Low-cost Airline Distribution Channels: Direct Distribution, NDC, GDSs, and Low-cost Airline Consolidators

Airline distribution is complex. On one side of the airline industry, we have legacy carriers mostly represented by full-service airlines. Since the late 70s, legacy airlines have used a complicated model of distribution that included various data aggregators, consolidators, tech providers, and other intermediaries. As a result, in the mid-90s, global distribution systems or GDSs (Amadeus, Sabre, and Travelport) became monopolists in air travel distribution as the key flight aggregators.

How airline distribution works in a nutshell

Nowadays, struggling to compensate for the lack of differentiation, legacy carriers are creating new travel APIs and establishing direct channels with travel agencies to show even more flight information. This became possible with the advent of New Distribution Capability (NDC) by International Air Transport Association (IATA). NDC is an initiative to set standards that would allow airlines to distribute their flights directly through online travel agencies or through global distribution systems and also provide ancillary offers.

The other end of the air travel industry is occupied by low-cost carriers (LCC). A totally different business model from the offerings of full-service airlines, the low-cost sector omitted global distribution systems’ oligopoly, leveraging direct online booking. Today, low-cost airlines cover 32 percent of the worldwide airline market, with over 40 percent in Europe and 36 percent in Latin America compared to full-service carriers. While it seemed nearly impossible for online travel agencies (OTAs) and metasearch engines to offer budget airlines’ inventory, some brands managed to do so one way or another.

Here are some examples of the websites and airlines they distribute:

Momondo.com is a Danish metasearch website that distributes Ryanair, Wizz Air, WestJet, Spirit Airlines, Norwegian Air Shuttle, Southwest Airlines tickets through its platform.

Kiwi.com is a Czech online travel agency that works with Southwest Airlines, Spirit Airlines, Ryanair, Transavia Airlines, EasyJet, and Wizz Air.

Travelfusion.com, an online travel data aggregator headquartered in London, is a direct distribution platform certified by IATA’s NDC. Travelfusion works with such carriers as Eurowings, Flybe, and Spirit Airlines.

In this article, we will explain how low-cost carriers distribute today. We’ll also give recommendations on how to use each channel if you plan to integrate LCC distribution in your product and explain the pros and cons of each type of connection.

What are low-cost carriers (LCCs)?

Low-cost carriers offer unbundled services and charge additional fees for ancillaries. For a long time, most budget airlines operated between secondary airports (hubs), working on short-haul flights only. Until recently, these were the main pillars defining the low-cost model. Now, ultra-low-cost (e.g. Spirit Airlines) and hybrid carriers (Hop! by Air France and Germanwings by Lufthansa) appear on the market. The landscape is changing, and today the budget sector looks for long-haul opportunities (e.g. LEVEL, Norwegian Airlines) and offer bundled services to attract even more customers.

The main low-cost distribution channels

Generally, distribution channels for low-cost airlines can be divided into four types.

Direct connection. The main channel of sales for low-cost airlines are their own websites. Selling tickets directly, budget carriers get information about their customers and optimize their systems using ticketless bookings (a type of booking without a physical ticket). They manually manage only necessary services, automating check-ins, luggage, and meal orders.

Global Distribution Systems. Budget airlines are also looking towards GDSs, as providers like Travelport and Amadeus offer services tailored for low-cost needs.

IATA’s NDC channel. Some low-cost carriers were the first to adopt NDC and provide XML APIs for OTAs and TMCs to connect.

Low-cost consolidators and aggregators. A couple of years ago, technology providers (including global distribution systems) focused on developing dedicated portals for travel agencies to source low-cost and full-service flights via a single channel.

That said, in 2019, traditional and low-cost airlines have a lot in common. But, for budget airlines, cost remains the key factor in its distribution. By building indirect channels, most carriers still attempt to avoid excessive distribution fees formed at global distribution systems.

Direct connection to low-cost carriers

Now, the situation is different. Travel agents can connect to budget carriers via their direct channels, as well as through GDSs, as long as they distribute budget airlines and share rich content. Nevertheless, direct booking remains the main distribution channel for low-cost carriers. As an example of high competition, look at JetBlue’s attempt to drive more customers to use their website directly.

