What is NDC

NDC – New Distribution Capability – is a new industry standard for the distribution and sale of airline tickets that applies to airlines, aggregators, and agencies. 

This technological standard was developed by the International Air Transportation Association (IATA). It is not a database or software but a standard designed to exchange data, open to all parties, including third parties, intermediaries, or IT providers.

The purpose of this program is to create and distribute personalized offers and fares, extra services, etc. Through this data distribution, airlines can communicate directly with agencies or travel management companies to better customize their offerings and determine their departure times.

There are also various NDC certifications awarded to airlines, sellers, or aggregators based on their level of ability to send or receive NDC messages.

How Booking Works via GDS and NDC

Since the 1960s, airlines have been collaborating with Global Distribution Systems (GDS), such as Amadeus or Sabre, for selling their flights through third-party vendors (travel agencies or travel agents). 

The system is based on a very old standard called EDIFACT and is the most commonly used method for accessing airline content by those involved in travel sales. However, it is not very flexible for the demands of today’s airlines or travelers.

Thanks to this standard, it is possible to:

  • Access rich content, which includes various media formats like photos, videos, sounds, virtual reality, etc.
    • Present airline products attractively using rich formats like photos and videos.
    • Utilize real-time fares, products, and policy information.
    • Provide personalized service based on the customer’s travel history and preferences, if they choose to be profiled.
  • Offer a transparent shopping experience:
    • Make all airline products and information services available to corporate buyers, reducing the need for bookings outside the policy.
    • Compare all available flights and fares
    • Select the most appealing travel option based on preferences, which can range from product quality, service level, timing, and prices.
    • Receive personalized offers based on travel history and preferences.
  • Product differentiation:  
    • Distribute the airline’s complete product portfolio, including ancillary services (extra services offered by airlines, such as additional baggage, seat reservations, etc.), and promotional fares.
    • Present airline products attractively using rich formats like photos and videos.
    • Add available information about each product: attributes, policies, passengers, reviews, services.
    • Offer value-added products and services when possible.

How the Current Booking System Works for Travel Agencies

When a travel agency wants to make a booking for a customer, they rely on GDS (Global Distribution Systems). GDS systems use three sources to retrieve the corresponding information for the search:

  • Schedules: GDS systems use Innovata or OAG, official databases containing schedule information.
  • Fares: ATPCo (Airline Tariff Publishing Company) is the company responsible for compiling and distributing all airfare information.
  • Availability of seats: GDS systems check seat availability based on fares and schedules through the Airline Reservation System.

At this point, the GDS returns the search results to the agencies (or aggregators) based on the selected criteria during the search.

If the NDC system is used:

  • A travel agent creates a purchase request sent to an aggregator.
  • The aggregator creates an offer request to be sent directly to the airlines.
  • Airlines determine a product that fits the offer
  • The product is redirected to the travel agent through the aggregator, and the offer remains active for a limited period.

With NDC, after the GDS request, the response comes directly from the airline’s servers (instead of from ATPCo servers where fares were previously entered). This way, the airline can track the customer’s behavior and offer tailored deals through profiling. Essentially, with the introduction of NDC, agencies, instead of going through GDS as they did before, go through aggregators.

Who Has Access to the NDC Standard? 

As mentioned earlier, NDC is neither a tool nor software but rather a data communication system that starts with the airline and reaches a third party, which can be:

  • Aggregator
  • Technology provider
  • Seller

In this scenario, each has its role:

Airlines create content and make it available, aggregators insert this content into their systems, acting as intermediaries between them and sellers. Sellers develop their booking platforms through aggregators or directly with airlines. IT Providers assist airlines, aggregators, and sellers in implementing NDC.

Certification Levels

There are various certification levels that guarantee different services. Let’s go through them:

Level 1 – Post Booking Ancillaries

Airlines or aggregators provide additional services, such as seat reservations or baggage, for bookings made through other sellers.

Level 2 – Offer Management

Airlines and aggregators allow purchases and bookings but with limitations on changes and/or cancellations.

Level 3 – Offer and Order Management

Airlines that allow purchases, bookings, and a limited number of changes or cancellations.

Level 4 – Full Offer and Order Management

Airlines or aggregators allow purchases, bookings, and a wide range of post-booking actions like changes and cancellations.

NDC@Scale – Volume Capability + Full Offer and Order Management

This is a special certification that allows a large number of NDC transactions determined by their technical and organizational setup, use cases, and key features.

The NDC standard includes offer management and order management:

Offer Management

Refers to airlines’ ability to offer complete packages with included services such as baggage, seat selection, complementary products using rich content.

Order Management

Refers to the ability to manage NDC-driven orders throughout the entire process, from booking to completion.

The NDC system is not adopted by all airlines, partly due to the development and maintenance costs that some airlines cannot afford. Additionally, although it is considered a standard, it is not entirely standard due to the uniqueness of each airline, differences in structure, business models, and technology.

Benefits of NDC 

For Airlines: 

Improved Product Differentiation through Rich Content offering.

