IATA NDC Development Project

The IATA New Distribution Capability (NDC) is a technology standard created by the International Air Transport Association (IATA) to improve how airlines distribute their products and services through OTAs channels. Developed to address the limitations of traditional distribution systems, NDC allows airlines to deliver personalized and dynamic content, such as tailored offers, rich media, and ancillary services in real-time. This XML-based standard enables direct communication between airlines, travel agencies, and aggregators, promoting greater transparency, enhanced customer experiences, and more flexible pricing strategies, ultimately transforming the future of airline retailing.

The NDC project focuses on modernizing and optimizing the airline distribution model by introducing this new messaging standard. It solves the key issue with traditional Global Distribution Systems (GDS), which limit the ability of airlines to provide personalized, real-time offers. These legacy systems often hinder airlines from differentiating their products or offering dynamic pricing and ancillary options.

NDC empowers airlines by giving them more control over product offerings and distribution through channels like travel agencies and online platforms. The project’s main objectives include:

• Enhancing Personalization: Enabling airlines to deliver customized, dynamic offers to customers.
• Improving Transparency: Offering detailed and clear information on fares, ancillary services, and product choices.
• Boosting Efficiency: Streamlining communication between airlines and sellers while reducing reliance on outdated GDS technologies.
• Increasing Revenue: Allowing airlines to upsell additional services, such as seat upgrades or baggage, directly at the point of booking.
• Elevating Customer Experience: Providing a seamless and consistent experience across all distribution channels.

The IATA New Distribution Capability (NDC) project has delivered transformative results for airlines and the broader travel industry. Key outcomes include:

• Enhanced Personalization: Airlines can now offer dynamic, real-time personalized content and tailored pricing based on customer preferences and behavior, improving conversion rates and customer satisfaction.
• Reduced Distribution Costs: By bypassing Global Distribution Systems (GDS), airlines have cut distribution costs by 15-20%, allowing for more competitive pricing and reinvestment in customer-facing technologies.
• Increased Revenue: Airlines have unlocked new revenue streams through effective upselling and cross-selling of ancillary services, resulting in a 10-15% boost in overall revenue.
• Improved Operational Efficiency: Direct API integrations and cloud infrastructure have reduced dependency on intermediaries, leading to faster response times, improved data accuracy, and streamlined distribution processes.

These results highlight the NDC project's success in revolutionizing airline retailing and distribution, providing enhanced customer experiences and increased profitability.

To connect NDC APIs directly with the respective airlines' Passenger Service Systems (PSS), a combination of cloud infrastructure, compute engines, and security measures is critical. This approach ensures scalability, high availability, security, and the ability to handle large volumes of real-time data and requests.

• Cloud Infrastructure: NDC APIs are deployed in a cloud environment to ensure scalability, flexibility, and cost efficiency. APIs are hosted using AWS services like EC2 for virtual servers, RDS (Relational Database Service) for database management, and S3 for scalable data storage. Auto-scaling capabilities are enabled to dynamically adjust resources based on traffic.
• Compute Engines for API Handling: Airlines utilize cloud-based compute engines to manage API requests and generate dynamic content. These engines process large volumes of concurrent API calls, ensuring low latency and responsiveness.
• Serverless Functions: Serverless computing allows airlines to execute specific tasks, such as pricing and availability checks, without managing infrastructure. This setup enables quick response times and resource scaling during peak traffic without pre-provisioning hardware.
• Auto-Scaling Virtual Machines: OTAs using traditional VMs can enable auto-scaling to ensure compute resources dynamically adjust based on traffic. AWS EC2 provides this functionality to handle fluctuating demand efficiently.
• API Gateways and Security: API gateways manage secure communication between PSS systems and NDC APIs. These gateways enforce security protocols, handle traffic, and monitor API requests.
• API Gateway (AWS API Gateway): The API gateway functions as a control layer for API requests, handling authentication, rate limiting, and traffic management. It also ensures compliance with airline industry standards, such as PCI DSS for secure payment processing.
• Security Layers: Built-in cloud security features like **IAM (Identity and Access Management)** control access to NDC APIs, WAF (Web Application Firewall) prevents malicious traffic, and DDoS Protection safeguards against attacks. Encryption of sensitive data at rest and in transit is a standard practice to ensure data security.
• Data Analytics and AI for Personalization: OTAs leverage advanced data analytics and AI to deliver personalized offers and dynamic pricing through NDC APIs, providing better customer experiences and maximizing revenue.

