An Introduction to Ann Cederhall and Her Expertise in Airline Distribution

AeroTime is proud to introduce Ann Cederhall as a new columnist, bringing her vast expertise in airline distribution strategy to our readers. Ann is an accomplished instructor with both IATA on Airline Distribution Strategy and Aeroclass on Airline Retailing. Her extensive experience includes roles as a frequent speaker, panelist at industry events, and author of numerous influential articles and white papers in the travel industry. As a co-owner of the consulting firm LeapShift, Ann has a profound track record in project and product management across global markets. The insights provided in her columns represent her personal views and do not necessarily reflect the official stance of AeroTime.

The Evolution of Airline Distribution: Low-Cost Carriers and Direct Connect Innovation

In the mid-2000s, the rise of low-cost carriers (LCCs) marked a significant shift in airline distribution. These carriers opted out of the traditional Global Distribution System (GDS), which had been the norm for mainstream airlines. Instead, LCCs pioneered the direct connect approach, selling flights directly to consumers without intermediaries, and introduced the concept of unbundling services such as seats and luggage, offering them as ancillary purchases.

This shift not only reduced distribution costs but also set a new standard in how airlines could engage directly with their customers. Observing the cost-effective distribution model of LCCs, traditional network airlines were quick to recognize the need for change. Their reliance on outdated technology and the absence of a system to manage ancillaries efficiently led them to seek solutions, notably through the development of new technologies and standards.

The Role of IATA’s New Distribution Capability (NDC)

In response to the evolving marketplace, the International Air Transport Association (IATA) introduced the New Distribution Capability (NDC) in 2012. NDC is a communication protocol standard designed to replace the old EDIFACT system used since the 1960s. Developed using Extensible Markup Language (XML), NDC facilitates enhanced communication between airlines and travel sellers, such as Online Travel Agents (OTAs) and Travel Management Companies (TMCs).

However, it’s crucial to note that NDC is not a technology used by airlines on their own websites but rather a standard that enables these entities to sell more effectively through various external channels. Despite its benefits, the adoption of NDC has faced challenges. The initial setup, integration costs, and the need to overhaul existing GDS-centric systems are significant hurdles for many travel sellers.

Challenges and Opportunities with NDC Integration

The integration of NDC standards has been met with resistance from some corners of the travel industry, primarily due to the complexities involved in transitioning from GDS systems to NDC. These systems, deeply embedded in travel agencies’ operations for invoicing, accounting, and booking, require substantial modifications to accommodate NDC. Furthermore, many travel agents receive incentives for booking through GDS, adding another layer of complexity to the adoption of NDC.

Despite these challenges, the potential benefits of adopting NDC are significant. It allows airlines greater control over their distribution, enabling them to offer a richer array of product offerings and customized packages directly to travel sellers. This control can lead to improved profit margins and better customer service.

Future Outlook and Strategic Considerations for Airlines

As the industry continues to evolve, airlines must carefully consider their distribution strategies. Decisions on whether to adopt NDC should be based on a variety of factors, including the needs of their travel sellers, the cost implications of API management, and competitive dynamics within the industry.

Airlines looking to implement or improve their NDC capabilities should consider not only the technical aspects but also the strategic implications of such a move. Whether to enhance customer experience, streamline operations, or increase sales through better control of distribution channels, the decision to integrate NDC should align with broader business objectives.

In conclusion, while NDC presents certain challenges, it also offers substantial opportunities for those willing to invest in the future of airline distribution. As the travel industry continues to adapt to new technologies and standards, the role of informed decision-making and strategic planning cannot be overstated.

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