The Evolution of IATA’s New Distribution Capability (NDC) and Its Impact on Air Travel

In recent years, the airline industry has been undergoing a digital transformation, with a key development being the widespread adoption of IATA's New Distribution Capability (NDC). Major airlines like Air Canada, Delta, and Air France-KLM have embraced this initiative, while Turkish Airlines recently launched TKCONNECT, its own NDC platform, in October 2024. But why is NDC becoming a pivotal focus for airlines around the world?

In this blog post, we will explore what NDC is, why it was developed, and how it is shaping the future of air travel distribution.

What is New Distribution Capability (NDC)?

New Distribution Capability, or NDC, was introduced by the International Air Transport Association (IATA) in 2012 as a new data exchange standard. Designed to modernize the way airlines distribute their products, NDC allows airlines to have more control over their sales channels and enhance customer satisfaction by offering richer, more dynamic content. In simple terms, NDC is a communication standard based on XML that enables airlines to provide detailed information about their services and products to travel management companies (TMCs), online travel agencies (OTAs), and other third-party resellers through standardized APIs.

Before NDC, airlines relied on Global Distribution Systems (GDSs) to share their flight information with travel agents and customers. However, this method had limitations in terms of flexibility and the ability to offer personalized or ancillary services, such as seat selection or baggage options. NDC aims to address these limitations by allowing airlines to distribute their products in a way that mirrors the direct experience customers get on their own websites.

Why NDC Was Born: The Shortcomings of Traditional Distribution Channels

Airline distribution has long been a complex process. Before the internet, GDSs revolutionized air travel by centralizing flight information and automating booking processes. While GDSs played a crucial role in streamlining air travel retailing, they became less efficient as customer demands for more personalized experiences grew.

One of the main challenges with GDSs was their inability to support rich content, such as detailed descriptions, visuals, or offers for ancillary services like extra baggage or in-flight meals. This limitation made it difficult for airlines to differentiate their products and increase revenue from upselling. Low-cost carriers, in particular, struggled with GDSs because they couldn't offer flexible pricing or adjust offers based on real-time demand, as they could on their own websites.

Recognizing the need for a more modern solution, IATA developed NDC to give airlines greater control over their product offerings and enable them to provide richer, more dynamic content directly to travel agents and customers.

The Benefits of NDC for Airlines, Travel Agents, and Customers

One of the key advantages of NDC is that it allows airlines to bypass traditional GDSs and distribute their products directly to third-party sellers. This gives airlines more flexibility in how they present their services and offers them the opportunity to create personalized deals and ancillary services for their customers.

From a travel agent’s perspective, NDC provides access to a wider selection of flight content, including exclusive offers, frequent flyer deals, and more personalized fare options. Additionally, by avoiding GDS surcharges, agents can offer better deals to their clients, making the booking process more competitive.

For customers, NDC improves the booking experience by providing more transparency and detailed product information. Whether it's comparing seat options, understanding baggage policies, or accessing loyalty program benefits, customers have access to more relevant information, leading to more informed decisions and higher satisfaction.

Technical Overview: How NDC Works

NDC operates through XML-based APIs that allow airlines to communicate with third-party resellers in real-time. Currently, there are three main ways to access NDC content:

• Via NDC API provided by a GDS
• Via NDC API provided by a flight aggregator
• Via NDC API provided directly by the airline

This system offers airlines more flexibility in distributing their products and reduces their dependence on legacy GDS infrastructure, which has been slow to modernize.

Challenges and Criticism of NDC Adoption

While NDC offers numerous benefits, its adoption has not been without challenges. Integrating NDC requires significant investment in technology, as airlines and travel agents must upgrade their legacy systems. Smaller airlines or agencies with limited IT resources may find the transition particularly difficult.

There is also resistance from traditional GDS players, who see NDC as a threat to their established business model. For many travel agencies, the shift to NDC means losing the commissions they earned from booking through GDSs, which has caused some pushback.

Additionally, there are standardization issues, as different airlines implement NDC in slightly different ways, leading to inconsistency in how data is presented. This lack of uniformity can create difficulties for third-party platforms trying to integrate NDC across multiple airlines.

The Future of NDC in Air Travel

Despite these challenges, NDC is steadily gaining momentum, with 77 airlines currently using the system in some capacity. IATA has introduced the Airline Retailing Maturity (ARM) index to help assess and promote the capabilities of airlines using NDC, further encouraging adoption across the industry.

In the coming years, we can expect to see more airlines, GDSs, and travel agents embracing NDC as the new standard for air travel distribution. The flexibility, personalization, and cost savings it offers are too significant to ignore, and as more players adopt the technology, the entire air travel ecosystem will benefit from faster, more efficient, and more customer-centric processes.

Conclusion

The adoption of IATA’s New Distribution Capability marks a major shift in the airline industry, allowing airlines to take greater control of their distribution channels and offer richer, more personalized experiences to their customers. While there are challenges to overcome, NDC is set to transform the way flights are booked, sold, and managed, making air travel more flexible and tailored to individual needs. As more airlines and travel agents embrace this technology, we are likely to see even more innovations and improvements in the years to come.