NDC and Modern Airline Retailing: Airport Finance Implications

What NDC Is

New Distribution Capability (NDC) is an XML-based data exchange standard developed by the International Air Transport Association (IATA) for airline distribution. NDC enables airlines to create and distribute product offers — including base fares, ancillary services, bundles, and dynamic pricing — directly to travel sellers (travel management companies, online travel agencies, corporate booking tools) or through Global Distribution Systems (GDSs), using standardized APIs rather than legacy EDIFACT messaging protocols.

The foundational document is IATA Resolution 787 (Enhanced Airline Distribution), adopted at the 34th meeting of the Passenger Services Conference in Abu Dhabi, October 18–19, 2012, and filed with the U.S. Department of Transportation under 49 USC § 41309. DOT granted tentative approval on May 21, 2014 and final approval on August 7, 2014. In its approval, DOT stated that "the modernized communication standards and protocols and the marketing innovations that [Resolution 787] could facilitate would be procompetitive and in the public interest."

The current generation of the NDC standard is NDC 24.1, introduced in 2024 with enhancements to support the transition from standalone NDC messaging to integrated Offers and Orders architecture. More than 70 airlines have been validated on IATA's Airline Retailing Maturity (ARM) Index, which replaced the prior four-level NDC certification system in 2022.

Modern Airline Retailing: The Broader Program

NDC is one component of a broader initiative that IATA calls Modern Airline Retailing (MAR), established in December 2022. The Airline Retailing Consortium — a group of airlines with advanced Offers and Orders implementation — was created at the same time. The program is structured around two standards:

NDC (Offers). The standard for shopping, offer creation, and distribution. NDC enables airlines to present fares, ancillary products, bundles, and personalized offers through APIs.

ONE Order (Orders). An XML-based standard that consolidates PNRs (Passenger Name Records), e-tickets, and EMDs (Electronic Miscellaneous Documents) into a single, unified Order record. ONE Order aims to replace the current system in which a single customer transaction may generate separate records across booking, ticketing, and accounting systems.

IATA's Distribution Advisory Council has adopted an aspirational goal of "100% Offers and Orders by 2030," with the explicit caveat that "this does not imply that the industry will be 100% Offers and Orders by 2030, but that full capabilities, based on global open standards, will be available" by that date.

A legal analysis published by JD Supra (September 14, 2025) summarized the industry timeline: core Offers and Orders capabilities for leading airlines are targeted by 2026; expanded capabilities (including next-generation Departure Control Systems, interline with Offers and Orders, and disruption management) by 2028; and technical readiness for industrialization by 2030.

Members of the Airline Retailing Consortium include American Airlines, Finnair, Air India, and others, each committing to early adoption.

Distribution Cost Mechanics

GDS Booking Fees

Under the legacy distribution model, airlines pay GDSs a per-segment booking fee for each reservation processed through the GDS. GDS fees can vary from around $3 up to $15 per segment, with an average of 2.5–3 segments per ticket. The three GDSs that process the majority of indirect channel bookings globally are Amadeus, Sabre, and Travelport.

GDS Surcharges (Distribution Cost Charges)

To incentivize NDC adoption and recoup GDS booking costs, airlines have imposed surcharges — filed as YQ, YR, or Q charges — on tickets issued through legacy EDIFACT GDS channels. These surcharges are passed through to the travel agent or traveler. NDC bookings are either exempt from these surcharges or subject to lower surcharges.

Named airline GDS surcharges as of the dates indicated:

Lufthansa Group was the first airline group to impose a GDS surcharge, starting in 2015. Air Canada announced in June 2024 that it planned to eliminate GDS surcharges for most booking classes except the lowest fares, as part of its NDC transition strategy.

NDC Booking Volumes

NDC bookings reached 34 million globally in 2023, representing approximately 2.3% of global air ticket sales. Whether this percentage has materially increased through 2025 is not documented in a published IATA report available as of March 2026.

Ancillary Revenue: The Economic Driver

The retailing transformation's economic case rests on ancillary revenue — the revenue airlines generate from products and services beyond the base fare. NDC enables airlines to present, price, and sell ancillary products (baggage, seat selection, meals, lounge access, Wi-Fi, travel insurance, hotel and car rental commissions) through all distribution channels, not only through airline.com direct channels.

CarTrawler and IdeaWorksCompany project global airline ancillary revenue at $148.4 billion for 2024, a 26% increase over the $117.9 billion recorded in 2023 and $39 billion above the pre-pandemic 2019 level of $109.5 billion. Ancillary revenue represented 14.9% of global airline revenue in 2024.

Among the 68 airlines in the 2024 CarTrawler Yearbook of Ancillary Revenue, the top 10 airline companies generated $54.1 billion in ancillary revenue in 2023, well above the $38.4 billion for the top 10 in 2019. Total loyalty program revenue for the top 10 frequent flyer programs was $32.2 billion, 18.6% higher than 2022. U.S. major airlines (Alaska, American, Delta, Hawaiian, Southwest, United) received more than $25 billion in ancillary revenue in 2023, representing 32% of the global total and approximately 68% of global frequent flyer program revenue.

