NP-SD-14 · Distribution Cost Optimization

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Process Flow Diagram (BPMN)

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L4 Process Steps

Step	Step Name	Role / Swim Lane	System	Input	Output	KPI	Dec?	Exc?
Phase 1 1.1	Extract channel cost data from PSS and finance	Revenue Accounting Analyst	SAP S/4HANA Finance (FI/CO)	Monthly GDS booking fee invoices from Sabre, Travelport, Amadeus; Altéa PSS transaction logs	Channel cost report segmented by GDS, NDC, and direct booking source	Cost extraction completeness ≥99% of bookings reconciled per period	N	N
1.2	Allocate GDS booking fees to route and O&D level	Revenue Accounting Analyst	AWS Redshift	Channel cost report, Altéa PSS O&D booking data	Per-segment distribution cost dataset by route, O&D, and booking class	GDS cost per booking reconciled within ±$0.05 vs. invoiced totals	N	Y
1.3	Validate and approve cost allocation baseline	Head of Distribution Strategy	Tableau	Per-segment distribution cost dataset from AWS Redshift	Approved distribution cost baseline dashboard with channel-level unit economics	Baseline approved and published within 5 business days of period close	Y	N
Phase 2 2.1	Benchmark distribution cost vs. industry peers	Distribution Strategy Manager	OAG Schedule Analyser	Approved cost baseline, IATA Distribution Cost Study, OAG channel share data	Competitive gap analysis: cost per booking vs. peer carriers by channel	Distribution cost per booking target ≤$11.00 (vs. IATA industry average of $14–18)	N	N
2.2	Set channel-specific cost reduction targets	VP Sales & Distribution	Tableau	Competitive gap analysis, annual revenue and margin plan	Approved cost reduction targets by channel (GDS, NDC, direct) for the planning year	Target: 15% reduction in blended distribution cost per booking year-on-year	Y	N
2.3	Identify high-cost booking segments and routes	Distribution Analytics Analyst	AWS Redshift	Cost baseline, channel mix data from Amadeus Altéa PSS	Priority route and channel matrix: top 20% routes by distribution cost contributing ≥40% of GDS spend	Top-20% high-cost routes identified and validated within 3 business days of baseline approval	N	Y
Phase 3 3.1	Assess NDC API capability and agency readiness	NDC Programme Manager	NDC API Gateway	NDC adoption tracker, agency certification status list, OBT compatibility matrix	Agency NDC readiness scorecard ranked by booking volume	≥60% of top-50 agencies NDC-certified within 6 months of programme launch	Y	Y
3.2	Design NDC incentive and GDS surcharge structure	Head of Distribution Strategy	ATPCO	Agency NDC readiness scorecard, current commission and override schedule	NDC incentive tier schedule and GDS surcharge policy filed via ATPCO	NDC incentive cost per shifted booking ≤50% of the GDS fee saving on the same booking	N	Y
3.3	Negotiate NDC adoption agreements with top agencies	Key Account Manager	Sabre PRISM	NDC incentive tier schedule, agency booking volume data from Sabre PRISM	Signed NDC adoption agreements covering milestone targets and incentive conditions	NDC adoption agreements signed with agencies covering ≥40% of total indirect booking volume	Y	Y
3.4	Activate NDC channel and monitor booking shift	NDC Programme Manager	NDC API Gateway	Signed adoption agreements, NDC API go-live checklist, Amadeus Altéa PSS integration confirmation	NDC booking volume report; channel shift metrics vs. GDS baseline	NDC share of indirect bookings ≥20% within 12 months of channel activation	N	Y
Phase 4 4.1	Audit GDS full-content agreement compliance	GDS Contract Manager	Sabre GDS	GDS full-content contracts (Sabre, Travelport, Amadeus), booking volume reports from Altéa PSS	Full-content compliance audit report by GDS and market	GDS contract compliance rate ≥98%; zero penalty clauses triggered	Y	Y
4.2	Renegotiate GDS booking fee and incentive terms	Head of Distribution Strategy	SAP S/4HANA Finance (FI/CO)	Full-content compliance audit, multi-year volume forecast, peer airline benchmark data	Renegotiated GDS agreement with revised booking fee tiers and volume-based incentive schedule	GDS booking fee reduction ≥10% vs. current contracted rate across all three GDS providers	Y	N
4.3	Restructure agency override commission schedule	VP Sales & Distribution	Sabre PRISM	Renegotiated GDS terms, agency performance data from Sabre PRISM	Updated performance-linked agency incentive schedule with NDC migration milestones	Agency incentive cost as % of total revenue ≤2.5% (down from industry average ~3.5%)	N	Y
Phase 5 5.1	Track blended distribution cost per booking weekly	Distribution Analytics Analyst	Tableau	Weekly GDS fee invoices from Sabre, Travelport, Amadeus; NDC booking data; direct booking revenue data from Altéa PSS	Weekly distribution cost dashboard with channel-level unit cost and trend vs. target	Blended distribution cost per booking ≤$11.50; dashboard published within T+2 business days of week close	N	N
5.2	Identify cost leakage and wrong-channel bookings	Revenue Accounting Analyst	AWS Redshift	Weekly distribution cost dashboard, PNR source data from Amadeus Altéa PSS	Cost leakage report: high-cost outlier bookings, NDC-enrolled agencies still booking via GDS	Cost leakage identified and escalated within 5 business days; leakage <2% of total distribution cost	Y	Y
5.3	Report cost performance to leadership and plan next cycle	Head of Distribution Strategy	Tableau	Cost leakage report, monthly blended distribution cost summary, YoY trend data	Executive distribution cost report; updated channel optimization action plan for next quarter	Monthly report delivered within 5 business days of period close; YoY cost reduction trajectory on track vs. 15% annual target	N	N

