IATA’s New Distribution Capability (NDC) initiative provides an innovative approach to airlines’ products and services distribution method.

1. www.niit-tech.com
Imperatives and Implementation of
New Distribution Capability for
Superior Customer Experience
Ratan Kumar
NIIT Technologies White Paper

2. CONTENTS
Background
3
Need for NDC
3
NDC Implementation Imperativesfor Full Service and
Low Cost Airlines
4
- Unbundling the Product
4
- Interlining
4
- Flight Reservation
4
- Non Air Product Reservation and Super PNRs
5
- Electronic Miscellaneous Document (EMD)
5
- Revenue Accounting and Integrity
5
- Booking Changes
5
- NDC Airline Profile
5
- Other Considerations
5
Multitude of Implementation Approaches for Airlines
6
Critical Success Factors
6
Conclusion
6

3. TRANSPORTATION
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TRANSPORTATION
CARGO CARGO
LOGISTICS
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JOURNEY
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TRANSPORTATION CARGO
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Background
personalized offers and merchandizing through agencies. This calls
With the advent of Next-Generation devices and technologies,
today’s customers are well connected, more informed and
technologically empowered. The rise of customers is forcing
businesses to change the way they operate and Airlines industry is
no exception. To sustain and grow in a highly volatile and
competitive environment, airlines across the world need to invest
time and money in creating personalized and-seamless interaction
with customers across all channels. This will lead to transformation
of digital landscape and an increase in customer affinity and
personalized merchandizing.
for airlines to devise an interface with travel agents; enabling them
to identify customers and provide them with personalized offers
during the shopping cycle.
IATA’s New Distribution Capability (NDC) initiative provides an
innovative approach to airlines’ products and services
distribution method. IATA is facilitating communication between
airlines and agencies. With multitude of benefits for travelers,
airlines, agencies and aggregators, NDC aims to provide a
dynamic airline shopping experience with additional revenue
generating opportunities for airlines.
A large chunk, around 60%, of air travel tickets are sold indirectly
via travel agents using Global Distribution Systems (Source IATA).
This traditional distribution model is finding it difficult to keep pace
with ‘digitally aware’ travelers. The model offers price-based
comparison irrespective of traveler’s relationship with the airline,
thereby commoditizing the entire shopping process. Customers
remain unknown to airlines until a transaction takes place. Thus, it
is impossible for an airline to customize its offers for customers via
indirect channels.
Currently, IATA is working with leading airlines, Global Distribution
Systems (GDS) providers and travel agencies to finalize standards
and business requirements for NDC. Several pilots are also
underway to verify requirement specifications and feasibility of
NDC. Most of the airlines are taking a cautious approach and are
waiting to see the outcome of these pilots before developing their
assets to support NDC program. Industry analysts and travel
industry gurus too, are debating on the power of customer
intimacy and its impact on airline top lines, as promised by NDC.
In today’s world, personalized
interaction and merchandizing
opportunities
are
relatively
FLY
SHOP
PAY
NDC promises a favorable impact on airline-traveler relationship.
negligible and airlines are not
able to leverage it until a
Need for NDC
STAY
HIRE
EAT
The ability to identify a consumer in initial phase of sales process
customer makes a booking via an airline’s website. When
across different sales channels will allow airlines to dynamically
customers make a direct purchase via websites, airlines have
construct and offer personalized products. This will facilitate
direct access to data including traveler history, loyalty status,
customized shopping; making it easier for consumers to purchase
travel preferences and other characteristics. With this information,
airline ancillaries such as priority boarding, onboard Wi-Fi, access to
airlines can offer personalization and merchandizing opportunities
airport lounges and many more. Continuous mapping of customers’
to the customers.
buying behavior with their profile will not only empower airlines with
greater insights into consumer behavior for devising more consumer
The way forward for airlines community is to accept the challenge
centric sales and service strategy, but will also benefit the consumer
and radically transform the distribution strategies to stay ahead of
with access to personalized fare quotes, wide range of airline
the competition and meet passenger expectations by offering
products and services and increased transparency in purchases.
3