Five airlines exceeded 50% of total revenue from ancillary sources in 2024, with Frontier Airlines at 62% — a first in the industry. All five (Frontier, Spirit, Volaris, Breeze Airways, Allegiant) are low-cost or ultra-low-cost carriers.

The Value at Stake

McKinsey & Company, in collaboration with IATA, has published three estimates of the airline retailing opportunity:

A separate McKinsey analysis (September 2022) estimated an additional $14 billion in value from payments optimization — $8 billion in revenue (ancillary sales, loyalty programs, flexible exchange/refund processes), $2 billion in B2B payment cost reduction, and $4 billion from improved direct-channel payment conversion.

Implications for Airport Finance

NDC and the broader Modern Airline Retailing program are airline-initiated and airline-centric. Airports are not direct participants in the NDC standard or ONE Order specification. The IATA transition roadmap, however, identifies airports as one of the stakeholder categories whose coordination is required for transition to 100% Offers and Orders. Travel in Motion's 2026 outlook noted that "airports, travel management companies (TMCs) and global distribution systems (GDSs) must be involved more by the airlines, IATA and the consortium to deepen their integration efforts".

The airline retailing transformation connects to airport economics through several dimensions:

PFC Collection Mechanics

Under 14 CFR § 158.45, issuing carriers are responsible for collecting Passenger Facility Charges (PFCs) at the time of ticket issuance and remitting them to the airport. The issuing carrier and its agents "shall note as a separate item on each air travel ticket upon which a PFC is shown, the total amount of PFC's paid by the passenger and the airports for which the PFC's are collected". PFCs are capped at $4.50 per flight segment, with a maximum of $9 per one-way trip and $18 per round trip.

NDC does not change the legal obligation to collect and remit PFCs. The statutory requirement is tied to the ticket (or, under ONE Order, the Order) at the time of issuance. The mechanism by which the issuing carrier identifies the PFC-applicable airport and collects the charge is an implementation detail within the carrier's order management system. As the industry transitions from e-tickets and EMDs to a single Order record under ONE Order, the mapping of PFC collection obligations to the Order record is a technical implementation that airlines' IT systems and passenger service system (PSS) providers are expected to address.

The risk to airports lies in operational execution: whether airline systems under new Offers and Orders architectures correctly calculate, display, collect, and remit PFCs at the same accuracy rate as legacy ticketing systems. The legal obligation to collect and remit is unchanged. Airport finance teams should monitor PFC accuracy during airline system migrations to ONE Order.

Airline O&M Costs and Residual Rate Effects

If airlines reduce distribution costs by shifting bookings from EDIFACT GDS channels (which carry both GDS booking fees paid by the airline and GDS surcharges passed to the traveler) to NDC channels (which carry lower or no distribution fees), the airline's operating and maintenance (O&M) costs decrease, all else equal.

Under a residual airline rate-setting methodology, a reduction in airline O&M costs — to the extent it flows through the airport's airline cost calculation — reduces the net airline cost requirement and, by extension, the landing fee and terminal rental rates. Under a compensatory methodology, airline distribution costs do not flow through the airport's rate calculation and the effect is nil. The magnitude of the effect depends on the share of airline distribution costs that are allocated to the airport cost base — a function of the specific airline agreement's cost allocation methodology.

Ancillary Revenue and Airport Concessions

NDC enables airlines to sell ancillary products through all distribution channels, including products that have historically been sold by airport concessionaires or by third parties operating on airport property. The categories where airline-sold ancillaries may intersect with airport concession revenue include:

Lounge access. Airlines sell lounge access as an ancillary product (bundled with premium fares or sold à la carte). The airport lounge access market was valued at $6.74 billion globally in 2024, growing at a CAGR of 16.66% during 2021–2024. At airports where lounge operations generate concession revenue to the airport (through MAGs, percentage rents, or direct operation), airline-controlled lounge access sold via NDC channels adds a competitive dynamic. The impact on airport concession revenue depends on whether the airline's lounge is operated under a lease that generates airport revenue, or whether the airline's lounge product diverts demand from independently operated lounges paying concession fees to the airport.

Pre-order meals and food & beverage. Airlines sell pre-order meals and upgrade food-and-beverage options as ancillaries. To the extent travelers pre-purchase meals through the airline's NDC offer before arriving at the terminal, the incremental spend that might have occurred at terminal F&B concessions is captured by the airline instead.

Wi-Fi and connectivity. Airlines sell in-flight Wi-Fi as an ancillary. This does not directly compete with airport terminal Wi-Fi (which is typically free or advertiser-supported), but it shifts the traveler's perception of connectivity value toward the airline's product.

