Somit Goyal is the CEO of IBS Software, a travel technology company providing AI-powered solutions across aviation, cargo and hospitality.
When Willie Walsh, director general of IATA (and incoming CEO of IndiGo), recently noted that an airline now earns about $7.90 per passenger transported across the globe—less than Apple makes on a phone case—he gave the industry both its punchline and its diagnosis.
Few industries are harder to operate than the airline industry. Airlines are capital- and labor-intensive and structurally vulnerable to shocks beyond their control. On top of that, decades of distribution evolution have embedded third parties—GDS systems, online travel agencies, corporate travel managers, metasearch and aggregation platforms—deep inside the customer’s journey, siphoning revenue and margin that the carrier would otherwise capture. The result is a 2.0% net margin on a trillion dollars of revenue. Modern technology and standards now make it possible to recover a meaningful share of that journey margin.
The arithmetic of the gap is stark. Three online travel platforms, Booking, Expedia and Trip.com, earned more than $11 billion in profit between them last year, roughly a third of what the entire global airline industry earned. Across the same traveler’s full trip, these platforms routinely earn more profit per traveler than the airlines that fly them.
Airlines have spent 40 years optimizing themselves as operators—measured in RASM, CASM, load factor and yield. None of these metrics tells you whether a customer’s journey drove value to the P&L.
What Modern Retailing Actually Changes
Modern airline retailing—IATA’s “Offers and Orders”—changes how an airline assembles, sells and services what it provides to a customer.
Today, a passenger books a flight and receives an e-ticket bound to a PNR. Bags, seats, lounge passes, ground transport and hotels live in separate systems and separate transactions. The airline sells the seat; everyone else sells the journey.
Under modern offer and order architecture, the same passenger receives a single dynamic offer assembled in real time from the airline’s own and selected partner inventory, held as a single order record, and serviced through a unified system regardless of what changes after booking. The airline sees a coherent customer. The margin previously fragmented across intermediaries flows back, in meaningful part, to the carrier that orchestrated the trip.
The Structural Leak
IATA forecasts $23 billion in industry net profit for 2026, on $1.05 trillion of revenue. Industry ROIC sits at 4.3%, persistently below the 8.5% cost of capital. Even at full-throttle demand, airlines barely earn what investors require.
The leak is structural. Global airline ancillary revenue reached $157 billion in 2025—15.7% of revenue, up from 9.1% a decade ago. Premium and business travelers spend lavishly on hotels, ground transport, lounges, dining and experiences, and book most of that adjacent value somewhere else. The hidden margin in aviation is the delta between the seat cost and the total travel wallet, and it is currently being captured by everyone except the carrier.
How Modern Retailing Moves The P&L
Modern retailing moves five things on the P&L, directly or indirectly.
Distribution costs fall when the channel mix shifts toward direct and modern indirect. Conversion lifts when offers are dynamic and contextual rather than static fare classes. Attach rate (the share of customers who buy ancillary products alongside their flight) lifts when those ancillaries are merchandised against intent, rather than presented at checkout as an afterthought. Servicing costs fall when the order, not the PNR, becomes the system of record. And customer lifetime value compounds when the same traveler is recognized across channels and trips, rather than reacquired at marketing cost on every booking.
McKinsey now puts the value of modern airline retailing at $45 billion industrywide by 2030—roughly 2% to 3% of revenue or 15% of EBITDA for a typical carrier. IATA’s target is 100% Offers and Orders by the same year. In my conversations with airline leaders over the past year, it’s clear we are nowhere close.
The Coming 12 Months
Three moves separate carriers that will earn the hidden margin from those that will surrender it.
First, reorganize the commercial P&L around the journey rather than the segment. Other industries have already made this turn. Financial services moved from product-line P&Ls to customer-relationship P&Ls built around share of wallet and lifetime value. Retail moved from category to customer-centric merchandising. Telecom replaced line-count metrics with ARPU and churn. In each case, the discipline was the same: Stop optimizing the unit of production, start optimizing the unit of value to the customer. Put ARPU, attach rate and customer lifetime value on the executive dashboard alongside RASM, and compensate against them.
Second, invest in the technology that makes journey-based selling real. The offer side of modern retailing has had the attention and the spend; the order side is where margin actually compounds. Modernizing order architecture—moving from rigid PNR and e-ticket constructs to flexible, real-time order management that holds seats, ancillaries, partner products and post-booking changes as a single customer record—is the essential backbone of this shift. Without it, dynamic offers collapse the moment the customer needs to make a change.
Third, empower the commercial organization to execute the first two moves. Strong airline commercial teams understand the operational constraints better than any outsider can. What helps is bringing in external talent steeped in customer lifetime value disciplines from retail, fintech and consumer platforms, and aligning incentives and authority with the journey so the team can make integrated trade-offs across technology, channels and customer experience.
The journey is where that imbalance gets corrected. The framing I share with airline leaders is this: The question is no longer how to monetize a four-hour flight, but how to convert it into a four-day experience, one where the carrier is present, relevant and earning margin across the full arc of the customer’s trip. The carriers that internalize this in 2026 will compound advantage for a decade. The ones that stay focused on selling seats will keep funding everyone else’s margin with their own.
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