"The Report Card Nobody Asked For" The State of Airline Retailing 2026 — What the Industry Believes, What It Admits, and What It's Avoiding

Eric Marketts

Welcome back to The V1 Airline Retailing Report. I'm Eric Marketts.

Steph Nell

And I'm Steph Nell. Eric, we're doing something earlier than our regular Monday release and its a little different this week.

Eric Marketts

We are. No breaking news this episode — or rather, the news is a breaking survey. Ann Cederhall just published the State of Airline Retailing 2026 through LeapShift. It's a global survey of two hundred and thirteen stakeholders — airlines, vendors, consultants — and Ann has been doing this long enough that you can compare 2026 results directly against 2023. For anyone who's new — quick orientation. The V1 Airline Retailing Report is a weekly show. Every Monday, Steph and I break down two or three narratives that matter in airline and travel distribution. Not the press release version. The real version — what it means, who benefits, what the risks are, and what the industry keeps missing. For today's report highlights and references, please see the episode details.

Steph Nell

And Ann is one of the most credible voices doing this kind of work. She's not an airline apologist, she's not a vendor pitching a platform. She calls what she sees. Which is why some of these numbers are uncomfortable .

Eric Marketts

Uncomfortable is the right word. And what's useful about a survey like this is that the data doesn't just give you numbers — it surfaces narratives. Three of them, in this report, that we think deserve a full conversation. The first narrative is about confidence — or the lack of it. What airlines actually believe about their own retailing capabilities, and why that self-assessment has gotten worse, not better, since 2023. The second narrative is about the industry's own initiatives — NDC, ONE Order, Modern Airline Retailing — and a sentiment shift in the data that should make everyone in distribution stop and pay attention. And the third narrative is the one Ann calls hidden opportunities — the segments, the moments, the revenue that's already there and almost completely untouched. That last one is where the report gets most actionable.

Steph Nell

Let's start with the confidence data, because it sets the table for everything else.

Eric Marketts

So Ann asked airlines a simple question: how good a job is your airline doing at retailing? And the results are striking . Thirty-one percent said poor. Ten percent said very poor. That's forty-one percent of airline respondents rating themselves as doing a poor or very poor job at retailing. Only eight percent said very good. Steph, what do you do with that?

Steph Nell

The first thing you do is notice the direction of travel. Because in 2023 the industry was less self-critical. And you'd expect the opposite — three more years of investment, NDC maturity, more ancillary tooling on the market. More confident, not less.

Eric Marketts

And here's the other finding that sits right next to it. Airlines are less confident in their own capabilities than they are in their peers'. Which means they look across the industry and think others are doing better. But when you're inside your own walls, it's mostly chaos .

Steph Nell

Which tracks with the free-text comments Ann published. Several respondents used almost identical language: we do fine on our own website, but through third parties, we fall apart. And the internal politics comment — someone just wrote "no, and too much internal politics." That's not a technology problem.

Eric Marketts

There's also the macroeconomic frame that Ann sets up at the top of the report. Industry net profit margin is 3.7 percent according to International Air Transport Association's 2025 report. Global ancillary revenue is between one hundred and twenty and one hundred and fifty billion dollars annually. McKinsey estimates a ten to thirty percent ancillary uplift is available through personalization alone — without adding a single seat. So the stakes are not abstract.

Steph Nell

And yet sixty-nine point seven percent of respondents say they are not using an order management system — an OMS — that brings all purchases together. That number was sixty-two percent in 2023. It went in the wrong direction .

Eric Marketts

So revenue opportunity is real and quantified. Self-assessment is declining. OMS adoption is moving backward. And the number one item airlines ranked as most important to their retailing journey — the top of the list — was "technology from vendors that can deliver." Not strategy. Not people. Vendor technology.

Steph Nell

Which is an indictment of the vendor community as much as anything else. Say more about what that means.

Eric Marketts

It means airlines feel captive. One respondent put it cleanly: "Airline is a captive to its tech partners. Until it assumes its own tech leadership and vendor-neutral transformation, it is doomed to low margins and leaky ROIs." That's not a fringe view. It was the most echoed sentiment in the open text feedback. Another said airlines want to retail but are still built to ticket — and that the legacy PSS vendors are the main blocker.

Steph Nell

So the bear case here is that confidence is declining, tech dependency is deepening, and the window for catching up to consumer retail expectations is shrinking. The gap between what airlines believe they should be and what they actually deliver gets wider every year while the rest of retail moves forward.

Eric Marketts

That's the bear case. The bull case is simpler but requires a different kind of leadership. One respondent said their airline is doing a genuinely good job within current legacy constraints — and that the opportunity now is to simplify. Not invent entirely new products. Simplify what they have, retail it better, and stop trying to build everything in-house using PSS tooling that was never designed for retailing in the first place .