Travel insurance, car rental, hotel. Airlines sell commissionable third-party products (travel insurance, car rental, hotel) through NDC channels. These products generate ancillary commission revenue for the airline. At airports where car rental and hotel concessions generate facility rent, customer facility charges (CFCs), or concession fees, airline-sold alternatives do not necessarily reduce airport concession revenue (the physical car rental or hotel transaction still occurs at the airport), but may shift the commission and referral revenue from the airport's distribution touchpoints to the airline's.

Passenger Processing and Airport Systems

ONE Order's consolidation of PNRs, e-tickets, and EMDs into a single Order record affects the data that flows to airport operational systems — including Common Use Terminal Equipment (CUTE), Common Use Self-Service (CUSS) kiosks, and Departure Control Systems (DCS). IATA's ONE Order Factsheet (December 2025) states that ONE Order, in tandem with One ID (biometric digital identity), "will help streamline the travel experience, making it truly seamless at various touchpoints, such as the boarding process and border crossing".

For airports that own or operate common-use passenger processing systems, the transition from e-ticket-based processing to Order-based processing requires system updates by the airport's technology vendors. Travel in Motion's 2026 outlook stated that "airports must focus on making Order data usable for operational planning with the support of the airport software vendors which usually provide a legacy departure control system (DCS)".

Revenue Per Enplanement and CPE Metrics

NDC and dynamic pricing enable airlines to unbundle base fares and sell ancillary products separately. A passenger who previously purchased a fare that included checked baggage and seat selection may now purchase a lower base fare and add ancillaries separately. The airline's total revenue per passenger may remain constant or increase, but the fare itself — the number visible in the booking — may decrease.

For airports, the metric affected is not cost per enplanement (CPE), which is a function of airport costs divided by enplanements and is independent of fare levels. The metric affected is the planning and forecasting of PFC revenue, which is per-segment and unaffected by fare levels, and the planning of percentage-of-revenue concession agreements, which are affected by the consumer's spending allocation between airline products (purchased before arriving at the airport) and airport concession products (purchased in the terminal).

The Transition's Current State

The World Aviation Festival's January 2026 outlook described the current state: "The decoupling of Offers and Orders will continue to mature. In 2026, expect more airlines and vendors to treat the order management system (OMS) as the new 'gravitational centre' of retailing. While not fully independent from the PSS, we should see capability of orchestrating fulfilment, servicing and settlement events across partners. The shift will not be large-scale globally just yet, but pilots will start turning into production-grade rollouts".

Roland Berger's November 2025 analysis described the 2026–2028 period as the "next horizon," with "completion and industry adoption of IATA's final Offer & Order standards" and "first full production implementations" expected in that window.

The transition's pace is uneven. IATA's NDC Factsheet (December 2025) states that "it remains each airline's responsibility to individually assess the opportunity for NDC adoption and to decide their best timelines. IATA will not prescribe a specific course of action but will accompany any willing airline through their individual journey".

Sources and Further Reading

• IATA, NDC Factsheet (December 2025)
• IATA, ONE Order Factsheet (December 2025)
• IATA, Airline Retailing Consortium
• IATA, Modern Airline Retailing — First Transition Roadmap (November 29, 2024)
• IATA, Airline Retailing: An Industry Vision for Offers and Orders
• DOT, IATA Resolution 787: Enhanced Airline Distribution: Order to Show Cause
• McKinsey/IATA, Airline Retailing: The Value at Stake (October 2019)
• McKinsey, Ready for Takeoff: The Airline Retailing Opportunity (September 2024)
• McKinsey, The Eight Myths of Airline Retailing (May 2025)
• McKinsey, How Payment Innovation Can Improve the Bottom Line (September 2022)
• CarTrawler/IdeaWorksCompany, Airline Ancillary Revenue Skyrockets to $148.4 Billion (October 29, 2024)
• IdeaWorksCompany, 2024 CarTrawler Yearbook of Ancillary Revenue
• CarTrawler, US Major Airlines Receive More Than $25 Billion in Ancillary Revenue (January 23, 2024)
• Travel Market Report, Lufthansa Group Hikes GDS Booking Fee (January 11, 2026)
• AltexSoft, Distribution Costs and Hidden Payments in Travel (September 21, 2025)
• AltexSoft, Global Distribution Systems 101 (January 20, 2025)
• 14 CFR § 158.45, Collection of PFCs on Tickets Issued in the U.S.
• FAA, Passenger Facility Charge (PFC) Program
• Roland Berger, Airline Order and Offer Management (November 9, 2025)
• JD Supra, Navigating the Complex Pathway to Modern Airline Retailing (September 14, 2025)
• World Aviation Festival, Modern Airline Retailing Outlook 2026 (January 4, 2026)
• Travel in Motion, Modern Airline Retailing Outlook 2026 (January 5, 2026)
• OAG, How NDC Changes Airline Commerce (May 4, 2023)
• Air Canada, Introducing Our Improved NDC Program
• Amadeus, NDC: New Distribution Capability (February 3, 2026)
• ResearchAndMarkets.com, Airport Lounge Access Market Outlook (June 13, 2025)
• Executive Travel, Airlines Shatter Records with $148 Billion in Extra Fees (October 14, 2025)

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