Air Transport Distribution, a System Close to Excellence

In 2025, according to the latest available global figures, air transport generated a turnover of $1,008 billion, or $2.76 billion per day or $115 million every hour, across some 1,300 scheduled airlines. We will pass the 5 billion passenger mark in 2026. And the system continues to grow by 4% to 5% per year, which means a higher traffic volume of around 250 million passengers from one year to the next. More than 25,000 planes are used to transport all these people.

How did we get to this point?

Air transport has enjoyed such popularity for at least three good reasons, each of which is a determining factor. First of all, there is the desire of the inhabitants of the planet to travel: it is the expression of the freedom to be able to go from one country to another, even if obtaining the necessary visas can limit the possibilities. Secondly, it is the extraordinary technological development that has had the effect of making this type of transport more accessible while ensuring reliability close to perfection. And then there is the highly intelligent organization of the marketing of this activity, thanks to a unique distribution system.

The management of marketing criteria and distribution tools is the work of IATA. This organization (International Air Transport Association) was founded in Havana in April 1945, i.e. before the end of the Second World War. From that moment on, the founders immediately recognized that passengers might need to travel using several carriers during the same trip. This was all the more true since the range of aircraft was infinitely shorter at the time than it is today. It was therefore necessary to find a way to simplify the formalities and avoid having to buy a separate ticket for each carrier used. This is how the concept of “interline” came into being.

On paper, it seems very simple and even obvious. In fact, it consists of the companies agreeing to carry passengers with a ticket issued by another carrier. This is elementary, except that the money that comes in return for the purchase of the ticket is received by the issuing company. It was therefore necessary to ensure the correct transfer of the share due to the companies that transport the customer on a single part of the journey. For this to happen, the companies also had to have a great deal of trust in each other and agree to collaborate, even, and above all, I would say, with their competitors. For example, a passenger could make a round trip between New York and London with an American Airlines ticket, while flying with American Airlines in one direction and BOAC in the other.

This organization has been the basis of the success of air transport. I will pass over the complexity of the administrative process, which must both respect the decisions of each carrier and ensure the reliability of the flow of funds while guaranteeing passengers a smooth journey. This system has survived 80 years of history and the dazzling development of this activity. It has been adopted by almost all carriers, and even the “low-cost” carriers are beginning to adopt it. To my knowledge, there is no equivalent in other sectors of activity, except perhaps in telecommunications.

It remained to improve the lives of distributors—travel agents—who had long been very dominant in the distribution of air transport before the arrival of the Internet and the possibility for customers to buy their tickets directly from their carrier. This is why IATA created what is known as the BSP (Billing and Settlement Plan). Before the BSP, each airline had to deposit a stock of tickets in each travel agency it wanted to accredit. This required the latter to keep a rigorous inventory of these stocks, of which it could hold as many as there were carriers. The concept of the BSP consists of holding only one stock of tickets managed by IATA and assigning each ticket issued to the carrier chosen by the travel agent.

At the end of the agreed period, IATA deducts the amount of the tickets issued minus the distributor’s commissions and distributes the total among the carriers designated by the travel agents. This has not only simplified the management of both distributors and carriers, but it has also made financial payments more reliable. Its widespread adoption has not been easy; it has taken half a century from the first BSP introduced in Japan in 1971 to its adoption in nearly 150 countries.

Of course, everything that was manual has been computerized and digitized, but the concepts remain as defined when they were created.

To give an idea of the scale, the total amount of payments that passed through IATA was $492.4 billion in 2025, with an unpaid-bill rate of less than 0.05%. Hats off to those behind it!