4. With growing number of sales channels such as airline website,
Following is the impact of NDC on airline processes and IT systems:
mobile app, social media, travel agents, Online Travel Agencies
(OTA), call center bookings, desk bookings etc. it is highly important
Unbundling the Product
to identify the right customer. Emerging technologies promise
Customer flexibility and unbundling traditional flight seat are
means to identify consumer even before the actual search begins. It
potential catalysts to grow ancillary revenues associated with
allows airlines to project their offerings based on the perceived value
every seat purchase. LCCs have been able to harness the
and preference of an individual customer, in turn allowing them to
potential of offering cheaper seats and flexibility for selecting
evaluate multiple offerings based not just on a single parameter of
services. For traditional airlines, this means changing the way they
price but also customer satisfaction.
function; which may ultimately impact brand/service ideologies.
28.8
14.4
12
From an IT perspective, this involves creating an ancillary service
catalog, and being able to distribute it based on point of sale and
NDC Implementation Imperatives
for Full Service and Low Cost
Airlines
Reeling under rising costs, increased competition and economic
decline, airlines face the imminent test to invest in distribution and
customer service channels to surpass competition and contain
expenses at the same time. Today, airlines have mature systems for
reservation, loyalty and CRM, enabling them to provide ancillary and
customer profile.
Comparison capability plays a big role in the new world of NDC. An
end customer can search and compare offers based on attributes
and features such as baggage allowance, seat pitch, in-flight
entertainment options, in-flight Wi-Fi access, free intra-terminal
transport, etc. This is similar to a shopping experience that
customers today get on popular e-commerce portals while
shopping for products such as mobile, consumer goods etc. NDC
non-air merchandising and distributing seats via GDSes, Web
provides airlines the capability to distribute their services using rich
services and other offline means. Context sensitive selling continues
content (ancillaries and add-ons) in a standardized way.
to drive customer stickiness through the e-Commerce arena.
Personalization and merchandizing continue to be the way forward
for airlines.
Prime contenders for NDC are most of the full service carriers who
have their Passenger Service System (PSS) hosted on third party
systems offered by GDS companies and other product companies
or have in-house legacy systems. These systems work wither in a
co-hosted ecosystem model or on platforms where change is
Interlining
GDS systems have been playing a primary role in offering interlining
services. Going forward, airlines need routing options based on
their code share and interline agreements to create and manage
bookings on partner’s passenger service systems (PSS) in addition
to their own. Interline routing mechanism which has traditionally
been maintained in GDS systems need to be implemented again
for NDC interlining. The Offer Responsible Airlines (ORA) PSS will
expensive and time consuming. Apart from this, GDSes manage
be impacted by the change. Further, interline ticketing, fulfillment
exceptionally high loads of transactions, which if moved to airlines,
and
would call for extensive performance load factor delivery. This may
considerations need to be undertaken. Interline airline’s fares,
even mean substantial increase in infrastructure investment by
pricing rules and offers also need to be available with the ticketing
airlines. Given this scenario, conventional and proposed distribution
so that airlines can provide effective and efficient customer service.
voluntary-involuntary
booking
management
related
models are likely to stay together for the next 5-7 years. This will call
for maintaining IT systems and processes for supporting both the
systems during this transition period.
NDC opens new doors for allowing customers to make purchase
decisions based on not just the price. From the traditional Low Cost
Flight Reservation
Going forward, NDC product related bookings/orders need to be
maintained by airline PSS while code share PNR segments need to
be maintained by ORA airline systems. This will result in extended
synchronization processing so that bookings can be serviced and
Carrier (LCC) perspective, NDC opens up a plethora of
delivered properly. Complex scenarios such as involuntary
opportunities in terms of interlining with other carrier and exposing a
disruptions, GDS queue equivalent processing and corresponding
single standard for data exchange with OTAs. This leads to greater
notifications to agencies need to be addressed.
adoption by the industry and thereby larger revenue opportunities
for LCC.
4

