Despite efforts to modernise airline retailing, a new study by Atmosphere Research Group and Accelya has revealed that progress in implementing NDC, as well as Offer and Order transformation, remains sluggish.
The report draws on insights from 28 telephone interviews with industry experts, consultants, and executives from leading carriers such as American Airlines, British Airways, Emirates, Finnair, and Qantas, plus an online survey completed by 78 airline professionals.
The report, The Future of Airline Retailing, shows that while two-thirds of airlines have started using NDC to digitise their third-party merchandising capabilities, only 27% have taken meaningful steps toward fully integrating Offer and Order.
The report also notes that the slow pace of transformation stems from various challenges, including legacy contracts, financial constraints, and uncertainty about return on investment.
"The only thing that moves fast at an airline is the airplanes," remarked Atmosphere Research Founder, Henry Harteveldt.
Resistance and challenges
The study found that while 44% of airlines aimed to implement Offer and Order by 2028, 38% anticipated continuing with legacy systems until at least 2029.
Harteveldt expressed scepticism about the ambitious goals: "They may not be fully Offer and Order, but they will be well on their way in 2028."
One major obstacle is the complexity of airline operations. Unlike traditional retailers, airlines could not adopt a "one-size-fits-all" technology solution, said Timothy O’Neil-Dunne, Principal at consultancy, T2Impact.
He noted that many airlines required extensive software customisation, which slowed adoption. Additionally, airlines are hesitant to overhaul existing revenue accounting models, as doing so requires significant investment and internal restructuring.
Gradual progress
While the full transition to Offer and Order remains distant, airlines expect a steady increase in NDC adoption.
The report found that NDC-enabled bookings accounted for just 7% of airline sales in 2023 but were projected to reach 21% by 2028. Meanwhile, legacy GDS bookings using Edifact technology were expected to decline from 33% to 14% over the same period.
The shift hinges on GDS companies’ ability to evolve. "It takes two to tango," Harteveldt noted. "If the GDS companies do make progress, then yes, that shift can take place."
Accelerating the transformation
Experts suggest that a pragmatic, results-driven approach is necessary for airlines to modernise effectively.
Instead of attempting large-scale overhauls, airlines should focus on incremental changes such as dynamic pricing, ancillary upselling and order-based accounting.
"The key is to focus on high-impact, incremental changes that deliver real value," said Accelya's Chief Customer Success Officer, Tye Radcliffe.
To further accelerate adoption, the report suggests that airlines should:
- Implement modular retailing solutions that allow for gradual upgrades.
- Align revenue accounting models with order-based approaches.
- Embrace a balanced distribution strategy that includes direct, NDC, and GDS channels.
- Secure executive buy-in and foster cross-department collaboration to drive momentum.
Currently, only 15% of surveyed airlines report extensive collaboration between departments on retailing strategies. Harteveldt compared the modernisation effort to a home renovation, emphasising the importance of careful planning to ensure successful execution.
Competitive pressure may drive change
Despite resistance, competitive forces may ultimately drive airlines to adopt Offer and Order. Radcliffe believes that when competitors modernise and gain an operational edge, reluctant airlines will be forced to follow.
"If their competitors do make the change and suddenly they’re able to do things that other airlines cannot, that will be the real impetus for change," he said.
This pattern is not unprecedented. Rogier van Enk, Chief Commercial and Customer Officer at Flyadeal and former SVP at Finnair, likened the shift to the industry’s transition from paper tickets to electronic tickets, which initially progressed slowly before accelerating rapidly once critical mass was reached.
While modernisation remains a work in progress, airline executives recognise that Offer and Order is critical for long-term competitiveness.
"Ultimately, success isn’t about technology for technology’s sake," said Radcliffe. "It’s about driving revenue, improving the customer experience, and setting the foundation for long-term agility."
