The airline industry has historically generated much lower margins than other sectors, even before the recent pandemic. Being a capital-intensive business, airlines are limited by their operations focus. However, innovating and expanding beyond these constraints unlocks greater investment potential, imperative in an era where aviation is under environmental focus. Airlines that enhance their retailing capabilities present a more attractive investment prospect, positioning themselves to meet demands for profitability, customer satisfaction and environmental responsibility better.
Consultants, T2RL, state that 117 airline companies, representing 10% of the industry, have begun their retail transformation, using New Distribution Capability (NDC) to start their journey. Accelya are a proud supplier to many of those airlines. T2RL recognizes Accelya as the leading provider of NDC volumes (>50% of the global market). Those 117 pioneering airlines have generated billions of dollars in both cost efficiencies and new revenues, and their executives tell me that increased customer loyalty is directly correlated.
As the industry looks towards a world of 100% Offers and Orders, it’s Accelya’s belief that a gulf will widen: between airlines embracing NDC and those stuck with uneconomical terms for a legacy distribution ecosystem that does not enable effective value creation or meet customer expectations.
Many of the early adopters embarked on a clear strategic path: distribution freedom. This involved taking back control of how products are created, and via which channels they are sold, providing travel sellers with choices regarding how they connected to their content. This distribution freedom empowers airlines and stimulates innovation across the seller landscape. New concepts and models are being made possible only by digital distribution.
However, with leading airlines having already embarked on this journey, more airlines must adopt NDC and begin enhancing their retail capabilities. Implementing a foundational change layer and initiating the retailing transformation generates immediate value, creates a competitive advantage, and paves the way for longer-term value and success.
At Accelya, we took up the challenge of making NDC more accessible for more airlines. We have focused on refining the core technology to a scope that all airlines can leverage, regardless of size. This ensures that new adopters can implement NDC quickly without complex and costly projects and make this critical step into modern retailing. Beyond the technology, we have engaged with high-volume distributors, aggregators, and sellers to standardize the connectivity process so that new airlines to NDC can immediately onboard their partners.
Our view aligns with IATA's that NDC is the most probable first step in Offer and Order transformation, while acknowledging that some airlines may choose a different path. Recognizing the 21.3 standard as the convergence version, we have positioned the Airline Industry Data Model (AIDM) at the heart of our FLX Select offering. This means that any new partner will be readying themselves for a world of Offers and Orders sooner than 2030.
As more airlines derive greater value from enhanced retailing, this industry will see greater returns, leading to more significant investment and longer-term, sustainable profitability.