Steph Nell

The critical take from this data isn't the numbers. It's the pattern. Airlines know what's wrong. They can describe the problem with precision. The gap is execution, not diagnosis.

Eric Marketts

The second narrative. Ann asked respondents to rate the industry initiatives — Modern Airline Retailing, NDC, and ONE Order. And the results are genuinely surprising to me , because they move in opposite directions.

Steph Nell

Lay out the numbers.

Eric Marketts

Negative sentiment toward MAR — Modern Airline Retailing — is growing. Negative sentiment toward NDC is growing. Combined negative and "needs improvement" for NDC is now over forty-four percent. That's a meaningful chunk of the distribution industry looking at the flagship International Air Transport Association standard for airline retailing and saying it's not working well enough.

Steph Nell

And on ONE Order?

Eric Marketts

Optimism about ONE Order has increased since 2023. That's the counterintuitive finding. The concept of moving from PNRs and tickets to a single order construct — people believe in that more than they did three years ago. Even as the specific mechanisms — NDC as a content standard, MAR as the broader framework — are facing more skepticism.

Steph Nell

Which tells you something about where the frustration is located. It's not with the vision. It's with the plumbing.

Eric Marketts

Exactly. And Ann does something useful here — she draws a distinction that the industry has almost completely failed to communicate clearly. The difference between an order-based PSS, which people often call OOSD, and an OMS, which is an Offer and Order Management System that sits on top of your existing PSS. These are different things. Airlines and even vendors frequently conflate them.

Steph Nell

Walk through that distinction, because I think a lot of people listening have heard both terms and are not clear on which is which.

Eric Marketts

An order-based PSS replaces your reservation system at the core. In that model, PNRs and RBDs disappear. Each seat is treated as a product — one hundred and eighty seats means one hundred and eighty products. Revenue management operates at the individual product level. It is a full infrastructure replacement. What people call OOSD. An OMS, by contrast, sits on top of whatever PSS you already have. It manages PNRs, tickets, and EMDs in the background, but all customer-facing sales are organized into a single order. Multiple PNRs can exist within one order. The customer sees one record. The airline gets full visibility without hunting through split PNRs to understand what was sold.

Steph Nell

And the OMS path does not require a full PSS migration.

Eric Marketts

That's the point Ann makes clearly. You have three options. Migrate to an order-based PSS if you truly need to and if the business case holds. Stay on your existing PSS and layer an OMS on top. Or do nothing — but doing nothing has a cost, and that cost is real even if it doesn't show up on a project budget.

Steph Nell

And the confusion between those options is doing real damage. Because airlines that think they have to choose between "full migration" or "do nothing" often choose "do nothing."

Eric Marketts

That's the critical take. The industry has generated so much terminology — OOSD, OMS, NDC, MAR, ONE Order, dynamic pricing, continuous pricing — and has done almost no work to help airlines understand what each means for their specific situation. Ann quotes Fatos Endemir at SITA, who puts it well: the real decision is not OMS versus order-based PSS. It is whether an airline can genuinely move from transaction management to retail management . Orders only create value if they remove friction, support real shopping baskets, enable flexible servicing, and accelerate time to market. Otherwise, they are just modernized PNRs with a higher price tag.

Steph Nell

That's a useful test. Not "did we implement the standard" but "did it change how we sell."

Eric Marketts

And there's one more number worth flagging from this section. Around seventy percent of airlines are still on NDC version 17.2. That version does not support servicing. The latest version is 24.1. Migrating between versions is expensive and slow. So the industry is debating whether NDC is becoming EDIFACT with lipstick — Ann uses that phrase — while the vast majority of carriers haven't even implemented a version of NDC that handles the most basic post-booking transactions.

Steph Nell

The gap between the debate and the reality of what's deployed is enormous .

Steph Nell

The third segment is the one I find most practically useful for anyone building retailing strategy right now. Ann identifies what she calls hidden opportunities — segments and moments that are significantly underdeveloped. And some of these are genuinely surprising given how long the industry has been focused on ancillary revenue.

Eric Marketts

Start with the one that most people will immediately recognize.

Steph Nell

Group travel. Weddings, sports teams, school trips, conferences, music tours, extended families. Ann's point is that group travel is treated as an operational exception — a manual process, usually handled outside the normal booking flow. Not a retail opportunity. Yet the demand is obvious and the willingness to pay is high. A wedding party flying to a venue could be offered coordinated seating, shared ancillaries, flexible change policies, destination packages. Instead, most airlines route the group coordinator to a call center and process it manually.

Eric Marketts

And corporate direct purchasing follows the same pattern. Corporates say they want to buy directly from airlines. Direct purchase enables real corporate personalization — policy-aware offers, configurable bundles, content that goes beyond discounted fares. But adoption hasn't grown at the pace anyone projected. Airlines have been talking about retailing to corporates for a decade and most of them still serve corporates the same way they did in 2015 .

