The retailing opportunity for airlines: Departing now!

In 2019, the airline industry was captivated by the retailing opportunity. In a joint research effort, McKinsey and International Air Transport Association (IATA) identified $40 billion in additional annual value for the global airline industry by 2030.

Last week, I had the opportunity to share McKinsey’s updated findings at the IATA World Passenger Symposium (WPS) #iatawps in Chicago. You can find highlights of the update to $45 billion in Airlines (IATA's Aviation Business Magazine), and we look forward to sharing more detailed findings more broadly in the near future. But in the meantime, I’m eager to share my personal reflection on the airline retailing conversations at WPS.

My three key takeaways:

1. NDC is beyond the point of no return. The broader discussion at IATA World Passenger Symposium confirms that the conversation around NDC has pivoted from the “what” and “why” to the “how” and “how quickly to capture value”. And perhaps more important than the “big number” available, might be the growing gap between airlines leading in retailing - and the rest of the pack.
2. Time for a value-driven mindset. While the majority of booking volumes is on the retailing journey, the majority of airlines is not yet. And while the industry needs the frontrunners charting the path (and de-risking the journey), it emphasizes the need to bring the rest of the airlines along in order to unlock benefits for the ecosystem (e.g., interlining). It shows the importance of tying the transformation back to the business priorities, customer journeys, and use cases so that the transformation can finance itself.
3. Obvious-yet-not-so-easy playbook for success. In this light, the themes Anthony Rader (American Airlines), Bryan Koh (Singapore Airlines), Nicolas Salazar (LATAM Airlines Group), Tamur Goudarzi Pour (SWISS), and my colleague Nina Lind touched on in a panel highlight the need for focus on business change to get to value creation. For example, moves the panelists have found to be effective, include:

• A stage-gated build-test-learn-repeat approach
• Prioritizing business change, engaging senior leadership
• Transversal collaboration, e.g., reorganized around the ecommerce transition

We hope to see many airlines on stage next year sharing successful unlocks to shape the collaboration required, both within the organization and with ecosystem partners, which was clearly the challenge pinned down this year on and off stage to make tangible progress.