how online travel agencies revolutionized air distribution

Technology and digital advancements have had a profound impact on the travel industry worldwide over the last decade. From content to contracting to sales to customer-service, digital tools are deeply entrenched in today’s travel ecosystem. Among them, online travel agencies (OTAs) have become a critical component of the travel distribution value chain. OTAs aggregate content, offer convenience, and empower travelers with the ability to compare price and book products.

Industry estimates peg OTAs to account for nearly half of online travel gross bookings worldwide. Their share, notwithstanding, varies from market-to-market. OTAs often lead online distribution efforts in markets with high fragmentation – more the number of airlines operating in a market or more unbranded versus branded hotels, more entrenched are the OTAs. Still, as sizable as OTAs have become across markets, they have also had a bumpy ride to establish their prominence. In this spotlight, we look at the evolution of OTAs and how they have become a significant node in the travel distribution chain.


The journey through the travel planning and bookings funnel has always been filled with myriad of layers and complexities. Travelers use multiple channels – offline or online travel agents, suppliers, metasearch – and devices such as telephone, computers, smartphones to discover, decide and purchase travel. The foundation upon which the OTAs were built were complexity and inefficiency of researching travel, coupled with the lack of choices and price transparency. OTAs arrived at the scene in the early 2000s, with air ticketing being the primary focus for many.

Compared to the slick user interfaces and the eye-catching colors used today, the earlier versions of OTA websites were rather text-intensive and had little or no visual elements. The launch of OTAs such as Expedia, Orbitz and Travelbag brought about a significant shift in how air travel was sold. Behind the scenes, OTAs jumped through the hoops – airline contracting, investing in technology infrastructure to integrate content via low-cost carriers and a variety of aggregators. As the number of airlines and partners increased, so did the complexities. Increasing visitor traffic also drove to high look-to-book ratio, thus seeking real-time fares from partners emerged as a major cost center for OTAs. This drove OTAs to innovate further and collaborate for solutions that enabled them to cull out relevant search results, and accurate cached airfares.

On the consumer side, OTAs aggressively competed on prices, invested in search marketing, offered instant discounts, and allowed travelers the ability to choose from a wider range of airlines, combining multiple airlines in a single itinerary online. However, the booking experience was still not ideal, as travelers had to navigate through multiple menus in order to complete their bookings. Travelers were also offered limited customizations to their flights – all the way from restricted number of airline choices, connections, various fare classes, etc. These hindrances are the things of the past today for most part, wherein ancillaries, multi-city flights, virtual interlining, are becoming a norm on OTA flight displays.


As digital distribution technologies evolved, OTAs positioned themselves as a one-stop-shop that offered a seamless travel booking experience. This included a range of products – increased flight choices and codeshare combinations, hotels, packages, taxis, cruises, rail, buses – personalized itineraries, varied payment methods and customer support. The explosion of these services intensified the level of competition not just among the OTAs but also with the offline agencies, tour operators and above all the suppliers. In the race to win travelers, innovation was the only differentiator.

In the 2010s, OTAs began to offer solutions that went well beyond traditional air ticketing to boost revenues and extend their competitive edge. Through a series of integrations directly with airlines, including low-cost carriers and other technology providers, OTAs offered travelers the ability to purchase ancillary services such as seat and meal selection. While it seemed obvious on the surface, underneath it all was a complex maze of integrations, technology standards and connectivity challenges. On the front-end, OTAs also enhanced their user experience to a great extent – the path to purchase was the most vital in upselling ancillaries. With the advent of smartphones and app stores, OTAs launched the next wave of their digital presence via apps.

redefining the user experience

The last decade witnessed the emergence of novel and innovative user experiences come to the fore across the digital world. From Snapchat to WeChat, Pokémon Go to Minecraft, user experience has set each of these services apart from the others. Specific to online travel, OTAs have emphasized on investing in contemporary user experiences to travelers. These spread across the shopping to booking funnels across the desktop and mobile, chatbot-enabled customer support, and also gamification of notifications, promotional or itinerary-related.

As the wave of digital travel continues to swell, OTAs also have their eyes on the emerging Internet of Things (IoT) platforms such as voice assistants, home speakers and the connected cars. This has further enabled travelers to get inspired and create comprehensive travel plans anytime, anywhere and anyhow. By encouraging travelers to sign in, OTAs have also tied together different platforms, thereby delivering a seamless cross-device experience. The entire travel booking process transformed into an experience in itself.


The online booking experience has dramatically improved through personalization. Unlike most travel retailers, OTAs consider themselves a technology company first and travel retailer second. Accordingly, their commitment and investments in technology to enhance operations and sales conversion is generally more pronounced than others in the distribution chain. Courtesy of various data, user tracking and marketing-tech tools – all ultimately powered by artificial intelligence (AI) and big-data technologies – OTAs are more aware than ever of what the travelers are researching, the destinations on their wish lists, past purchases, preferred payment modes, seat, meals and a lot more! The commitment to invest in such tools enable OTAs to monitor the user journey, including itinerary changes and cancellations, and curate the booking flows and predict product recommendations along the way to suit the travelers’ needs.

In addition to AI-based tools, OTAs have gone further down the customization highway through industry initiatives such as IATA’s New Distribution Capabilities (NDC). Simply put, NDC is a set of technology standards that allow airlines to streamline, standardize and distribute their content via third-parties. NDC seeks to redefine the air distribution marketplace, by empowering full-service airlines to offer a high degree of customization across intermediaries and even to travelers directly. Although NDC roll-out is still in relatively early stages, OTAs already have fair deal of experience in distributing ancillaries. OTAs have been the early partners for low-cost carriers in distributing their ancillaries, integrating through airlines proprietary systems and APIs.


It is evident that OTAs have already come a long way. OTAs have already transformed from desktop retailers into mobile travel retailers. Yet, there is still a lot of room for innovation and refinements to be built on the back of fragmented flight data. The rise of OTAs can be encapsulated by three major factors: Content, Accuracy, and Speed.

So what lies next for the OTAs? For starters, it is geographical expansion and deepening the product offerings. Similarly, the introduction of virtual interlining has meant that newer routes and airline combinations are opening up. This development has proved to be mutually beneficial for the airlines and the OTAs alike.

Another boon for the industry has been the growth of the internet and social media. Higher internet speeds around the world are helping OTAs in offering a seamless booking experience to their travelers. The content is being generated quickly and accurately by making use of technologies such as machine learning. The overall UI/UX has also improved by a significant degree. Finally, the speed of booking is being improved by means of simplifying the booking process. In order to provide a greater degree of convenience, OTAs have developed all-in-one apps and APIs that allow the users to make their bookings quickly and effectively. OTAs are also making use of techniques such as intelligent caching, which stores historical search results for making quicker suggestions. Chatbots are also readily available to answer customer queries. Regardless of the course that the industry takes, it is likely that travelers will experience further personalization and booking convenience.


Future Of Travel

In our previous explorations of today’s traveler experience within the airline sector, we've delved deep into the ...

Future Of Travel

Welcome back to our monthly Airline-Tech Innovation Radar, where we spotlight the most intriguing tech innovations...

Future Of Travel

The global Skift Travel Health Index now benchmarks year-on-year, since 2023 was a year of recovery for the indust...


What are the busiest routes this month? Find out with our extensive data exploring the world's busiest air routes.


Expert analysis on the most in-depth, up-to-date flight data and aviation industry news.


Discover the new technology shaping the future of travel for airlines, travel companies and tourists.