How to use direct connection

Pros: Direct API distributes a full range of airlines content without additional intermediaries like GDSs and ATPCO, the main tariff publishing and ticketing provider.

Cons: Very few LCCs offer their own APIs.

To learn about various APIs used in air transportation industry, check our dedicated article.

Web scraping

Ryanair is well known for having sued Skyscanner, Expedia, TravelSupermarket, and other aggregators in an attempt to cut indirect bookings. Until recently, Skyscanner and TravelSupermarket preserved their right to scrape data from Raynair.com, followed by KAYAK and Fly.com reaching an agreement with Ryanair to scrape legally.

Ryanair is not the only low-cost carrier to appeal to the court to prohibit web scraping. The same approach was chosen by and Southwest Airlines. But the situation has changed, and budget airlines became available on various travel metasearch and price comparison platforms. It is also important to point out that screen scraping led to the appearance of scam metasearches, and OTAs distributing dated flight information.

How to use web scraping

In some cases, if airlines don’t provide their APIs, you may reach an agreement with them to legally scrape their inventory.

Pros of web scraping: It’s easy to do via ready-made crawlers.

Cons: Scraped data is not reliable and is difficult to update. And web scraping doesn’t allow for booking support. Allegedly, travel agencies that use scraping and at the same time suggest booking options resort to manual bookings by their personnel. If you do this without a prior agreement, you risk losing a large sum of money if you’re sued or your OTA might be closed.

Global distribution systems in the low-cost world and XML enabled channels

  • The main reason is the distribution fee charged by global distribution systems providers. Since budget airlines struggle to reduce ticket price by any means, indirect distribution via GDSs wasn’t a suitable option.
  • Additional expenses on distribution could negatively affect ticket prices, requiring additional investment in technical infrastructure to offer travel agencies relevant data. That’s why online travel agencies and travel metasearches used web scraping to get flight information from budget carriers.

With the rising popularity of budget airlines, capturing leading positions and occupying a significant part of the market, GDSs started putting no-frills airlines on their platforms. As a result, since the beginning of the 2010s, nearly all the larger budget carriers signed distribution or merchandising contracts with global distribution systems. Those connections include both standard GDS distribution or NDC channels by GDS provider (rich content agreement).

For example, in 2014 Southwest Airlines signed a contract with Amadeus for its reservation system, expanding on other products like Amadeus Sky Suite scheduling system in 2018. Nevertheless, Southwest fares aren’t available through Amadeus, while they are present on Travelport due to the renewed content agreement in 2018.

Meanwhile, Ryanair is available for distribution through Sabre and Travelport. In 2017, Ryanair left Amadeus because of growing distribution fees but continued to use Navitaire, a passenger service system owned by Amadeus.

Norwegian Air Shuttle had also signed a contract with Amadeus to distribute its long-haul flights, reporting 110 percent growth in sales during a three-year period from 2015. They had also renewed the contract with Travelport, signing for a rich-content agreement, merchandising, and branding to enable ancillary offers via Travelport’s e-Commerce platform.

The table of the major budget airlines in contract for content distribution with GDSs

Currently, all major budget carriers work with at least one GDS provider distributing through indirect channels. With the emergence of NDC channels and expanded capabilities of direct bookings, GDSs started to offer a number of products tailored to the low-cost model.

Amadeus claims partnering with almost 110 LCC and hybrid carriers with 12 newly signed airlines in 2017. It proposes three methods for booking a ticket from a budget airline on its dedicated page:

  1. E-ticketing assumes a complete integration of the airline with equal booking capabilities compared to full-service airlines. Currently, Amadeus mentions WestJet, Vueling, and Norwegian Airlines using this type of ticketing.
  2. Light-ticketing is an e-ticketing type of booking, offering immediate ticket issuing as an advantage. Light-ticketing allows excluding ATPCO from the distribution pipeline, using the XML interface. It is used by several airlines like AirAsia, Spring Airlines, Transavia, and Jet2.
  3. Ticketless booking via SSR e-pay. This type of booking requests the customer’s credit card instead of issuing a ticket. Among the airlines using it are Jetstar, Spirit Airlines, and TUl fly (formerly TUIfly).

