✈️ Indirect Distribution: The Hidden Engine Behind Airline Profitability
Most airline executives focus on network planning, pricing, and partnerships, but how those offers reach the passenger is often overlooked. That’s where indirect distribution comes in. And this Quick Reference Guide is your strategic decoder.
𝗪𝗵𝘆 𝗧𝗵𝗶𝘀 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 𝘁𝗼 𝗔𝗶𝗿𝗹𝗶𝗻𝗲 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁:
Indirect distribution isn’t just a technical flow, it’s a profit-critical infrastructure. Every fare filed, seat shown, and ticket issued through a travel agent or OTA (Online Travel Agent) passes through a complex web of systems, providers, standards, and messages: GDS, PSS, ATPCO, OAG, SSIM, AVS, PNR, and many more.
𝗛𝗲𝗿𝗲’𝘀 𝘁𝗵𝗲 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗰𝗮𝘁𝗰𝗵:
• 𝗚𝗗𝗦𝘀 𝘄𝗲𝗿𝗲 𝗼𝗻𝗰𝗲 𝗮𝗶𝗿𝗹𝗶𝗻𝗲-𝗼𝘄𝗻𝗲𝗱. Now they’re cost centers. Network carriers rely on them, but LCCs often bypass them entirely or pass the cost to passengers. Understanding this helps you rethink channel strategy and margin control.
• 𝗢𝗳𝗳𝗲𝗿 𝗰𝗿𝗲𝗮𝘁𝗶𝗼𝗻 𝗶𝘀 𝗺𝗼𝗻𝗼𝗽𝗼𝗹𝗶𝘇𝗲𝗱. GDSs aggregate schedules, fares, connections, and availability for nearly all airlines worldwide, giving them a near-total monopoly on global visibility and offer creation.
• 𝗟𝗲𝗴𝗮𝗰𝘆 𝘀𝘆𝘀𝘁𝗲𝗺𝘀 𝗮𝗿𝗲 𝗯𝘂𝗶𝗹𝘁 𝗼𝗻 𝟭𝟵𝟲𝟬𝘀 𝗮𝗿𝗰𝗵𝗶𝘁𝗲𝗰𝘁𝘂𝗿𝗲. GDSs and related platforms were designed before the rise of low-cost carriers, ancillaries, premium economy, and rich content. They’re optimized for seat sales, not for modern retailing.
• 𝗧𝗶𝗰𝗸𝗲𝘁𝗶𝗻𝗴 𝗹𝗼𝗴𝗶𝗰 𝗮𝗳𝗳𝗲𝗰𝘁𝘀 𝗿𝗲𝘃𝗲𝗻𝘂𝗲 𝗳𝗹𝗼𝘄. The validating carrier model determines who gets paid first. Misalignment here can lead to cash flow implications in interline scenarios.
The quick reference guide breaks it down on one page, ideal for strategy teams, finance leads, and commercial managers.
It’s not just about tech, it’s about understanding the levers that shape your distribution cost, customer experience, and ancillary revenue potential.
Some airlines earn more per passenger despite flying similar routes, and it all starts with mastering distribution.
𝗟𝗶𝗸𝗲 𝘁𝗵𝗶𝘀 𝗽𝗼𝘀𝘁:
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What’s the most important lesson, challenge, or opportunity you’ve discovered in managing airline distribution channels, whether for cost, customer experience, or business model impact?
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Curious about how new standards like NDC and Offers & Orders may change this landscape? I’ll be breaking it down soon. Follow me for more Air52 insights and stay tuned for the next post.
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