OTAs squeezed as airlines push for distribution control

For decades, travel agencies were the sales engine airlines never built. The selling part—the art of finding customers, converting them and building loyalty—was never really theirs. That’s where travel agencies, and later online travel agencies (OTAs), stepped in and quickly became the marketing and sales arm of aviation. But today, the very same arm is being ruthlessly chopped off.

The big great squeeze

Airlines were never built to sell. They were never a massive sales organization. Their role has always involved managing the operational aspects—in other words, to move people safely and efficiently across the world. But running complex flight operations is one thing; mastering digital marketing, dynamic pricing and personalized customer journeys is absolutely another.

Today, OTAs are finding themselves squeezed and choked by the very companies they helped to grow. In the current (very competitive) market situation, when the oxygen masks fall as the pressure drops, airlines are turning off traditional commissions—the oxygen of agency economics—that once fueled the OTA world.

Instead of collaboration, we are now seeing the demand for the ultimate control: airlines restricting content, removing logos and overall branding rights, taking away promotional content and funneling every possible booking toward their own “.coms.” Truth be told, this brewing mess is not good for anyone involved. The skies do not look bright even for the airlines themselves.

The price of playing Monopoly

It really comes down to economics: Over the last 10 years or so, airlines have faced continuous economic and political turbulence. At some point, they opened their P&L sheets and started questioning every single line in there.

One big move everyone remembers was the push from global distribution systems to New Distribution Capability. On paper, it looked promising: Cut out the middlemen, save money and take control of distribution. But the current reality? Far from the initial promise, as the shift has become expensive for everyone involved. And history repeats itself.

However, the pursuit of greater profitability carries three side effects: inflated costs, strengthened influence of major OTAs and customers shouldering increased prices with less trust.

1. Inflated costs

Airlines focused on flying planes—that is, in logistics and flight operations, while travel agencies specialized in market reach and conversion. For the last decade, airlines have spent their efforts consolidating power, tightening their grip on distribution, aiming at venturing beyond their traditional strengths and moving away from running flights to running marketing departments. It's just that becoming a huge sales and marketing organization, particularly a global one, is another ballgame.

What slowly started as a push for profitability is now turning into a game of Monopoly—one where airlines aim to hold all the cards. But this domination has its price: The cost of maintaining direct technologies, servicing customers and navigating fragmented integrations is mounting.

2: Strengthening influence of major OTAs

As smaller and mid-size agencies are vanishing or choosing to merge, the ecosystem will consolidate around fewer, far more powerful industry players. If airlines choke every intermediary, they don’t just eliminate competition. In fact, this way they empower the few mega-OTAs they fear most. And when the giants step onto the field, they come armed. They will bring vast customer armies, deep war chests and legal teams ready for battle.

3: Customers bear increased prices

Once intermediaries are pushed out and transparency weakens, prices rise unnoticed and the customer ends up becoming the ultimate victim of the power play, being penalized with the increased prices. Click by click, prices go up, baggage regulations differ and increased marketing costs get reflected in the fare prices. While airlines gain unchecked control, travelers lose choice. Fewer choices, less transparency and higher prices. What a mess.

The changing air game

The airlines' quest for total control will most likely increase short-term profits. But it also runs the risk of causing long-term stagnation. After all, diversity in distribution keeps this market healthy.

A joint effort is what keeps the industry thriving. We must talk more. If OTAs collaborate on shared issues and airlines keep senior leaders connected to the realities on the ground with intermediaries, we can build a stronger, more transparent ecosystem. Or else, the airlines might soon realize they’ve traded flexibility for dependence, innovation for bureaucracy and partnership for confrontation.

Monopoly, after all, always ends the same way: one player left standing and no one left to play with.