Rich content can help airlines showcase images of their planes, seats, etc. It can also include descriptions, reviews, and promotional offers to demonstrate the value of the airline’s

Better Cost Management

Airlines that switch to NDC gain better cost control and more significant savings compared to using the GDS system.

Increased Level of Personalization  

With NDC, airlines can manage the flow of information and give more prominence to fare options and extras. This allows airlines to personalize services based on consumers’ preferences.

For Sellers: 

1. Enhanced Customer Experience With NDC technology, ancillary services are no longer limited, as was the case with GDS.  

2. A wide range of additional services for sale In recent years, airlines have modified many fares by including services that were once included in the price as extra services if purchased directly from the airline’s website. Due to the obsolescence of the GDS system, it was difficult to find these services for sale on third-party websites. Thanks to NDC, this problem no longer exists.

3. Access to lower fares Airlines offer various fares to travelers to provide flexibility (with baggage, without baggage, with cancellation options, and so on), but some have started to stop selling them through GDS to combat its dominance in the market, making them available only on their official websites.

For example, Lufthansa has increased prices by up to €16 for those booking a flight through GDS compared to the official website.

4. No more surcharges

Airlines have begun to apply an additional cost to fares served through GDS (the so-called “GDS Fee”) to travel agencies/agents to encourage customers to purchase them directly through their website. With NDC, the savings are significant because there are no such fees to pay, resulting in lower flight prices.

Benefits for Travelers:

1. Access to lower prices  

Travelers have access to discounted prices if the airline uses the NDC system because there are no GDS fees to pay, resulting in lower prices. Additionally, travelers can benefit from personalized packages based on their preferences, thanks to the ability to share information with the airline regarding their various loyalty programs or seating preferences.

2. Better end-to-end booking experience

With the NDC system, travelers can book a flight more easily, and sellers will display all available options more immediately. Changing travel preferences after booking will be much more flexible than before and will also provide access to different routes and fares.

3. Transparency Thanks to the airline’s ability to provide more comprehensive information, travelers can better understand differences in fares or why the same route has a different price when purchased from another airline.

Transparency about seat selection or various services, with the help of more detailed descriptions and images, provides a concrete idea of what to expect from the journey in question

What Happens When You Purchase an Airline Ticket? 

When searching for a flight, the search engine, also known as the “pricing engine” or “shopping engine,” combines schedules, fares, and availability to return search results. The search engine considers thousands of options and identifies a small number of relevant results. When you select your result, you are choosing:

  • An itinerary – a series of flights that take you to your chosen destination, also known as “segments.”
  • A fare – the price of the flights with a set of rules that determine it.

Creating a Booking 

When booking a flight, the first step is to create a booking in the airline’s system (a process also known as PNR, “passenger name record”). The booking is created whether you book directly with the airline or through a travel agent. If you book through a travel agent, a GDS or API is used to interact with the airline’s system. The two key elements of the booking are:

  • The passenger: name, surname, and title.
  • The segments: the flights the traveler will take to complete the itinerary + the “booking class” that will be used for each of the flights.

No payment is made at this stage because you are just adding the service to your “cart” and asking the airline to hold your booking. Once the PNR is saved in the airline’s booking system, you have the booking. However, the booking may have different references:

  • If the booking was made through a GDS like Amadeus or Sabre, there can be a booking reference and another reference for the airline’s booking system.
  • If the flight involves multiple airlines, there can be different references for each carrier.

Checking that Passenger Segments are Confirmed 

When you create your booking, it’s like having a conversation with the airline’s system, asking the airline to reserve a space on the segment you want to fly. You must wait for the airline’s booking system to confirm the seat on the flight before you can proceed. Each segment has a status representing the traveler’s booking. At this point, you should see the status change to “confirmed,” indicating that the passenger’s seat on that flight is officially blocked. Sometimes the airline may respond with a “no,” for example, if seats for that flight class have run out between the search and booking, leaving the passenger without a booking and a “NO” status code.  

Requesting Additional Services 

It may happen that flight segments are not the only “service” you want in your booking. You might find many other services of interest when looking at the offers, from extra assistance for passengers with disabilities to the ability to bring animals in the cabin. All these requests can be found within the airline’s system using Special Service Requests (SSRs). An SSR consists of a four-letter code, plus some information describing the service. Just like segments, requesting an SSR initiates a conversation, and you must wait for the airline to respond.

Determining Booking Prices

The search results you choose form an itinerary and a fare, in other words, which flight you will take and how much you will pay for it. Once the booking is created, as a final check, the price is reevaluated. This is done to ensure that the available fares haven’t changed since you started your initial search and that the price remains the same once additional data is added to your account that wasn’t there before (such as the final number of passengers and the method of payment). This will establish the final price you will pay for the flight. The initial price is now stored within your booking, and your cart is ready for checkout.

Ticket Issuance 

When you book a flight through a travel agent or the airline’s website, you typically go through a single checkout process, but behind the scenes, there are actually two steps:

  • Booking, which records passenger information and temporarily blocks the seat on the flight.
  • Ticket issuance, which is the payment process that grants the passenger the ability to travel.

