Airline Ticket Sales: From Distribution to Retailing with New Distribution Capability (NDC)

Ever since the 1960s, airlines had been leaders in using computer technology to manage massive amounts of data and present it to travelers and travel agents in the form of real-time offers consisting of a seat, a routing, and a price.

By 2012, airlines were focused on segmenting and targeting consumers to gain strategic advantage and generate incremental revenue. Discount airlines offered low prices with few ancillary benefits; if travelers wanted extra services they needed to pay extra for them. Legacy airlines, on the other hand, offered higher fares that bundled certain rights and ancillaries.

Consumers came to expect to book airlines online with the same level of convenience and product information they experienced on sites such as Amazon.com. However, the technology that connected airlines to travel agencies was not capable of fully meeting the demand-side and supply-side need for information on and the sale of rights and ancillaries.

An airline industry group proposed a solution in the form of a new standard for data management called new distribution capability, or NDC. Channel partners needed to decide if the NDC standard had the potential to resolve the misalignments that had hampered the channel for years.