Unit 3 Learning Outcomes

After completing this unit, you will be able to:

Unit 3 Overview

The future of airline distribution will impact the commercial viability of the airline industry itself.
Airlines want to sell more effectively, offering the value that travel consumers seek. Under NDC,
airline distribution will continue to evolve into a more flexible, dynamic and passenger-centric
environment. Airlines can continue to be increasingly successful.

IATA expects that NDC will contribute to, and be part of, a changing environment for airline
distribution over the next 5 years that is characterized by the following trends.

The goal of this unit is to explain expectations for NDC and how it will continue to evolve airline
distribution systems together with the industry’s commercial and technological environment.

IATA expects that NDC will contribute to, and be part of, a changing environment for airline
distribution over the next 5 years that is characterized by the following trends:
• Passengers will become more geographically and demographically diverse
• Airline distribution will need to incorporate and interact with new technologies
• Third party retailers like Travel agents and OTAs, will remain in a core part of the
distribution mix.
• More flexible distribution facilities to adapt to new products and new product attributes
• Local-friendly payments to make payment frictionless anywhere in the world
• Passengers and travel agents will expect their shopping experiences to get faster and
simpler to complete, with more control by the purchaser over what they want regarding
services.

3.1 NDC and New Technologies

NDC will allow travel suppliers to leverage new technologies to dramatically improve the
shopping and travel experience.

3.2. Future NDC Developments - One Order

One Order is the next generation communication standard to be adopted by airlines and other
travel suppliers such as lodging and ground transportation service providers.

NDC explains the concept of an ‘Order’ as a reservation, or the set of data commonly contained
in today’s Passenger Name Record (PNR), Electronic Ticket (ETKT) and Electronic
Miscellaneous Document (EMD).

NDC aims to enhance distribution, while ONE Order has the objective to simplify distribution by
assigning only one reference number to all elements of the reservation or order. One reference
number will help airlines and travel agents manage bookings more efficiently and ultimately
deliver better service to customers.

© 2019 International Air Transport Association. All rights reserved. Montreal — Geneva Page 1 of 3
Let’s look an example of how One Order would work. Richard has an upcoming business trip
from Sydney to Singapore. His itinerary is as follows:
• Taxi booking from his home to Sydney airport at 8 pm.
• Flight from Sydney to Singapore at 11.30 pm.
• Flight arriving at Singapore at 6 am next day.
• Taxi booking from Singapore airport to Hotel - 7 am.
• Hotel booking and check in - 8 am.

Richard’s reservation holds four different product bookings: the flight + 2 taxis + hotel. Today,
each supplier booked provides its own booking reference number. Hence, Richard would
typically have four different booking numbers. Additionally the reservation (PNR) number is also
unique as well as reference numbers assigned to standard traffic documents (ticket and EMD)
issued for the reservation. Hence, Richard’s reservation displays up to seven unique reference
codes.

If the Sydney-Singapore flight departure is delayed for 4 hours, Richard or his agent must
individually contact both taxi suppliers and the hotel to inform them of the 4 hour delay.

One Order solves this problem. With One Order, all these booked products would be linked to
each other through one booking reference number. Any effect to one of the booked products
would modify a subsequent product booked and affected by the flight delay. In the example,
where the flight is delayed for four hours, Richard doesn’t have to contact the taxi transportation
service provider at destination to change the arrival airport pickup time. His booking would
automatically be modified and the taxis and hotel suppliers would be notified about flight delay
and revised arrival time.

3.3. Capitalizing on Loyalty Programs for Business Intelligence

Business Intelligence is the science of collecting and interpreting data to make key business
decisions around products and strategy. The NDC ecosystem plays a very important role when
it comes to Business Intelligence. Aggregators have the potential to collect and store
anonymous data flowing between travel agents and airlines. Based on this data, aggregators
and retailers (especially travel agents) can generate better recommendations based on user
behaviors and preferences.

Airlines too benefit greatly from better access to customer information. Airlines can better
understand customer travel habits and preferences in order to improve their overall service and
provide more personalized service.

Airline loyalty programs will play a significant role in the NDC world. Through FQTV (Frequent
Traveler) subscriptions, all airlines are able to recognize their passengers, enabling them to
deliver more personalized service.

© 2019 International Air Transport Association. All rights reserved. Montreal — Geneva Page 2 of 3
Paras, a passenger, always picks a window emergency exit seat. He books a SYD – JFK flight
on Airline.com’s website. He selects his preferred seat number and applies for their loyalty
program. After he buys the ticket, the following details are saved to the loyalty program:
• Personal details;
• Flying history;
• Flying preferences – Airline.com would save ‘emergency exit seat’ as Paras’ preference.

After two months, Paras wants to fly SYD – SIN and this time he visits an NDC-enabled travel
agent. When the agent sends the request to the airline, it also shares Paras’s loyalty program
number (assuming Paras chooses to be recognized). This results in the airline sending a
personalized response of a bundled offer with Emergency Exit seat and a personalized
message (for example “We know you love taking the Emergency Exit Seat, here’s a special
offer exclusively personalized for you”).

In such a case, NDC benefits the following parties:

• Travel Agent – improves customer satisfaction;
• Airline – Able to retain and offer its customer what he prefers;
• Passenger – improved customer experience.

Unit 3 Study Check

Now let’s test what you have learned in this unit. When you are ready click on the Next button to
proceed.

Unit 3 Summary

Let’s summarize what we’ve learned in this unit.

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