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30 June 2023
Distribution in aviation has always involved a variety of entities and continues to do so, such as airlines, travel agencies, other middlemen, metasearch engines, and, more recently, IT and digital businesses with strong retail experience. Most airlines are personalizing their offers to survive in this environment. This is only possible, though, if the offer is more than a simple commodity. Airlines are now able to provide a wide variety of unbundled products to their clients thanks to IATA's introduction of New Distribution Capability (NDC) and One Order, which allows these players to share data in a more efficient and transparent manner.
According to the BCG-IATA study conducted in 2022, global industry leaders believe the following:
In general, distribution players should continue to think about investing in NDC because of the critical requirement to update the airline distribution infrastructure. In addition, new competitors are entering the retail travel market. Collaboration is more important than ever as tech behemoths like Amazon and Google entered the travel retail business; they can alter the way customers make travel arrangements since they bring massive resources and big-data reservoirs. However, they lack inventory. This is where the airlines step in. Airlines may expand into new areas and get access to more data by collaborating. To offer complimentary products, this cooperation will entail pooling inventory and resources.
Data exchange is not a one-way street. Sharing the airline’s information and data with other players is only one part. To personalize offers to the customers, the airlines need their information. A data exchange in both directions is necessary to facilitate personalization. To reach this goal, the airline needs to be customer-centric and enable the emergence of travel ecosystems, which will support collaboration and data sharing. By receiving detailed information about the customer beforehand, it will be possible for the airline to offer the right product, bundled or unbundled, depending on the customer’s needs and wants.
The customer needs to be satisfied and, even more, delighted at every point of the trip, from the first search to the sale of ancillaries just before takeoff, to reinforce the brand, even if the sale is not done through direct channels.
It is important to give customers the option to book through their preferred channel without penalizing them if they reserve through different means than directly on your channel. Customers enjoy having options and want to shop around. Making sure that the customer has the experience they desire, regardless of channel, is essential for distribution success. The capacity to collect data from all potential sources and being a genuine "master" of data collection have a direct impact on the ability to tailor offers.
In summary, in order to fill gaps and strengthen their travel distribution models, airlines must first evaluate the key opportunities and difficulties presented by the new distribution environment, as well as the extent of their own internal capabilities. Only if companies develop these talents and put them into practice holistically while making wise use of cutting-edge technology will they be able to profit from the disruption of travel distribution. Most often, this will call for solid collaboration with channel, content, and technology providers. The airlines that succeed in the new climate will be more in touch with their customers and generate more revenue through less cutthroat, direct ways.
Defend your profitability and competitive advantage! At AviaPro Consulting, we ensure your airline will successfully implement NDC, guaranteeing you lower distribution costs while increasing revenue.
Reach out to our experts and professional consultants to give you a brief walk through of the NDC journey. Feel free to book time directly onto my calendar here: https://meetings.hubspot.com/ali-kassir.