5. Non Air Product Reservation and Super PNRs
non-air booking components. Airlines will also need to manage the
Currently, agencies create airline PNRs and manage non-air related
impact of these offer conditions on bookings, account of change
bookings as passive segments in the GDS PNRs. With NDC, airline
fees using EMDs and notifications to agencies.
will be able to provide PNRs for air segments. It may not be feasible
to manage complete traveler itinerary in airline PNRs depending on
NDC Airline Profile
the support provided by the airline. Agencies will continue to create
The complexities of presenting NDC enabled offers call for setting
PNR in its aggregator systems (which were earlier GDSes), in order
complex airlines profile rules while trying to curb unnecessary
to consolidate all air and non-air components. However, what was
requests from travel agencies. While some airlines might want to
earlier a primary PNR, will now just be a copy of airline PNR. This
simplify this by having broader parameters, others may like to
may have an additional impact on the Super PNR management
manage profile at a granular level to receive optimum requests
process. Morever, aggregators will hold additional responsibility of
from aggregator systems.
synchronizing Super PNR with the ticketing system of the airlines.
Other Considerations
Electronic Miscellaneous Document (EMD)
• Caching: Traditionally, GDSes have cache and fares available for
Offer Responsible Airline will be responsible for issuing EMDs on
travel searches. Going forward, caching may not be applicable
behalf of Participating Offer Airline (POA), for the services offered
as ‘offers’ will be personalized based on traveler’s profile. Hence,
by them. The key considerations involved are:
quality of caching needs to be judiciously implemented by the
• Consistency - Standardization of ancillary services required
across airlines to support interline sales, fulfillment, refunds,
payment, settlement and reporting, etc.
• EMDs for subscription services such a slounge access, WIFI
access, etc.
• Passenger purchasing ancillary services directly with any offer
participating airline instead of the travel agent.
Revenue Accounting and Integrity
GDSes provide Billing and Settlement Plan (BSP) and revenue
integrity checks at the time of booking, booking changes and
fulfillment. These checks are minimally applied by the airlines PSS.
Airlines PSS.
• End-to-end message security: The original service message
(e.g. schedule change message by an interline airline in a booking)
should not be changed/altered by any entity in the distribution
chain (ORA, Aggregator, Sub Aggregator, Agent, Customer).
• Heterogeneous model co-existence: NDC will be implemented
by selective agencies, and a subset of airlines on select routes
and destinations. Therefore, the traditional model as well as the
NDC model will co-exist in the travel world for some time. The
implication of this will be in terms of managing two sets of IT
infrastructure at the same time. However, the ROI derived from
NDC sales will support the business case.
Going forward, scenarios such as partial cancellations need to be
managed outside the GDS. Settlement processing and reporting
will in turn impact the way processes and systems perform them.
Booking Changes
Voluntary and in-voluntary changes, and cancellation process will
be managed by the airlines PSS for all bookings involving air and
5