Steph Nell

There's also disruption retailing — which is almost completely absent from airline strategy. Delays and cancellations are treated as operational problems to be managed. Ann's argument is that they're high-emotion, high-engagement moments where customers are actually more open to offers — if those offers are transparent and empathetic. A customer stranded for three hours might pay for lounge access, meal vouchers, or a hotel rebooking at a rate they'd never accept in a calm pre-trip shopping flow.

Eric Marketts

And the upgrades finding deserves its own moment. Ann calls upgrades "a broken opportunity." The technology to do dynamic, contextual upgrade offers already exists. Geofencing, real-time data, push notifications. You could deliver: "Upgrade now using miles or cash." Or "You have twenty-four thousand points — you need twenty-five thousand for an upgrade. Buy a thousand points for twelve euros?" If the seat is empty, that is pure incremental revenue. Edelweiss sells upgrades onboard. Demand is there. The execution gap is about the will to build the trigger logic .

Steph Nell

And then there's the MCP finding, which I think is the most interesting data point in the whole report.

Eric Marketts

Talk about it .

Steph Nell

Ann asked airlines about MCP — Model Context Protocol — as a potential product or technology layer. Forty percent of respondents said they don't know what it is. Only eight point nine percent have it in production. Thirteen percent have it on a plan. And thirty-three percent said no, they're not pursuing it. For a technology that has been the dominant conversation at every airline and distribution conference for the past six months, that's a remarkable disconnect between what's being discussed and what's actually being built.

Eric Marketts

Which connects to the broader theme Ann closes the report with. The opportunity is no longer about inventing new ancillaries. It is about retailing existing ones better. Airlines launch good ideas and fail to make them dynamic. They don't trigger at the right moment. They don't personalize based on signals they already have. The product exists. The data exists. The technology is available and getting cheaper. What's missing is the retail discipline — pricing precision, merchandising, offer design, timing logic — that any mature retailer would consider table stakes.

Steph Nell

And one more finding worth naming. Fifty-seven point nine percent of airlines can now sell ancillaries on partner airlines. That's up from thirty-six percent in 2023. That is a real improvement and it's worth acknowledging . But it means forty-two percent still can't — and the three most common partner types where this capability exists are "some codeshare partners" and interline, which means full alliance coverage is still rare.

Eric Marketts

The industry's own top three challenges — ranked identically by airlines and non-airlines in Ann's survey — are: selling products on partner airlines, interaction between systems, and seamless integration with PSS. Same three problems the industry has been naming for years. Same three problems. Still at the top .

Steph Nell

That's the indictment. Not that the industry isn't working. It's that it keeps working on the same obstacles without moving them.

Eric Marketts

Ann closes with a line that deserves to stand on its own: the next wave of airline retail growth will not come from inventing entirely new products, but from rethinking overlooked moments, underserved segments, and under-connected partners. The opportunity lies in treating every journey — individual or group, leisure or corporate, smooth or disrupted — as a retail experience rather than a transaction .

Steph Nell

Let's close it out. Three findings from Ann Cederhall's State of Airline Retailing 2026 report. First: airline confidence in their own retailing capabilities has declined since 2023, even as the ancillary revenue opportunity has grown. Airlines know what's wrong. The gap is execution, not diagnosis — and vendor dependency is tightening rather than loosening.

Eric Marketts

Second: NDC and MAR are facing more skepticism than they were three years ago, while ONE Order is gaining cautious optimism. The industry's failure to clearly distinguish between an OMS and an order-based PSS is causing airlines to freeze instead of act. You do not have to replace your PSS to unlock order-based retailing. That confusion is costing real money.

Steph Nell

And third: the biggest retailing opportunity in aviation right now is not a new product. It's group travel, corporate direct, disruption moments, upgrades, and post-purchase touchpoints — all of them largely untouched, all of them high willingness-to-pay, all of them sitting inside every airline's existing infrastructure. The problem isn't imagination. It's execution discipline .

Eric Marketts

Ann wrote this report knowing the industry is under pressure. Tariff uncertainty, economic headwinds — retailing is not top of mind for a lot of carriers right now. Which is exactly why this kind of clear-eyed assessment matters. When you resurface from a crisis, the airlines who used the time to sharpen their retail logic will look very different from the ones who waited.

Steph Nell

If you found value in this episode, share it with someone making decisions in distribution, retailing, or travel technology. These conversations get better when more informed people are having them.

Eric Marketts

We'll be back next Monday. Until then — I'm Eric Marketts.

Steph Nell

I'm Steph Nell. Thanks for listening.

Eric Marketts

Stay sharp out there .