Low-cost carriers can also configure the Amadeus connection to distribute bundled and unbundled ancillaries through their NDC channels. It’s also worth mentioning that some airlines with no GDS connection still can be booked via Amadeus.

How to source tickets from low-cost carriers via global distribution systems

Pros: Like full-service distribution, global distribution systems offer rich capabilities, allowing you to source GDS and non-GDS content through their APIs. Furthermore, for the infrastructure-mature OTAs, GDS providers may offer countless products, booking tools, and merchandising platforms. A distribution provider is usually a technology provider, so you have an all-in-one solution through the distribution pipeline.

Cons: The issue with global distribution systems is the integration costs.

Direct distribution via new distribution capability by IATA

British budget carrier Flybe implemented its NDC API in 2016 offering it to corporate buyers. Flybe is one of the first budget airlines to come up with an XML enabled channel. IATA has also written an in-depth case study on the Flybe’s NDC implementation.

Flydubai, a Dubai government-owned LCC, was the first budget carrier to obtain IATA’s NDC compliance level 3. They also implemented an NDC API, partnered with TPConnects as an IT provider to distribute ancillaries to travel agencies.

A number of low-cost airlines like Norwegian Air Shuttle also on the list of IATA NDC adopters claimed to achieve level 3 certification in 2018 without any visible signs of public API existence. WestJet works on its API in partnership with Farelogix without releasing it in public. While Vueling Airlines and JetBlue can also be found in IATA’s lists as new distribution capability adopters, there are no public APIs available.

How to use NDC APIs

Pros: These include dynamic pricing, rich content, configurability, and personalization.

Cons: Most budget airlines prefer to distribute via their own websites or stick to the GDS XML channels, making NDC a rare artifact within the budget airline segment. And if NDC grows stronger, integrating multiple APIs will be more time- and cost-consuming than using some universal API.

Dedicated airline consolidators and aggregators for low-cost carriers booking

Pyton Flight Portal. Pyton is a travel technology company that develops travel applications for OTAs and TMCs. Since 2015 Pyton has been a part of the Amadeus IT group. In partnership with Amadeus, they are working on the low-cost booking platform that will be integrated with Amadeus Travel Platform. The platform is called Pyton Flight Portal and includes over 100 LCCs. It will allow travel managers to book budget airlines and full-service carriers through a single interface. The API of the platform is XML-based.

The number of low-cost airlines supported by Pyton is quite large

tfFlight. Travelfusion offers its platform tfFlight for online travel agencies, TMCs, metasearches, and tour operators. The platform consolidates data from LCCs and hybrid carriers available via a single API. Among the benefits are easy integration with desktop and mobile interfaces, integration with PNRs, and rich content capabilities.

How to source tickets via low-cost carrier aggregators’ API

Pros: A single API distribution via a dedicated platform offers wide capabilities for sourcing LCCs, hybrid, ultra-low-cost, and full-content airlines. They also offer technical support and management interfaces to work with or integrate their systems into existing technical solutions of your travel agency. Perhaps, the biggest advantage is that you specify which type of airlines you want to source. Choosing from the vast base of carriers, you will also be able to distribute bundled/unbundled content as they are XML capable.

Cons: It’s also a question of price whether to use a dedicated budget airlines portal or not. The integration costs may vary from platform to platform. Nevertheless, there are no visible cons except for integration.

Conclusion

Low-cost airlines are now starting to concentrate on indirect bookings more, while full-service carriers struggle to push through their direct channels. It’s interesting how budget airlines gradually become similar to traditional airlines, offering bundled ancillaries, operating long-haul flights, and contracting GDSs to sell more. Initially focusing on leisure customers, LCCs now are able to reach business travelers via indirect channels. So online travel agencies now can reach budget airlines freely via dedicated platforms and global distribution systems.

Being a Technology & Solution Consulting company, AltexSoft co-builds technology products to help companies accelerate growth.

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