6. Multitude of Implementation
Approaches for Airlines
NDC aims to provide airlines with further merchandizing and
personalization options. Airlines have been pushing for greater
social media intimacy with their customers to drive sales and
achieve excellent customer service. Travel solution providers
have been able to create interest amongst airline marketing and
sales managers. However, none of these solutions have been
developed from the overall perspective of an agency distribution.
The need of the hour is to find a way to not to drastically alter
(and invest in) the existing systems, but still achieve the benefits
promised by NDC. Airlines are hunting for ways to reduce the
impact of NDC on their core distribution systems and plan to
reuse the existing IT infrastructure to deliver range of NDC
services. To start with, several airlines have plans to implement
NDC on their domestic markets without including interline
partners. At the same time, rest of the airlines plans to have
flattened airline profiles for ease of maintenance.
Airlines companies showing confidence in IATA’s NDC program have
further endorsed the fact that personalized merchandizing is need of
the hour. Though it has been in talks for quite some time now, airlines
have been finding it difficult to achieve true personalization and
customer intimacy across various sales channels. E-Commerce and
IT managers face the imminent question of how soon and how much
should they really invest in NDC. Managing a new distribution
standard based on Open Axis schemas adds complexities for airlines
that are battling with the already existing heterogeneous standards
within their ecosystem. Airlines need to perform cost benefit analysis
based on their business plans and its impact on their IT systems and
processes. Airlines are likely to approach this, by carrying out limited
implementation in order to evaluate market behavior and agency
response before going for a full scale implementation.
Critical Success Factors
The key factors to a successful NDC implementation should
include:
• Clearly identified objectives of NDC in terms of short, medium
and long term goals of the airlines
Conclusion
NDC offers great opportunities for airlines and travel agencies in
terms of additional revenue opportunities and higher customer
28.8
satisfaction through greater choice, brand affinity and service. It’s
14.4
12
slated to be a win-win for all the parties. IATA steering committee and
partner airlines are striving to find solutions that will increase NDC
distribution to other airlines and agency systems, and will helps take
holders’ put their best foot forward. Despite several road blocks, the
program is on track and we will be able to see a few NDC
implementations by the end of 2014. NDC will drastically impact the
way agencies sell today. Airlines and agencies need to develop
capability both in terms of IT and training, to be able to deliver the
current levels of efficiencies. In this rapidly transforming business
landscape implementation of a solution like NDC is imminent.
NIIT Technologies has been working with some of the world’s
leading travel distribution companies, having executed projects in
Reservation, Ticketing, Fares, Interline, online travel portals,
integration for non-air products, fare search engines, merchandizing,
corporate booking portal and customer analytics and reporting,
front-mid-back office systems, multi GDS connectivity, accounting
and reconciliation.
NIIT Technologies, IATA’s Strategic Partner, has been actively
contributing to this initiative as part of the NDC working group. At
NIIT Technologies, we understand the complexities NDC will
introduce in the existing airline processes and IT systems. The
strategy to adopt NDC will be critical for airlines and we feel that the
ideal approach will be not to change existing core systems for PSS
and Loyalty, but develop a merchandizing engine that provides
real-time personalized offers based on customer profile. This solution
should further integrate with other core systems for providing
ancillary sales, revenue accounting and integrity, EMD fulfillment, etc.
The merchandizing engine should provide flexibility to deliver seats
and offers using NDC standards. In a short-time, this solution will
allow airlines to achieve their business objectives for self-operated
routes, without significant investments. An open system based
solution, developed in-house for merchandizing will deliver flexibility
needed in this competitive environment. It can provide agility
required in this evolving environment such as customer intimacy,
• Business benefit v/s investment analysis
affinity selling, cross selling, etc. Early adopters of NDC can achieve
• Maturity of PSS to deliver a range of functionalities from Super
faster ROI and reduce the impact of implementation. Based on the
PNR to offer bookings
• Availability of merchandizing solution with the flexibility to integrate
outcome of this first step, NDC can later be rolled-out to interline
and other markets.
with legacy airline’s core systems and provide adequate control to
adapt to changing market needs and advancement in technology
6

7. Airline Profile
This is where
NIIT can help
you
NDC Schemas
based Web services
28.8
NDC Merchandizing & Personalization Engine
Customer
Persona
14.4
Rules
Engine
Offers
12
ORA Core Systems
Offer
Responsible
Airline (ORA)
PSS
Loyalty
and FFP
EMD
Ancillary
Engine
Interline
Partner Airline
PSS
From LCC perspective, LCCs can be directly made NDC complaint,
NDC holds greater opportunities for Full Service Carrier (FSC), LCC
and since they usually sell ancillaries on all routes, they can create a
Airlines, as well as travel agencies. What needs to be seen is how
light airline profile entry for all their routes.
soon an airline can find a way to implement it. Industry is also
looking towards agencies to accept the change and play a leading
role in this historical initiative.
7

8. About the Author
Ratan Kumar is a Consultant working with NIIT Technologies in the Airlines and Travel
Distribution space within TTL (Travel, Transport and Logistics). He specializes in Airlines, Travel
Agency Business, eCommerce, Merchandizing, Mobility, and Personalization, with over 12 years
of experience in the domain. Ratan has over 14 years of experience with the IT industry and has
worked for numerous area including loyalty, banking and cards, portals, airport operational
systems and has wealth of technical, managerial and business skills acquired across a wide
range of demanding roles in software development area.
About NIIT Technologies
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