Beginning in the 1990s, the emergence of the Internet enabled airlines to develop their own websites, using modern programming language and customer-friendly interfaces. Over time, and in response to market demands, airlines have developed ancillary services and introduced fare unbundling, contributing to product differentiation and empowering customers to choose and purchase only those services they desire. However, airlines do not have an industry solution to offer the same options for these products via travel agents using GDSs.

IATA has been directed by its Board of Governors to develop new distribution standards to enable airline product differentiation. These will be open standards that can be used by any party, including GDSs. The intent is to enable product differentiation through all distribution channels, also to include customer identification and recognition.

A briefing on the initiative was given at the IATA World Travel Symposium held in Abu Dhabi 16th-18th October.

The New Distribution Capability (NDC) will create a set of open XML standards to modernise airline retailing by enabling innovation in the way airline products are distributed, and making possible personalised offers to passengers who will have access to all airline products and services regardless of distribution channel.

The key attributes of the NDC include:

• The NDC is built on the principles of collaboration, transparency and innovation.
• It is an industry effort involving all partners in the travel value chain, including airlines, online travel agents and travel management companies, GDSs and other travel technology providers
• Airlines will be able to differentiate and personalise their product and service offerings across all channels while ensuring that passengers will have full visibility of airline fares and services
• It will facilitate new entrants into the distribution sector, resulting in increased competition. Historically competition leads to lower prices and increased choices for consumers.

"A Foundation Standard for the NDC is the first step to enabling the development of open XML standards that will be available for all interested providers to work on and develop their own offerings. At the World Passenger Symposium, participants have agreed that the industry standard is paving the way for the future, and the time is right to move to a new model," said Aleks Popovich, IATA Senior Vice President, Industry Distribution and Financial Services.

IATA is well placed to coordinate this initiative. 

We hope that this is the beginning of the end of the continued pointed comments that are made about GDS and other channels of distribution.  With steady global growth forecast for the travel industry there is room for all distribution channels that innovate and prove value.  The GDS-travel agency channel whilst shrinking in overall market share has not gone away and still provides a valuable part of many airlines' distribution strategy.  The ability to sell the diverse range of airline ancillary products via this channel can only result in a win-win scenario.

Tony Tyler, IATA's Director General, in his opening address at the conference stated:

"The solution is the New Distribution Capability (NDC) powered by open XML standards. This will enable innovation in the same way the iPhone enabled applications to be developed. It is difficult to know what innovations will come. But we could certainly expect to bridge the gap between airlines and their customers so that customised offers can be made even through travel agents. With that, we will move from the mass commoditisation of air travel to what one analyst has called "mass customisation.""

Developing industry standards is a core role for IATA.  Questions are already being asked however as to who will pay for the required developments and what level of fees might GDS and agents want to extract for the distribution and sale of ancillary revenues?