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.

The industry timeline for Offers and Orders adoption includes core capabilities for leading airlines 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, Air France-KLM, British Airways, Emirates, Finnair, Iberia, Lufthansa Group, Singapore Airlines, 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. Amadeus, Sabre, and Travelport process over 90% of indirect channel bookings globally.

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.

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, 41% higher than 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.