In the current whirl of discussion about NDC-sourced content, readiness and removal of content from different channels, it is important to take a step back and look at why NDC matters - what we can all get out of it and what approach we need to take for that to happen.
Taking airline distribution to a new level – but why?
NDC is all about bringing new retailing capabilities to travel distribution, taking it to a new level. But why is that so crucial? Because over the years, the consumer’s expectations and behaviors have changed dramatically. Today’s consumer expects choice, convenience, and flexibility. We have all become used to being able to buy anything on the go, and to change or return any product that doesn’t live up to our expectations with one click. But more than anything, we crave for tailored offers, relevant to us, and we have become accustomed to AI-powered recommendations based on our shopping history, peers’ purchase behavior or our preferences. A recentstudy made by McKinsey , shows that 76% of consumers are more likely to consider purchasing from brands that personalize. Let’s look at one of the real success stories of personalization and business innovation enabled by new technology – and see what we can learn from it.
From Netflix to NDC
There is hardly anyone today that has not heard of Netflix, let alone not using it on a regular basis. The company’s story started 25 years ago, when Netflix was a content aggregator, renting out DVDs. Against a monthly subscription fee, a DVD would be sent via mail to a customer, and as soon as the user had returned the DVD, they could order another one. With no due dates or late return fees, which was something people hadn’t seen before. And this proved to be a huge success: within five years of launch, Netflix was shipping millions of DVDs daily.
A few years after launch - when Netflix had enough data from existing users - it started its first “personalization” efforts by recommending subscribers DVDs based on the feedback from other subscribers.
But it predicted that soon its customers were not going to want to wait days to get a DVD in the mail to watch a movie. So, it also started taking advantage of technology advances – namely the increasing speed of internet - and in 2007, ten years after its outset, the company started streaming videos online. And this transition to a new technology proved to be fundamental for its success.
And it did not stop there. As Netflix moved to the cloud, it started looking for trends on how people watched content, what kept them watching, and how true personalization increased significantly the hours spent on the platform. And it started using all this data to start creating its own, unique content.
Innovation enabled by new technology allowed it to rethink its business, reinvent its offer and speak to its customers in a more intimate way. And with success! Not only does Netflix now have more than200 million subscribers in over 190 countries , but more importantly, it has changed forever how we consume video content !
Then, to travel
The parallel to travel is remarkable. Just like Netflix completely changed our video watching habits – for which it needed new technology such as fast internet, cloud services and data – travel needs new retailing power too! Because our industry’s consumer – the traveler – also demands more choice, more flexibility, more information, and more personalization. And that is why we need to transition as an industry from the existing technology with limited retailing capabilities – called EDIFACT (which we’ve been using now for more than three decades to connect airline systems to global distribution systems) - to a new, more modern technology standard: NDC. We need to harness these new technological capabilities to create a new and improved flight shopping experience for all travelers – just like Netflix did!
The X factor – our approach to NDC
For Amadeus, NDC is instrumental in our journey to support airline innovation towards enhanced retailing and to help travel sellers and corporations’ shop, buy and service richer experiences for travelers. By applying technology and innovation, developed with the traveler in mind, we are accelerating this industry evolution, and empower the travel ecosystem to deliver value that supports both industry growth and an improved traveler experience.
There are four pillars that sustain our NDC strategy and make us different. We call it the Amadeus NDC [X] factor.
1. Unique IT and distribution synergies
Not only do we have the world’s largest travel distribution platform , we are also the largest provider of IT solutions to airlines. This reach across airlines and travel sellers, and the subsequent deep understanding of needs on both sides of the playing field, means we can connect the dots in a way that helps to overcome fragmentation and supports our customers to build the journeys and travel experiences that travelers want.
The technology underpinning our IT solutions allows the airlines to easily build and tailor their offers using the latest merchandising techniques, and efficiently present and distribute them in a way that enrich and enhance the shopping experience on the buyer’s side.
2. Normalized end-to-end servicing
The GDS environment has served as a hugely effective way of selling travel for more than 30 years. And whilst embracing new technology to grasp new opportunities, we must ensure we are not throwing the baby out with the bathwater. Therefore, maintaining the existing travel seller operational benefits as well as the capabilities for them to offer travelers the highest level of service is crucial – and this is why we are so focused on the normalized end-to-end servicing for all content in one single platform.
With still many differences in the way that airlines deliver content and capabilities via NDC, one of our key missions is to “normalize” the standard as much as possible on our side and streamline the integration of different NDC APIs, so that travel sellers can search, book and service different airlines’ NDC and other content in the same way. We manage this complexity on behalf of our travel seller customers, so that they can manage their business.
3. Integration and interoperability with the ecosystem
At the same time, selling a flight fare and servicing is only one piece of the puzzle. There is so much more to it. With 35 years in developing efficiency solutions for our travel seller customers, we understand the value of connecting the new technology for enhanced offerings with the existing travel ecosystem infrastructure. We work to ensure that what is already in place today in our solutions, also applies to the NDC flow, such as end-to-end mid- and back-office integration, automated payment reconciliation and reporting, automation or omnichannel servicing.
Reverting back to Netflix, it is also worth bearing in mind that even if its streaming business generated31B USD of revenues last year, the company also still generated close to 150 million USD in mailing DVDs. So, Netflix is – just like the travel industry - still today a hybrid analogue/digital business. But with a speed of growth of its digital business that never would have been possible with the old technology. In our industry, we expect to see the same. We do expect that as the technical standardization evolves and innovation accelerates, the transaction volumes will shift increasingly towards NDC. Nevertheless, we will be living in a hybrid world for quite some time, where EDIFACT and NDC will coexist. It is therefore very important that travel solutions can handle both technologies in parallel and at scale and – ideally – in a seamless, non-disruptive way.
4. Cross-industry collaboration
Modern travel distribution is a complex affair, involving several stakeholders and different approaches and strategies. Ensuring a successful adoption of NDC at a global scale - and accelerating travel retailing - will require a huge ecosystem endeavor. It’s only by talking and partnering that the industry will overcome challenges head on and unlock its full potential.
That is why, from day one, at Amadeus we have built on the advantage of our two-sided business model and have involved both our airline and travel seller partners in the design of our solutions, considering their feedback for improvements and making sure they are aligned with the needs of our partners. We build it together and adapt as we go.
We are now at the beginning of a new era in travel distribution. The transition to NDC won't happen overnight but will rather go through continuous increments – and it is a journey for all stakeholders involved.
And just like we would never have been able to completely reinvent how we consume television content if we were still using analogue dial-up internet connections, we will not be able to create the new, modern travel shopping experience that today’s leisure and business traveler is looking for, without moving to a new technology like NDC.
Read the next blog in our "Accelerating modern retailing series"here .
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