Key Components Summary:

• Cloud Platforms: AWS, GCP
• Compute Engines: EC2, Compute Engine
• API Management: AWS API Gateway, Google Cloud API Gateway
• Storage: AWS S3
• Networking: Cisco for high-speed connectivity
• Load Balancing: AWS
• Security: IAM, WAF, DDoS protection, encryption

The implementation of the IATA New Distribution Capability (NDC) project presented several challenges:

• Technical Complexity: Integrating NDC APIs directly with airlines' legacy Passenger Service Systems (PSS) required significant customization and development. Migrating from the traditional Global Distribution Systems (GDS) infrastructure to a cloud-based, API-driven framework involved overcoming legacy system limitations and ensuring compatibility.
• Scalability and Performance: Handling real-time, dynamic pricing and personalized content for large volumes of traffic required robust cloud infrastructure, compute engines, and advanced load-balancing mechanisms. Ensuring high availability, low latency, and data security at scale was critical.
• Industry-wide Adoption: Convincing stakeholders across the airline ecosystem, including OTAs and travel agencies, to adopt the NDC standard was a challenge due to the need for technical upgrades, retraining, and overcoming resistance to change.
• Security and Compliance: Ensuring compliance with industry standards like PCI DSS and securing sensitive customer data and transactions presented additional layers of complexity.
• NDC Schema Version Changes: IATA periodically releases new versions of the NDC schema (e.g., 17.2, 18.1, 19.1) to introduce new features and fix issues. However, these versions are designed to be backward compatible to a large extent, allowing airlines, OTAs, and aggregators to adopt newer versions without disrupting existing operations.
• API Flexibility: To manage different schema versions, APIs are designed with flexible endpoints that can handle multiple versions of the NDC schema simultaneously. This allows various partners to adopt newer schemas at their own pace while maintaining smooth integration across the ecosystem.
• Schema Mapping: Airlines and travel technology providers implement schema mapping solutions that automatically translate between different versions of the NDC schema. This ensures that updates in the schema do not disrupt communication between different systems, enabling smooth processing of requests across versions.
• Adoption and Compliance Support: IATA provides extensive documentation, certification programs, and support to guide airlines and third-party vendors through the adoption of each new schema release. This ensures standardization across industry participants while giving them the flexibility to choose when and how to adopt each version.
• Industry Collaboration: Regular updates to the NDC schema are done in collaboration with industry stakeholders, ensuring that new features address real-world challenges while maintaining standardization.

Despite these challenges, the project successfully transformed airline distribution with enhanced flexibility, personalization, and efficiency.

The IATA New Distribution Capability (NDC) project is a game-changing initiative aimed at modernizing the way airlines distribute their products and services. Traditionally, airlines have relied on Global Distribution Systems (GDS) to interact with travel agencies, Online Travel Agencies (OTAs), and other third-party sellers. These GDS platforms have been limited in their ability to support dynamic pricing, personalized offers, and rich content, leading to inefficiencies, high costs, and a lack of flexibility for airlines. The NDC project, spearheaded by the International Air Transport Association (IATA), introduces a new XML-based messaging standard that overcomes these limitations by enabling airlines to distribute personalized and dynamic content directly to third-party channels.

Key Components of the IATA NDC Project:

