New Distribution Capability (NDC)

To understand NDC, one has to understand the limitation of the system it replaces, EDIFACT.

For decades, airlines entered generic schedules and fares into GDSs. The GDS would then bring them together to develop a price. The airline had no visibility into who was asking for the seat.

• Old Way (Commoditization): A travel agent inquires, “Price for JFK to LHR?” The system returns “$500.” All airlines look the same; it is a race to the bottom on price.
• NDC Way (Differentiation): The agent communicates directly with the airline. The airline comes back and says, “Since this is a frequent flyer, here is a $500 seat, but we will include free lounge access and a picture of our new lie-flat bed.”

NDC enables airlines to market their product on the basis of value, not just price, which brings the buying experience in the travel world closer to what is considered modern-day e-commerce (such as Amazon).

NDC brings in a basic architectural change called Offer and Order Management.

• Shopping (Offer): In the legacy world, the GDS built the itinerary. In the NDC world, the offer is constructed by the airline. The airline has its internal engine generate a bundle (Flight + Bag + Meal) and sends a unique Offer ID to the seller.
• Booking (Order): When the customer selects that bundle, the seller sends the Offer ID back to the airline, and the airline converts it into a confirmed Order. This transitions total control of the transaction integrity into the hands of the airline.

NDC is more than a technical upgrade. It is a commercial strategy. Airlines would like to take control of their inventory back from GDSs (Global Distribution Systems). By using NDC pipes, airlines can avoid paying legacy GDS fees and withhold certain fares (like Basic Economy or Promo Fares) from traditional channels and make them only available via NDC connections. This has resulted in a patchwork of landscapes where agents are having to update their tech stack in order to access an airline’s entire inventory.