You need to do more than just invest in NDC

It's been 12 years since Tony Tyler, the then Director General and CEO of IATA, announced the New Distribution Capability (NDC) at the IATA AGM and featured it in the IATA Annual Review Report. [1].

NDC is designed to streamline and optimize data sharing and communication among stakeholders — airlines, travel agents, GDSs and others — in the aviation industry.

The new standard will help stakeholders achieve better personalization through AI-driven pricing and recommendations, disintermediation, easier and more secure data sharing with partners — and more.

From June 2024, 73 out of the 336 IATA-registered airlines are on the IATA ARM index registry, which tracks NDC adoption [2] [3]. That's approximately a 22% adoption rate over 12 years.

Given how crucial flawless data exchange between stakeholders is to the sector, and how common decade-long tech contracts are, this isn't necessarily a poor adoption rate.

But does this apparently low number truly reflect the industry's current reality? Or is something else going on

A closer examination of the IATA ARM index data reveals something completely different.

There may be 73 airlines on the ARM index. But only 41 have implemented the 'Pay' capability. And while 70 airlines have the 'Shop' capability, 'Shop for ancillaries' is implemented by only 51 of them.

Analyzing the data specifically for airlines that have implemented the 'Shop for flights' core capability, the distribution of NDC implementation versions across different airlines is as follows:

Over 71% of airlines still rely on the initial versions of NDC (17.2, 18.1, and 18.2). Very few airlines have transitioned to the anticipated 'convergence version' of NDC 21.3.

While 22% of airlines have implemented NDC in some form, the full benefit of NDC—derived from implementing and leveraging significant capabilities—is enjoyed by only a limited number of carriers.

Why is this the case when airlines could benefit significantly from implementing NDC? What challenges do airlines face in adopting and progressing with NDC?

Some airlines, such as those operating on the Ultra Low-Cost Carrier (ULCC) model that don't distribute through GDS, haven't adopted NDC because it's not relevant. For others, there are several challenges to NDC adoption.

One challenge is the complexity of NDC adoption. With several versions available, how do airlines know which one is right for them?

The optimal approach would be to adopt a version that facilitates onboarding the maximum number of sellers quickly and seamlessly.

Airlines must decide whether to support multiple NDC versions. Backward compatibility may also be complicated by custom-tag implementations. While primarily business decisions, these also need technical investment.

Another challenge is stakeholder buy in. Whenever there is a need for investment, questions about return on investment (ROI) naturally arise.

Amidst these complexities, limited NDC adoption makes creating a business case to establish ROI difficult. Despite the long-term benefits of NDC, investments are diverted to other areas.

Slow NDC adoption by travel management companies (TMCs) also hampers airlines. It limits their ability to onboard TMCs as sellers.

Despite a set of 'TMC adoption accelerators' [4] agreed by TMCs and airlines, progress has been sluggish. Just one airline on the IATA ARM index is certified for 'ORDHIS', part of 'Accelerator #7'.

Whilst these are just a subset of the many challenges for NDC adoption, even if all them are resolved, there remains the challenge of finding the right talent to assist airlines in implementing NDC.

How can airlines overcome these challenges?

The best way to overcome these challenges is with an expert partner. The right partner will blend technical expertise with deep travel-sector knowledge, particularly of migrating from legacy systems to NDC.

With help from an experienced partner, your organization can streamline the entire adoption process, from building a compelling business case, through technical adoption, training and evangelization, right up to ongoing maintenance and optimization.

Naviq is a market-leading provider of technology platforms for the aviation industry. With almost three decades of experience to draw on, and experience of previous successful NDC migrations for industry leaders, Naviq has the experience and expertise to help you realize the maximum return on investment (ROI) from your move to IATA NDC.

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