• XML-Based Standard: The foundation of NDC is its XML-based communication protocol, which replaces the legacy EDIFACT standard used by GDS. This new standard allows for more flexibility in how data is exchanged between airlines and third-party sellers, facilitating real-time offers and rich content delivery.
• Direct API Integration: Airlines implementing NDC can establish direct API connections with OTAs, travel agencies, and aggregators, bypassing the traditional GDS intermediaries. This gives airlines greater control over how their products and services are distributed, allowing for more customization and real-time updates to pricing and inventory.
• Personalized Offers and Dynamic Pricing: One of the major advantages of NDC is its ability to offer personalized content to customers. Airlines can now use customer data to deliver tailored offers, customized seat options, and ancillary services like extra baggage, in-flight meals, or priority boarding. Dynamic pricing is another significant feature, enabling airlines to adjust fares in real-time based on market demand, customer profile, or other factors.
• Rich Media Content: NDC enables airlines to provide rich media content such as images, videos, and detailed descriptions of their products and services. This significantly enhances the shopping experience for customers by giving them a clearer understanding of what they are purchasing, helping airlines differentiate their products and increase conversion rates.
• Seamless Upselling and Cross-Selling: The NDC standard allows airlines to offer additional services at various points during the booking process, thereby enhancing revenue opportunities. OTAs and other third-party sellers can now present ancillary services, such as seat upgrades or lounge access, in a more integrated and user-friendly manner, improving the likelihood of upselling and cross-selling.
• Cloud Infrastructure and Compute Engines: The use of cloud platforms like AWS or Google Cloud ensures scalability, flexibility, and cost-efficiency for airlines. NDC APIs hosted in the cloud can handle large volumes of traffic while ensuring high availability and low latency. Cloud-based compute engines manage the heavy processing of API requests, ensuring that airlines can respond to dynamic content demands in real-time.
• Security and Compliance: NDC emphasizes robust security features, including API gateways that manage traffic, control access, and enforce industry-standard security protocols such as OAuth, SSL/TLS, and encryption of data at rest and in transit. This ensures that sensitive customer data and payment transactions are handled securely, meeting airline industry compliance standards like PCI DSS.

• Limited Personalization: GDS platforms had limited ability to offer personalized experiences to customers, as they operated on static pricing models and lacked the ability to deliver real-time, dynamic content.
• Complexity and High Costs: Airlines had to rely on GDS intermediaries to manage their distribution channels, leading to high transaction fees, limited control over product offerings, and inefficient distribution processes.
• Missed Revenue Opportunities: With limited ability to upsell or cross-sell services during the booking process, airlines struggled to maximize ancillary revenue, such as from seat upgrades or baggage fees.

Post-Deployment Benefits:

• Increased Personalization: Airlines now have the ability to tailor their offers based on customer profiles, booking history, and preferences. Real-time dynamic content, such as pricing and availability, enhances the overall booking experience.
• Reduced Costs: By bypassing GDS systems and leveraging direct API integrations, airlines have reduced distribution costs, enabling them to offer more competitive pricing and reinvest in customer-facing technologies.
• Enhanced Customer Experience: Rich content delivery, personalized offers, and seamless booking processes have improved the overall customer experience, leading to higher conversion rates and customer satisfaction.
• Operational Efficiency: The direct API connections and cloud-based architecture allow airlines to streamline their distribution processes, reducing reliance on intermediaries and enabling faster, more accurate information delivery.
• Revenue Growth: The project enables airlines to unlock new revenue streams through upselling and cross-selling, as well as by offering more targeted and relevant ancillary services during the booking process.

The IATA NDC project is a transformative initiative that modernizes airline distribution by introducing a more flexible, scalable, and personalized solution. By leveraging cloud computing, API-driven architecture, and AI-driven personalization, NDC enhances customer engagement, reduces costs, and creates new revenue opportunities for airlines. The ability to deliver rich content and real-time offers through direct API connections has not only improved the customer experience but also positioned airlines to compete more effectively in a rapidly changing digital landscape. This project sets the foundation for the future of airline retailing, where personalization, flexibility, and innovation drive success.

The IATA New Distribution Capability (NDC) project has a global scope, impacting airlines, travel agencies, and customers across multiple continents. With airlines adopting NDC from regions such as North America, Europe, the Middle East, and Asia-Pacific, the project has been instrumental in modernizing airline retailing on an international scale.

Key geographical highlights include:

• North America & Europe: Major airlines and OTAs have led NDC adoption to enhance direct distribution and personalized offers
• Middle East & Asia-Pacific: Fast-growing markets like the Middle East and Asia-Pacific have embraced NDC to offer richer content and flexible pricing to compete globally.
• Global OTAs and Travel Aggregators: NDC is facilitating smoother cross-border transactions and bookings for OTAs, enabling them to serve a more diverse customer base.

This widespread geographical reach ensures that the NDC project supports a unified, global distribution system while addressing region-specific travel needs.