When you make a booking, the seat on the flight is blocked only for a certain period. The airline communicates a “time limit to book,” which tells you how long the seat is reserved. If payment is not made within that time, the airline releases the space for someone else to purchase. Before the passenger can have the “right to travel,” the seller must issue the ticket. Along with the ticket, there is another document called an Electronic Miscellaneous Document (EMD) used to handle penalty payments when you change or request a refund for the flight or when you pay for extras like seats or baggage.

Future Perspectives

Airlines are working to modernize the booking process. IATA is working to replace “bookings” and “tickets” with “orders” and “payments.” Each order will have a single standard ID instead of a different confusing booking numbers. These changes are not only about the customer experience; they are designed to simplify airline accounting, make collaboration between various airlines easier, and help offer products beyond the aviation ecosystem.

What Happens When I Search for a Flight?

Imagine searching for a flight from Venice to Barcelona.

To find flights, the search engine (also known as the “pricing engine” or “shopping engine”) must intelligently combine a series of data:

  • Schedules
  • Fares
  • Availability

Let’s go through them one by one to understand how they work and interact with each other.

Schedules 

Schedules indicate when an airline plans to operate flights. Schedules are established with departure and arrival times and the days on which they are scheduled to operate. For example:

Iberia decides to operate flights departing from Barcelona from August 1st to August 31st, 2021, and we’ll call this flight VY5636, which will use an Airbus A321 for travel. Airlines distribute their schedules through providers, making them available to other airlines, travel agents, or tech providers. Typically, these data are not fixed; airlines update their schedules at least once a day, resulting in more than 800 scheduled flights that providers have to work with.

Fares

A fare refers to the price at which an airline intends to sell seats on a particular flight and the “rules” that determine that price.

Fares dictate a series of conditions, such as who can travel (in terms of cost), which flights they can take, and some restrictions that determine how they can be sold or used. For example:

  • you can depart from this airport
  • you can change flights but must pay a penalty of a certain amount
  • you cannot have an overnight layover during the journey.

Fortunately, the rules governing fares can be explained as a method for the computer to understand and choose a fare that fits what you have searched for without manual intervention. As mentioned earlier, airlines file their fares in an industry directory managed by ATPCO, where other airlines, travel agents, or tech providers can subscribe. Each airline can change its prices by filing different fares multiple times a day. ATPCO processes more than 10 million fare updates per day. Additionally, airlines offer various fares for the same flight simultaneously, as travelers do not always want the cheapest or most restrictive fare.

Availability

Airlines usually sell some seats at a lower price and some at a higher price because they know that certain categories of travelers are willing to pay more when they need a flight. A flight is divided into different “booking classes,” represented by letters of the alphabet, so a flight can be divided into 26 different buckets (sections): A, B, C, D, etc.

For example, a fare might be NVAKZNM3 (where the letter N indicates the booking class). Different booking classes have different availability. Let’s imagine that American Airlines uses N, V, and Y as booking classes to identify the economy class: 

N – as the most restrictive economy fare

V – as the more flexible economy fare

Y – as the economy fare that falls between N and V

This means that if an economy fare is sold out, there may still be other economy fares available. However, airlines do not advertise their availability; to check it, you need to access the Passenger Service System (PSS). The most famous systems that include this service are Amadeus, Altéa, and Sabre.

How do these three elements work together?

To know the results of a search, the search engine must combine schedules, fares, and availability. In the market, there are not many search engines; most travel agents use searches that work through GDS. The first step is to identify the route. There are several options to consider if you combine different flights that can connect, in addition to the wide range of airlines you can choose from. You can take a direct flight or a flight with a layover in another city. Once schedules and fares are combined, you will have a series of “itinerary prices,” and you may notice that many of these are not available because one or more booking classes are full. The end result is the so-called “offers.”

In conclusion

When you search for a flight, the search engine must combine schedules, fares, and availability to generate your search results. To do this, it must consider thousands of options and transform them into a small number of relevant combinations, all in a matter of seconds!

BizAway and NDC

BizAway has integrated Duffel’s API into its platform (read their case study on BizAway here), making it possible to use the NDC distribution channel for bookings with certain airlines. 

Thanks to this integration, BizAway allows its customers to reduce prices and streamline the booking process.

We have estimated an average savings of about 10% on the cost of airline tickets with the airlines that are part of the agreement (American Airlines, Austrian Airlines, British Airways, Brussels Airlines, Emirates, Iberia, Lufthansa, Singapore Airlines, Swiss Air), which, especially for large companies that do a lot of business travel, translates into a significant cost reduction,” says CTO and co-founder Flavio Del Bianco. – The partnership with Duffel allows us to undergo rapid technological evolution in anticipation of all airlines aligning with NDC standards. We have aimed to perceive the crisis that has affected the tourism industry as an opportunity for improvement to better adapt to the needs of our customers.”

Sources

https://www.wetravel.biz/2019/07/05/ndc-new-distribution-capability-2/ https://duffel.com/blog/what-happens-when-i-book-a-flight https://duffel.com/ndc https://duffel.com/blog/what-happens-when-i-search-for-flights https://www.iata.org/contentassets/6de4dce5f38b45ce82b0db42acd23d1c/get-started-ndc.pdf