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Ask the expert: David Doctor

Question: How can a variety of selling approaches increase airlines' revenue?

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Question: How can a variety of selling approaches increase airlines' revenue?

Expert: David Doctor, director, airline distribution, Amadeus

Airlines need to capitalise upon the channels they have available to them to market, distribute and sell their products.Cost considerations aside, today's airlines are channel agnostic and they need to be able to seamlessly serve customers across all channels if they are to maximise revenues and yield.

It is the combination of direct and indirect distribution channels that allows carriers to build and target the customers they want. The direct sales channels are those in which airlines sell directly to customers.

 

With over 94,100 travel agency locations and more than 32,500 airline sales offices we [Amadeus] have been able to offer a solution for airlines and agents.

For example, direct sales via airline websites, airline call centres and airline sales offices. The in-direct channel involves intermediaries, such as travel agencies. The in-direct channel leverages the Global Distribution System (GDS) so agents can effectively book travel and travel products from a wide variety of airlines.

The potential of indirect distribution to unlock new revenue streams, target new segments and reach new markets is imperative for airlines as they seek growth and profitability. At the same time, the direct channel will remain equally important as airlines are able to merchandise more effectively online which is improving online yield and customer loyalty.

As a GDS, we try to combine both the direct and indirect channels.  With competition in the region fierce, it is important that airlines maximise the indirect channel. Bookings through the GDS are typically 70 per cent higher in yield than the average booking made in the direct online channel, which makes it an important contributor to profitability.

The importance of travel agencies in the Middle East specifically can not be underestimated with over 70 per cent of bookings in the region made through the indirect channel. Amadeus has seen a 29 per cent rise in bookings in the region last year.

Following extensive discussions with some of the world's largest carriers, we are addressing the challenge of combining the best of both channels. That is, delivering a proposition to airlines that allows them to benefit from the strengths of GDS, in terms of unparalleled global reach and access to higher value sales, with the speed, efficiency, and brand differentiation of the online channel.

When we launched the Amadeus Airline Retailing Platform earlier this year, it contained features that helped airlines to improve merchandising capabilities; greater compliance with commercial policies; and a graphical interface allowing airlines to better manage points of sale in real-time. This is an important step as it moves the GDS away from a pure distribution platform to a real retailing platform.

It offers airlines the potential to secure great brand differentiation in the channel; it allows them to automate the booking process so that all fees are collected; it means that they can sell ancillary products more effectively; and, it ultimately means that they can boost both yield and profitability in one of their most important distribution channels.

With over 94,100 travel agency locations and more than 32,500 airline sales offices we have been able to deliver a solution which meets the needs of airlines and agents.

Over the next two years the following features will be added. Firstly, Fare Families and Upsell at Pricing. Fare Families allow airlines to create and display packaged branded offers on the agency desktop in the most visually impactful manner.

Meanwhile, Upsell at Pricing displays the nearest less restrictive offer to encourage agents to ‘upsell,' which is a merchandising technique designed to encourage customers to buy a higher value ticket or additional add-ons, rather than to simply shop by price alone. This technique has been proven to boost airline yield by over 8% when deployed through airline websites.

The second introduction will be Airline Service Fees - the industry's first solution to automatically price and collect ticketing and credit card fees through multiple channels in compliance with ATPCo and IATA regulations. This module allows valuable revenues to be collected through the TA channel.

Thirdly we'll introduce ancillary products and attributes - providing an additional revenue stream for airlines to easily and efficiently sell ancillary travel products. Airlines can benefit from up to 15% of the revenue from sales of such products as excess luggage, speed boarding or insurance. And lastly a management graphical user interface through which airlines can manage their distribution set-up through all the Amadeus points of sale.

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