Airlines Are Paying GDS Fees, OTA Commissions, and Losing Ancillary Revenue All at Once — Part 1

A passenger searches for a flight on Skyscanner. They compare fares across six airlines. They click through to Expedia, complete the booking, and pay. The airline gets a reservation — and a GDS fee, a platform commission, and a customer they will never meaningfully speak to again.

This is how a significant share of airline revenue disappears before the aircraft even leaves the gate. And it happens on every single flight, every single day.

The Triple Cost of Intermediary Distribution

Most discussions about airline distribution focus on one cost. The reality is three overlapping layers, each extracting value from the same booking:

Layer 1 — GDS Segment Fees

The Global Distribution System (Amadeus, Sabre, Travelport) charges airlines a flat fee for every segment booked through the system — typically $3 to $15 per segment, with the average booking covering 2.5–3 segments. A return flight for two passengers routed through a GDS generates six segments: that’s potentially $90 in distribution fees before the airline has sold a single ancillary.

IATA has been pushing New Distribution Capability (NDC) and ONE Order to reduce GDS dependency for years. The infrastructure shift has been slow. The fees continue.

Layer 2 — OTA Commission

Expedia charges airlines and travel suppliers 15–30% commission on bookings completed through its platform. Skyscanner operates on a cost-per-acquisition model — airlines pay for every click-through that converts. Kayak takes a referral fee. Booking.com’s flights product adds another layer.

The compounding effect: a passenger who finds a flight on Skyscanner, compares on Kayak, and books on Expedia generates fees at multiple touchpoints in the same funnel.

Layer 3 — Lost Ancillary Revenue

This is the cost that rarely appears in distribution budget discussions — and it’s potentially the largest.

Airlines globally generated $157 billion in ancillary revenue in 2025, representing over 15% of total airline income. Per-passenger ancillary spend averages $25 — and for ancillary-optimised carriers, it reaches $100 per passenger. Baggage, seat selection, meals, lounge access, fast-track security, car rental partnerships, hotel connections: all of this lives downstream of the initial booking.

When a customer books through an OTA, they complete that booking in the OTA’s environment. The OTA presents its own ancillary products — travel insurance, hotel add-ons, car rental through its own affiliate network. The airline’s ancillary opportunity is compressed to whatever can be offered at check-in and the gate.

The passenger who booked via Expedia is Expedia’s customer. The one who booked direct is yours.

What the Data Says About Direct vs. OTA Passengers

Direct booking passengers are not the same as OTA passengers in their behaviour:

• They have a higher propensity to purchase ancillaries (they’re engaged with the airline brand, not just the price comparison)
• They are easier to re-engage for future flights (you have their contact details and consent)
• They are significantly more likely to enrol in loyalty programmes
• Their lifetime value is demonstrably higher — they come back to your website, not to Skyscanner

The economics are straightforward: a direct booking passenger costs the airline nothing in distribution fees and generates full ancillary revenue potential. An OTA booking generates a fraction of that value at a material distribution cost.

Most airlines know this. The challenge is building the infrastructure to shift the balance — without simply disappearing from the discovery platforms that generate essential top-of-funnel volume.

The Regional Airline Problem

For large carriers — the Aegean Airlines, Ryanair, easyJet tier — direct booking investment is well-established. The website is slick, the app is mature, the loyalty programme is sophisticated.

For regional carriers, charter operators, and boutique airlines serving Mediterranean, Adriatic, and island routes, the calculus is different. These airlines:

• Lack the CRM infrastructure of the majors
• Have smaller marketing teams that cannot execute personalised direct campaigns at scale
• Rely heavily on seasonal travel patterns and tour-operator packages that funnel through GDS/OTA
• Have high repeat-traveller potential (island residents, business travellers on fixed routes, tourism-driven repeats) but no mechanism to capture it

A charter airline flying Greeks from Athens to Mykonos, Heraklion, and Rhodes in peak season is generating the same passenger data as a major carrier. They are capturing a fraction of it — and the passengers who love the service are booking their next flight on Skyscanner because that’s where they found the first one.

The Ancillary Blindspot

Here is the specific opportunity that intermediary distribution destroys: the pre-flight relationship.

The 72-hour window before a flight is the highest-value CRM touchpoint in the airline industry. Passengers are thinking about their trip. They’re confirming plans, packing, arranging transfers. They’re in exactly the right mindset to:

• Upgrade their seat
• Add baggage they forgot to book
• Pre-order a meal
• Add a lounge pass
• Book the car rental or hotel at the destination

Airlines that reach passengers in this window via WhatsApp or SMS — personally, contextually, in real time — generate significantly higher ancillary attach rates than airlines whose only pre-flight communication is a generic email reminder.

This window is entirely owned by the airline regardless of how the original booking was made. But capturing it requires a customer communication platform that most regional and mid-size carriers don’t have.

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In Part 2, we show exactly how Caramel’s autonomous CRM AI agent gives airlines — regional carriers, charter operators, boutique airlines — the infrastructure to capture customer data, automate pre- and post-flight engagement, maximise ancillary revenue, and build loyalty programmes that make direct booking the customer’s default choice.

Read Part 2 →

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