While progress is being made with International Air Transport Association’s (IATA) New Distribution Capability (NDC)—with two out of three airlines currently implementing the standard—offer and order transformation is not being adopted at the same rate.

In fact, only 27% of airlines have taken “substantive steps” with offer and order transformation, according to a newly published white paper from Atmosphere Research Group and airline software provider Accelya.

The report, titled “The Future of Airline Retailing,” revealed that 53% of airlines haven’t developed or started an offer and order strategy, and one in five airlines haven’t created objectives related to retailing.

“Airlines need to get into the offer order space,” said Tye Radcliffe, chief customer success officer of Accelya Group and former director of distribution at United Airlines.

“NDC is a great place to start because it’s a way for you to modernize the way that you interact with third parties, travel agencies, GDSs (global distribution systems), etc., and frankly, at some point, other airlines.

“As you develop those new rails … you’re able to start on your retailing journey,” he said.

The report is based on insights from consultants and feedback from telephone interviews with 28 airline industry experts and executives from carriers such as British Airways, Qantas, Finnair, Emirates and American Airlines. It also includes results of an online survey taken by 78 airline professionals.

Despite the lag, the parties behind the study are confident that modernization is imminent. The analysis revealed that retailing strategies such as dynamic offers, order-based servicing, modular technology and personalized content are recognized as “engines of revenue growth” and are competitive features for airlines.

The findings also pointed to growth in distribution share among three NDC-based channels, including NDC-based GDS, NDC direct connect and non-GDS NDC-based aggregators. In 2023, those three lines made up 7% of airline bookings. According to the analysis, the three are expected to account for 21% of bookings in 2028, meaning the industry theoretically could see the start of a “hockey stick” rise in NDC-based distribution.

The study also found that 72% of carriers identify retailing as “important” or “very important.”

“The gap between retailing appetite and execution is closing, with 2028 to 2029 realistic for transitions,” said Henry Harteveldt, travel industry analyst and president of Atmosphere Research Group.

“Airlines want to break free from restrictive tech and replace it with agile, open platforms. Cloud-ready, modular infrastructures are the path forward—enabling faster experimentation, product launches and integration, all while enhancing customer experiences and delivering more personalized, seamless travel.”

Radcliffe, who penned an opinion piece for PhocusWire on NDC’s future in February, agreed that transformation is “undeniable.”

“Early adopters are gaining a competitive edge—and as more airlines reach critical mass, the pace of change will accelerate,” he said.

And Radcliffe and Harteveldt aren’t alone in their stance. Plenty of industry experts have been vocal about the evolution of NDC, including Cory Garner, a former American Airlines executive who now runs his own airline distribution consultancy, Garner. In December at The Beat Live, he told airlines not to wait to jump on board.

“This is your opportunity to adjust,” Garner said at the time. “This is the time. Don’t wait for the next guy. Don’t wait for the guy after that. Don’t wait until it’s too late. Don’t wait until the only person you can ask is somebody who’s invested in keeping the status quo. Don’t wait. Do your homework. Now having time on your hands is an advantage.”

Why offer and order is lagging

Adoption of offer and order and order is not without challenges.

“The only things that move quickly at an airline are the planes,” the report said. And because the commercial side of the airline industry is complicated, it’s not as easy to make changes, especially with legacy systems in place.

While the majority of airlines are on board with the idea that retailing is important, reluctance to transform is common for a variety of reasons.

“Hesitancy to move stems from internal constraints, legacy contracts and uncertainty around ROI [return on investment],” Harteveldt said.

Given demand uncertainties and cost pressures, Radcliffe said many airlines are reevaluating large-scale investments related to retailing transformation. Despite offer and order strategies offering value in the long haul, budget constraints and reliance on legacy systems breeds slow adoption.

The specialized nature of airlines is another barrier for adoption, as there is no option to purchase “one size fits all” technology solutions, said Timothy O’Neil-Dunne, principal at consultancy T2Impact, in an interview for the report.

“Some airlines require extensive software customization to meet their business needs, provide them with what they believe will be a competitive advantage or both,” he said. “In the current world, no single vendor can provide everything. Therefore, modularity is a requirement for an airline’s major functions, and retailing is at the top of that list.”

