benefit of becoming an NDC pilot?
Pilot participants will have the distinct advantages associated with early adoption and will help shape the evolution of the distribution landscape in the industry. They benefit from participating in IATA events that will only showcase the details pilot participants want to share.
How do I participate in an NDC pilot?
The first step is to download and read the participation documentation from our page dedicated to pilots:
- The pilot participation Terms of Reference (ToR) which covers Pilot Phase Objectives, Rules of Engagement, and Pilot Participation Details
- The pilot webinar to support the ToR will help your organization prepare for participation in an NDC pilot in 2013
- The schemas available for download - The NDC XML capability will be based on the Open AXIS schemas
- The details to register (via survey) to participate in the NDC Pilot Survey
What are the pilot phase objectives?
The following are the five primary objectives of the NDC Pilot Phase:
- To test key NDC dimensions using real passengers and real accountable documents where applicable and address NDC schema functionalities
- To validate key NDC building blocks
- To identify the risks to industry adoption of NDC
- To build NDC industry awareness and education
- To provide assurance of the benefits of NDC to pilot participants and the industry
What are the pilot technical foundations?
Technical developments within a pilot should be guided by the foundation standard Resolution 787 (pdf) as voted at the Passenger Services Conference (PSC) in October 2012.
IATA XML schemas v1.0 approved by the Passenger Distribution Group (PDG), form the technical foundation of NDC and the Pilot phase.
What is the scope of the pilots?
- It is not anticipated that any individual pilot will address all of the scope of NDC
- Each pilot project will validate the robustness of the new NDC schemas and explore different areas of the overall NDC scope
- Ideally, all potential NDC scenarios should be covered during the overall pilot phase. This would include scenarios with e.g. Travel Management Companies (TMCs), online booking tools, meta searches etc. as seller
- Over time, IATA will try to drive various pilots in unexplored area
- All pilots must use the NDC schemas (see XML Capability)
Who may participate in a pilot?
- Pilot participation is open to any industry stakeholder (e.g., airlines, agents, technology providers, other).
- Pilot participation is determined by the use cases being supported by the specific pilot (see question above - What is the scope of the pilots ).
To what extent will participants disclose findings?
- Each pilot defines the available information to share. This is determined during the pilot kickoff and agreed by the pilot participant
- There is a signed Non-Disclosure Agreement (NDA) between pilot participants and IATA which defines the confidential information which may be shared
- Non-confidential findings (i.e., information not covered by the confidentiality provisions of NDA), is expected to be shared with IATA
- If participants are not willing to share any information they will not be considered as NDC pilot participants
How will findings feed back into the Business Requirements Document (BRD)? automatically?
- The feedback is first shared with IATA and will in turn be shared with the Distribution Data Exchange Working Group (DDXWG). All information shared with the DDXWG will comply with IATA’s antitrust guidelines
- The details of the information shared are determined by the pilot participants in the project charter
Who is funding the pilots? Is IATA funding them?
Each pilot project is funded by its pilot participants
Who checks the alignment between the pilot and the standard?
An architectural review will be conducted by IATA to ensure the use of the NDC messages and the overall architecture is compatible with the NDC standards and the model
How is ‘NDC compliance’ verified?
- At this time, this is done through an architectural review by IATA.
- A certification/compliance tool is being discussed.
Who reviews the progress of a pilot?
- Interim reviews are done during each pilot.
- There is also a year-end and end-of-pilot review with IATA.
How long will a pilot run for?
- We would like feedback on the delivery and operation phases. Approximately three months after go-live should be sufficient to provide feedback to get key learning’s on operation.
- This will be discussed with each pilot.
Getting there - the implementation processes
How can a travel agent, GDS or IT provider get involved in NDC?
What is the DDXWG (Distribution Data Exchange Working Group)?
The primary role of DDXWG is to document detailed business requirements and develop implementation guidance for data exchange standards in the area of airline distribution. More on the DDX Working Group
What are the next steps for NDC?
The pilot phase was launched in 2013. It is expected that this phase will last through 2014. In 2015 the initiative should move into a deployment phase, in which a small number of airlines will have adopted the initial version of NDC, A global roll-out is expected to take place in 2016