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Process Attributes

Identification

Process IDNP-SD-14

L1 DomainNetwork Planning & Scheduling

L2 ProcessSales & Distribution

L3 NameDistribution Cost Optimization

L4 Steps16 across 5 phases

Decision Gates7 (all with iteration loops)

Exceptions9 documented

Swim Lanes (Roles)

Revenue Accounting Analyst

Head of Distribution Strategy

Distribution Strategy Manager

VP Sales & Distribution

Distribution Analytics Analyst

NDC Programme Manager

Key Account Manager

GDS Contract Manager

Systems & Tools

SAP S/4HANA Finance (FI/CO)AWS RedshiftTableauOAG Schedule AnalyserNDC API GatewayATPCOSabre PRISMSabre GDS

Key Performance Indicators

Extract channel cost data from PSS and financeCost extraction completeness ≥99% of bookings reconciled per period

Allocate GDS booking fees to route and O&D levelGDS cost per booking reconciled within ±$0.05 vs. invoiced totals

Validate and approve cost allocation baselineBaseline approved and published within 5 business days of period close

Benchmark distribution cost vs. industry peersDistribution cost per booking target ≤$11.00 (vs. IATA industry average of $14–18)

Set channel-specific cost reduction targetsTarget: 15% reduction in blended distribution cost per booking year-on-year

Identify high-cost booking segments and routesTop-20% high-cost routes identified and validated within 3 business days of baseline approval

Assess NDC API capability and agency readiness≥60% of top-50 agencies NDC-certified within 6 months of programme launch

Design NDC incentive and GDS surcharge structureNDC incentive cost per shifted booking ≤50% of the GDS fee saving on the same booking

Airline-Specific Risks & Pain Points

Sabre, Travelport, and Amadeus each use different invoice formats and fee codes; reconciliation against Altéa PSS PNRs requires manual mapping that introduces errors in ~2–3% of bookings

Altéa PSS booking records must be joined to SAP cost data at different granularities; PNR format mismatches between GDS sources and PSS cause join failures requiring manual resolution

Disputed cost allocations between Finance and Commercial teams delay sign-off; no single P&L owner for distribution costs creates accountability gaps that slow the optimization cycle

Industry peer benchmarks are self-reported and often exclude hidden indirect costs such as agency incentive overrides; benchmarking accuracy is limited and results may misstate true competitive position

Commercial teams may resist aggressive NDC shift targets when GDS volume is contractually linked to incentive tiers or corporate travel agreements that cannot be restructured mid-year

High-yield corporate routes are typically the highest GDS-cost segments; reducing GDS dependency on these routes risks losing managed travel bookings routed through Sabre PRISM by TMC partners

Inputs / Outputs

Primary InputMonthly GDS booking fee invoices from Sabre, Travelport, Amadeus; Altéa PSS transaction logs

Primary OutputExecutive distribution cost report; updated channel optimization action plan for next quarter

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