NDC and how it works in the travel agency environment – this is the second in a series in which Travel News speaks to role players to get an overall perspective. Part 2 is the perspective of Iata.
NDC is a major step forward for revenue management and the transition towards a travel future that will benefit airlines and their customers. According to recently released figures from Iata, airlines in 2023 are anticipated to earn a global nett profit of $4,7 billion (R90,8bn) on revenues of $779 billion (R15trn). Passenger numbers are expected to surpass the four billion mark for the first time since 2019 and airline ancillary revenue is projected to grow from $66 billion (R1,28trn) in 2021, to $103 billion (R1,99trn) in 2022, pushing the airline industry back into profitability.
Travel News spoke to Perry Flint, Head of Corporate Communications, Iata in the US, about Iata’s view of NDC.
“In an NDC world, from a capability point of view, the airline can continue to use and to benefit from all the advantages provided by Iata BSP today, and any changes in payment strategy will be up to each individual airline. If the agent participates in the Iata Agency Programme then the settlement process for an NDC ticket is the same as for a ticket issued through a GDS.
“Interestingly, the involvement of GDSs in the adoption of NDC has turned out to be much more inclusive than initially anticipated. Initially it was predicted that NDC would cause GDSs and data providers to vanish as intermediaries between airlines and travellers. However, this has not been the case. Instead of being sidelined, technology intermediaries have taken on important roles in the NDC adoption process. Ultimately, NDC has fostered a far more combined approach among industry stakeholders than was initially envisioned, with Iata in a pivotal role,” adds Flint.
“The Iata airline partnership primarily drives industry change, reduces distribution costs and offers communication campaigns and training. It’s in the organisation’s best interest to promote NDC, a product launched by Iata to further enhance the capability of communications between airlines and travel agents.”
“At an industry level,” he says, “NDC penetration is still fairly limited. However, some airlines have said they are seeing incremental benefits in their NDC channel from cost-savings (due to newly-negotiated commercial deals) and revenue increases (due to increased sales of ancillaries and more price points due to continuous and dynamic pricing).
“As a result of this combined approach, Iata’s NDC adoption has gained momentum. As of April 2021, the number of NDC certifications across airlines, IT providers, and sellers had grown, achieving Iata’s initial self-set target of 20% NDC bookings by mid-2021.”
