NDC overpromised and underdelivered

Those of us old enough to remember the 1992 film "Falling Down" know how frustrating it was for Michael Douglas to have fallen victim to "Overpromise and Underdeliver".

Of course airlines typically behave in a more civilized manner than unemployed defense engineer William "D-Fens" Foster, during an episode of buyers remorse, but the longer term effects can be quite corrosive in a B2B context as well.

Early NDC sales pitches promised cost savings and abundant incremental revenues from a limitless variety of ancillaries, dynamic pricing, and a blurry vision of airlines becoming the Amazon of travel. One of the examples used early on was the ability to order a flower necklace upon arrival in Honolulu. In hindsight, that example should have given airlines reason to pause and think.

While carriers focussed on cost reduction via NDC based "GDS-bypass" such as Lufthansa Group and Copa Airlines saw convincing positive results, while carriers expecting revenue upsides were left underwhelmed.

The reasons for this NDC disappointment are manifold, but can be traced back to these root causes:

1. Lack of awareness that NDC is only an enabler of additional revenues, but not an "all-in-one" solution

2. Inability to settle and fulfill third party ancillaries

3. Lack of early maturity (upcoming NDC version 24.1 is said to be pretty mature)

4. Lack of travel seller enthusiasm for selling airline ancillaries and of third party ancillaries on behalf of the airline

As time went by, realization of 1. and 2. led to the OOSD / MAR initiatives International Air Transport Association (IATA) is now championing.

𝗡𝗗𝗖 𝗹𝗲𝘀𝘀𝗼𝗻𝘀 𝗰𝗮𝗻 𝗯𝗲 𝘁𝗿𝗮𝗻𝘀𝗹𝗮𝘁𝗲𝗱 𝗶𝗻 𝗮𝗻 𝗮𝗰𝘁𝗶𝗼𝗻𝗮𝗯𝗹𝗲 𝘁𝗼-𝗱𝗼 𝗹𝗶𝘀𝘁 𝗳𝗼𝗿 𝗮𝗶𝗿𝗹𝗶𝗻𝗲𝘀 𝘄𝗶𝘁𝗵 𝗿𝗲𝘀𝗽𝗲𝗰𝘁 𝘁𝗼 𝗠𝗔𝗥 𝗴𝗼𝗶𝗻𝗴 𝗳𝗼𝗿𝘄𝗮𝗿𝗱:

1. Develop a prioritized set of value pools for MAR before implementing any new technology

2. Ensure your prioritization isn't based on a generic sizing of value pools, but fully reflects the degree to which specific pools have already been tapped and your chances of success against formidable competition for other value pools

3. As a part of this prioritization, run an extra iteration to evaluate how different scenarios for the agentic AI evolution will affect your assessment

4. When assessing prerequisites, cast the net wide to ensure the full set of capabilities required for the set of objectives is in place, not just the distribution or technology foundation

5. Regarding timing, weigh the pros and cons of going early vs. staying on the sidelines for now. First movers of the MAR transition have a chance to define standards, but this requires deep pockets and adequate human resourcing. On the other hand, "follower" Copa Airlines achieved a 70:30 to 30:70 share of GDS bookings reversal in a space of 18 months post-pandemic, what took Lufthansa 6 years from 2015-2021.