Maximizing Your Airline’s Revenue Potential with New Distribution Capability

Maximizing Your Airline’s Revenue Potential with New Distribution Capability

Introduction

Airline revenue management is a complex process that involves multiple factors such as pricing, seat availability, and demand forecasting. The traditional distribution channels for airlines have been the travel agencies and global distribution systems (GDSs). However, with the advent of new distribution capability (NDC), airlines now have the option to reach customers directly and personalize their offerings. In this article, we will explore how NDC can help airlines maximize their revenue potential.

What is New Distribution Capability (NDC)?

NDC is a technology standard that enables airlines to distribute their products and services through various channels, including travel agencies, online travel agencies (OTAs), metasearch engines, and direct channels. The aim of NDC is to provide airlines with more control over their distribution and offer personalized travel experiences to customers.

Benefits of NDC for Airlines

One of the primary advantages of NDC is that it allows airlines to offer personalized content to customers based on their preferences, such as seat selection, baggage allowance, and ancillary services. This can result in higher customer satisfaction levels and increased loyalty to the airline. NDC also enables airlines to cross-sell and upsell their offerings, leading to additional revenue streams. By bypassing GDSs and other intermediaries, airlines can also reduce distribution costs and increase their profitability.

The Role of Data in NDC

Data plays a crucial role in NDC, as airlines can leverage customer insights to personalize their offers and pricing. By analyzing customer data such as past purchases, travel behavior, and preferences, airlines can offer targeted promotions and fares that are more likely to be accepted by customers. They can also use data to optimize their revenue management strategies by forecasting demand and adjusting pricing accordingly.

Case Study: Lufthansa

Lufthansa, the German airline, is a prime example of how NDC can be used to boost revenue. In 2015, Lufthansa introduced a surcharge of €16 for bookings made through GDSs. The move was aimed at incentivizing travel agencies to use Lufthansa’s direct channels, which offered more personalized content and ancillary services. As a result, Lufthansa saw a 50% increase in direct bookings and a reduction in distribution costs.

Conclusion

NDC is a game-changer for the airline industry, offering a range of benefits to airlines and customers alike. By leveraging data and personalization, airlines can increase their revenue potential and reduce distribution costs, while offering a better travel experience to customers. As airlines adopt NDC standards, travel agencies and other intermediaries will need to adapt their business models to stay competitive.