We’ve spoken in previous posts about the value that indirect distribution can bring to low-cost and hybrid carriers (LCCs) through higher revenues, lucrative partnerships and an enhanced customer experience. But what does this mean in real terms?
Did you know that LCCs can generate on average €10 more in net revenue per booking through travel agents compared to their own websites? For agency bookings in Amadeus, our top European LCCs are realising up to 60% higher average fares per passenger than direct bookings.
How are they making this happen?
Francois Romero looked at how LCCs can get the most from travel agency distribution in his recent post. Today I will build on that discussion and consider the importance of adapting LCC product offers for travel agency customers.
When travellers are booking through a travel agency, their needs and expectations are different to when they are booking on-line:
- Business travellers need to comply with their corporate travel policies. They require more flexibility in schedules, changes and services – something they’re prepared to pay a premium for – and it’s essential to have access to special corporate fares in the approval flow.
- Leisure travellers tend to book higher value trips through a travel agent and may opt for trip extras and bundled fares that offer more comfort and convenience, such as family seating or extra luggage.
No matter the traveller segment, it’s the ability to target offers according to the customer preferences and requirements that makes the difference. LCCs who are not embracing this practice are missing out on a real opportunity to get more revenue per passenger and grow volumes.
In Germany, we see some airlines are very successful in leisure travel with the use of targeted, bundled fares. These bundles are exclusive to travel agents and make ancillaries easier and cheaper to buy than booking each service separately on their website.
This creates great value: travellers get a deal on services they need for their full trip; agents get more choice, at the right price and in an easily bookable way; and LCCs generate new revenue opportunities.
It’s easy to boost sales if the right packages are created. What’s exciting is the use of dynamic packaging by tour operators. Offers include specific content adapted to the local market in an easy to purchase package. We’re seeing a lot of success with this in Germany, especially with the use of TravelTainment technology, where we are seeing top low-fare airlines in the market accounting for over 20% of dynamic packaging bookings, and this number continues to grow.
Our market is facing intense competition and increasing complexity. Consolidation is a real side effect of this. Lines are blurring between airline business models and the market is flooding with low-cost offers. Creating competitive, relevant offers for travellers and meeting the needs of travel sellers is more important than ever to sustain long term profitability.
So what’s the bottom line? Travel agents will sell whichever airline makes it easiest. Offers that are simple and hassle-free mean agents have more choice and flexibility to select the best fares and services for their customers.