Despite challenges, Radcliffe said transformation is still needed.

“It remains essential for long-term competitiveness, enabling airlines to better attract customers, increase revenue and strengthen loyalty as market conditions improve,” he said. “Airlines that take a strategic, step-by-step approach can future-proof their business while maintaining financial discipline—laying the foundation for a more agile, customer-centric retailing model.”

How to accelerate adoption?

Airlines that get on board with modern retailing will better position themselves for profitability in the long-term, more brand loyalty and improved customer service, according to the white paper.

Early adopters are gaining a competitive edge—and as more airlines reach critical mass, the pace of change will accelerate.

Tye Radcliffe, Accelya

So, how does an airline position itself to make adoption happen more quickly?

“Airlines looking to implement offer and order strategies need a pragmatic, results-driven approach,” Radcliffe said.

“Legacy systems, financial constraints and internal resistance can slow progress, but that doesn’t mean transformation has to wait. The key, I believe, is to focus on high-impact, incremental changes that deliver real value—think continuous pricing, ancillary upselling and order accounting—rather than chasing large-scale overhauls from day one.”

In a step-by-step format, airlines should consider open and modular solutions that allow them to modernize without overhauling, thereby reducing disruptions and driving efficiency while managing costs, he said.

To accelerate progress, Radcliffe said airlines should rethink revenue accounting models in order to align with an order-based approach to improve operations and retailing flexibility. He added that a balanced distribution strategy spanning direct, NDC and GDS channels will also allow airlines to maintain flexibility while capturing value.

Radcliffe said initiatives that deliver “quick wins,” such as dynamic offers and more personalization, can be helpful as airlines seek to build momentum within retail transformation.

According to Radcliffe, a good place to start is homing in on a business case within an airline to understand what modern retailing can mean for the organization—and executive buy-in is important, too.

“You’ve got to have somebody in the airline that’s really pushing this forward and trying to educate everybody on what offers and orders is all about,” Radcliffe said.

From there, it’s about getting the company on board. Teams need to be brought together on the topic, according to Harteveldt. That’s an area that could use work, as only 15% of surveyed airlines said an “extensive amount of retailing-related inter-departmental collaboration exists.”

“There are going to be groups at an airline that don’t think they need to pay attention to this, but do, because retailing is going to transform almost the entire airline enterprise, both operationally and on the commercial side,” Harteveldt said.

He compared the modernization of airline retailing to a home renovation project. It’s important, he said, not to attempt to “boil the ocean.”

“It’s almost like doing a journey-mapping exercise where you go through and you look at all the different aspects that retailing may touch, from order, offer, settlement, servicing and delivery, and figure out which organization or which part of the organization, which departments and functions may be affected,” Harteveldt said. “What are the technology implications and so on … the planning is critical, because if you don’t plan well, you don’t execute well.”

So, while some airlines are more on the “bleeding edge” of modernization, many are resistant thanks to longstanding systems already in place. 

“Ultimately, success isn’t about technology for technology’s sake,” Radcliffe said. “It’s about driving revenue, improving the customer experience and setting the foundation for long-term agility. Airlines that take a strategic, measured approach will be best positioned to unlock the full potential of offer and order.”

The report laid out additional strategic priorities for acceleration, too, including redefining indirect distribution, embracing modular retailing, creating dynamic, personalized offers and more.

Competition could be the answer

While there are things that can be done to speed up the process to get an airline on board for modernization, Radcliffe said he believes that, in reality, it comes down to one factor: competition.

“If their competitors do make the change and then all of a sudden, they’re able to do things that this other airline is not, that is what’s going to be the impetus for change,” he said.

There are historical parallels to this evolution. Rogier van Enk chief commercial and customer officer at Flyadeal and former senior vice president of customer engagement with Finnair, compared the shift to the transition from paper tickets to electronic tickets in the airline industry.

“It took some time to reach critical mass,” he said in an interview for the white paper. “Once that happened, the adoption accelerated rapidly, following an S-curve pattern. I believe we will see a similar pattern with NDC and offers and orders.”

The wide-ranging report touched on a number of other topics, including lessons airlines can learn about retailing from Amazon, modular software, traveler desires, the pillars of retailing and more.