The airline industry is moving deeper into a new era of retailing. What was once a relatively straightforward transaction, selling seats from point A to point B, has evolved into a more sophisticated retail ecosystem where airlines can merchandise flights, ancillary products, and broader travel experiences across the customer journey.
Airline merchandising is the strategy and technology airlines use to package, price, present and sell flights, ancillary products and related travel services to travelers. Increasingly, it sits within the broader shift toward modern airline retailing, including dynamic offers, Offers and Orders, richer distribution, and more personalized shopping experiences.
For airline executives and digital transformation leaders charting their course for 2027 and beyond, these changes have direct implications for revenue, customer experience, and loyalty. Carriers that strengthen their retailing capabilities can create more relevant offers, expand revenue beyond the fare, and build deeper relationships with travelers.
Traditional airline merchandising relied heavily on predefined products, fare families, and ancillary catalogs. Many customers encountered similar options regardless of who was booking, where they were traveling, or what they had previously purchased.
Modern airline retailing is becoming considerably more adaptive. AI, machine learning, customer data, and real-time decisioning can help airlines determine which products and offers are most relevant based on factors such as passenger profile, itinerary, destination, trip context, and previous behavior. Rather than simply displaying every available ancillary in the same sequence, airlines can prioritize the products most likely to be useful to a particular traveler.
Consider how context can change the retail experience. A business traveler booking a transatlantic flight may place greater value on lounge access or priority services. A family heading to a beach destination may be more interested in baggage, adjacent seats, a hotel, or ground transportation. A loyalty member could receive offers informed by status, redemption preferences, or previous engagement.
Done well, personalization can improve both commercial performance and the passenger experience. McKinsey has found that travel brands still have considerable room to use their customer data more effectively for real-time personalization, while IATA identifies personalization as an important goal of modern airline retailing.
For airlines, the objective is to increase relevance without increasing friction. Better merchandising helps travelers find products they actually value while giving carriers more ways to grow revenue from each relationship.
One of the most consequential changes in airline merchandising is the move toward richer, more flexible product presentation.
Attribute-based shopping allows customers and distribution channels to evaluate airline products using characteristics such as baggage, seat options, lounge access, Wi-Fi, flexibility, and onboard services, rather than comparing flights almost entirely on price and schedule. ATPCO describes attribute-based shopping as an important component of modern airline retailing because it helps travelers identify flights that better match their preferences.
At the same time, dynamic offer capabilities are giving airlines greater flexibility over how products are priced and bundled. IATA describes Dynamic Offers as combining continuous pricing and dynamic bundling so airlines can respond more effectively to shopping context and customer requirements.
Together, these capabilities can help airlines move beyond rigid product structures without assuming that every traveler wants the same bundle.
A passenger may value extra legroom but have little interest in lounge access. Another may prioritize baggage, flexibility and ground transportation. Airlines with more adaptable retailing capabilities can create and present combinations that better reflect those preferences while retaining commercial control over pricing and margin.
The economics make airline merchandising increasingly difficult to treat as a secondary capability. The global airline ancillary services market was valued at $142.6 billion in 2025 and is expected to reach $298.4 billion by 2034, representing a compound annual growth rate of 8.6%.
But ancillary strategy has also matured. Early efforts often focused on expanding the catalog of products available for purchase. Today’s more sophisticated approach emphasizes relevance, timing, pricing, bundling, and presentation throughout the passenger journey.
For airlines, that can also mean looking beyond traditional flight ancillaries. Hotels, car rentals, activities, travel protection and other trip components can allow carriers to participate in more of the travel spend surrounding the flight.
This broader approach supports airline customer loyalty strategies by giving travelers more reasons to remain within an airline's branded ecosystem before and after purchasing their seat.
An irrelevant offer presented repeatedly creates friction. A useful product presented in the right context can make the booking experience easier while increasing total trip value.
NDC remains an important part of airline retailing transformation, but it is one piece of a broader industry shift.
IATA defines New Distribution Capability as an industry-supported data exchange standard that improves communication between airlines and travel sellers and enables richer airline products and offers to be distributed across channels.
Modern airline retailing extends further. IATA's vision centers on the transition toward 100% Offers and Orders, supported by NDC, Dynamic Offers, ONE Order, and related standards. The goal is to move away from many of the legacy artifacts and processes that have constrained airline retailing.
For airline leaders, the distinction is important. NDC can improve how offers are communicated and distributed. Dynamic Offer capabilities shape how products and prices are assembled. Order-based systems are intended to simplify how purchases are fulfilled and serviced.
As these capabilities mature, airlines gain more flexibility to differentiate their products across direct and indirect channels. Distinctive seat products, ancillary services, bundles, loyalty benefits and broader travel offerings can become part of a richer retail proposition.
The transition won't happen identically for every carrier. Airline size, architecture, commercial priorities and existing technology will influence the pace and sequence of modernization. IATA's transition roadmap similarly recognizes that readiness and timing will vary across the industry.
Airline merchandising doesn't operate independently from loyalty strategy. Increasingly, the data, products, and experiences involved in each influence the other.
Loyalty data can inform which products and experiences are most relevant to a traveler. Merchandising technology can expand the ways members earn, redeem and engage with their program.
McKinsey's research on travel loyalty reinforces the importance of that connection. Its research found that customer experience has become a particularly important driver of airline loyalty and argues for greater use of data to personalize both offers and experiences.
For an airline, closer integration between merchandising and loyalty can support several capabilities:
This becomes especially important as airlines compete not only with other carriers for loyalty, but with financial services brands and other travel ecosystems offering increasingly flexible rewards experiences.
The innovations reshaping airline retailing require a combination of technology, data, integration and commercial strategy.
AI-driven personalization depends on usable customer and shopping data. Dynamic offers require flexible product, pricing, and offer-management capabilities. Attribute-based shopping depends on structured product information. NDC and Offers and Orders introduce their own integration and transformation requirements.
Airlines don't necessarily need to replace every existing system at once. For many carriers, modernization will involve adding modular capabilities around existing architecture while reducing dependence on legacy constraints over time.
Partnerships can play an important role, particularly when carriers want to expand beyond the flight without building and maintaining every travel capability internally.
Switchfly helps airlines extend their retail proposition through dynamic packaging, white-label booking experiences and loyalty-enabled travel products. Carriers can combine flights with hotels, cars, activities, travel protection and other trip components while using configurable pricing, business rules and loyalty redemption capabilities within the airline's branded experience. This allows airlines to expand ancillary revenue and participate in more of the travel journey while maintaining focus on their core airline operations.
The direction of airline merchandising points toward more dynamic, contextual, and connected retail experiences.
For airline leaders, the important question is how to build a retail environment capable of presenting the right combination of flight and non-flight products, loyalty value, and traveler experiences across the channels customers use.
That requires airlines to evaluate several capabilities together, including dynamic offers, product attributes, distribution, loyalty integration, personalization, ancillary strategy and broader travel packaging.
As those capabilities develop, airlines can compete on more than the seat. They can use their existing customer relationships and travel demand to capture more of the trip, create more useful loyalty experiences, and build new sources of revenue around the journey.
For carriers evaluating how dynamic packaging and loyalty-enabled travel can fit into that strategy, Switchfly helps airlines grow beyond flight-only retailing with branded travel experiences built around the complete trip.