RESEARCH REPORT
In the retail-led future of airlines, the sky’s the limit
10-MINUTE READ
February 13, 2025
In brief
- Airlines stand to gain billions in untapped revenue from modernized offer, order, settle and deliver (OOSD) systems.
- Despite the potential, the complexities involved in transitioning from legacy systems to modern retailing platforms are slowing progress.
- To capture the full value at stake, airlines must adopt a holistic approach for success through a new, agile and data-driven operating model.
Retail-led future for the aviation industry
A retail-led transformative shift is imminent in the aviation industry, with modernized offer, order, settle and deliver (OOSD) systems poised to unlock billions of dollars in trapped value. These systems enable airlines to gain deeper insights into customer behaviors and preferences, allowing for evolved offerings and brand differentiation. Our analysis shows that using them well could boost annual revenues by 3–6%, underscoring their critical role in shaping future competitiveness.
However, the complexities involved in transitioning from a legacy system to a modern retailing platform are huge, making adoption slow. Airlines face the dual challenge of upgrading legacy systems while aligning with evolving global distribution systems (GDS) and coordinating efforts across their partner networks. They also must shift their approach to collaboration, changing roles and establishing new collaborative norms. But the bigger barrier is strategic. Most airlines are approaching these changes as incremental improvements, which do not add up to the full-scale transformation that will propel them into a competitive future.
This report explores the industry’s pressing challenges and game-changing opportunities through three lenses:
Reality: the current state of play
Most airlines remain in the early phases of adopting modern retailing technologies owing to the challenges associated with these upgrades. Even though New Distribution Capability (NDC) was introduced back in 2012, many airlines are still testing or piloting them. Although adopters have seen incremental benefits (for example, ancillary sales, such as seat upgrades and onboard purchases have increased up to tenfold, driven by unbundling strategies and enhanced servicing capabilities) leading to revenue increases of up to 1.5–2%. However, hidden infrastructure costs in the form of IT operations and implementation expenses often dilute these gains.
Reaction: rising to the challenges
The path to success involves folding tactical wins into transformative goals. Airlines are adopting a dual approach: pursuing immediate tactical gains while laying the groundwork for broader technology transformations. And depending on their stage of adoption, the expected timelines that airline executives plan to complete offer and order transformations vary.
19%
in less than 12 months
51%
in 1 – 3 years
27%
in 3 – 5 years
3%
in more than 5 years
Resolution: turning vision to action
Transitioning to a modern retailing platform requires a comprehensive strategy. Airlines must embrace transformation by balancing rapid innovation with a phased approach, one that can deliver immediate value while maintaining momentum for long-term success. The report outlines 4 key steps for achieving this:
Foster a culture of innovation that aligns with evolving customer expectations, enabling frequent and agile updates to processes and offerings.
Use frameworks like OneOrder and NDC as foundational tools while developing unique strategies to differentiate in the marketplace.
Align organizational priorities with clear goals, identifying the capabilities and resources needed at each stage of transformation.
Develop a realistic roadmap with incremental milestones, where each phase delivers tangible value and strengthens organizational momentum.
Toward a retail-led future for aviation
Moving to a retail-led future for the aviation industry is a given. This report explores how aviation companies can capture the full value at stake by undertaking significant structural changes that redefine how they operate and interact with customers. It defines key reinvention elements that form the backbone of this roadmap, each driving specific outcomes essential to success.