Assessing the role of 'brick and mortar' travel agent in Asia
Published: 30 May 2008
Travel Distribution Asia Special
GDSs are evolving to remain relevant with solutions, which increase efficiencies, grow revenue and improve upon agents' value in the distribution chain.
Recently, EyeforTravel.com's Ritesh Gupta spoke to Amadeus, Abacus and Travelport to know more about their latest initiatives in the Asia Pacific region and viewpoint on some of the industry issues.
EyeforTravel.com: Do you think legacy carriers have shackled themselves to the more traditional distribution channels and even as hard as they try to extradite themselves to bring their distribution costs down they cannot do without the 'brick and mortar' travel agencies?
Simon Nowroz, Managing Director for Asia, Travelport: An increasing number of airlines are choosing to sign up to participate in the GDS. Airlines need a mixture of sales channels to reach both leisure and business travelers and we have seen bookings on airline.com sites begin to plateau.
I do not view legacy carriers are shackled to the GDS. The GDSs add tremendous value and are recognised by carriers as a vital link in the travel distribution chain. We are continuingly evolving our business to remain relevant in an environment with increasing competition and reduced commissions.
Travel vendors, in particular airlines, have always had in place a direct sales model with their city ticket offices and call centres. These remain a part of the overall distribution mix along with GDSs and travel agents. As the travel distribution has changed with new technology and consumers looking to book online, industry suppliers and providers have adapted their marketing strategy to develop their own websites to serve this part of the market. Airline websites now offer user friendly, self service options while at the same time, becoming more market savvy and deploying sophisticated marketing tactics to sell seats directly.
Brett Henry, Vice President Agency Marketing, Abacus International: We see a strong continuing role for the 'brick and mortar' travel agent in Asia due to the complexities associated with numerous currencies, visa requirements and payment systems, although the future will increasingly lie with those agencies' ability to specialise in high value areas such as medical travel, education travel, senior travel, green travel, women's travel etc.
One important way GDS distribution adds value for traditional airlines is providing them with extensive reach beyond their own national boundaries and it is difficult for airlines to duplicate this rapidly by adopting a direct to market model.
Peter Smith, VP eCommerce, Amadeus: Travel agencies are very active in today's travel industry and remain an important component of the travel distribution chain. A recent Amadeus study, conducted by Hermes Management shows that in Asia Pacific, we found an increasing number of travel agencies now looking to technology to remain competitive in the growing travel market.
The study did highlight some challenges faced by agents. The research showed that drastic reductions in commissions, low-cost carrier growth and changing consumer behaviour have created a dent in traditional income channels of travel agencies.
Despite these challenges however, the study shows that there are some steps that can be taken by travel agencies to maximize revenues. Amadeus is a key partner to the travel agency and we continue to develop technology to ensure that agencies fully maximize their efficiency and operational costs to gain a competitive advantage. Amadeus solution are designed to help agents sell the highest margin package which fits the customer's needs.
We have created solution, even for independent, single-site travel agency, to allow them to better service their customers. More single-site agencies are choosing Amadeus than any other GDS because of our advanced travel technology which is flexible and scaleable.
On customers mixing modes of travel
Henry: There is some evidence that customers are mixing modes of travel; for example, executive travellers who are quite prepared to experience 'cheap and cheerful' LCC trips for short stay family holidays.
We do not see this increasing trend toward 'mixing and matching' of travel purchase fundamentally affecting the travel distribution model as these travellers will be targeted and serviced by a range of suppliers as they currently are.
Smith: It is crucial that as technology providers we understand travelers. Our industry partners, including airlines, have invested and continue to invest a lot into understanding the needs of their customers. Therefore, the success of LCCs rides on carriers understanding the need of people to travel but without having to spend a significant amount on air-tickets.
But as we are realizing now, LCCs that were traditionally known as budget carriers are again evolving because of the change in the profile of travelers using LCCs. A recent Amadeus commissioned report carried out by Intercedent revealed that in an effort to gain greater efficiency in travel management, there is a growing acceptance of budget airlines among corporations. Airlines themselves are also noticing changes in their traveller profile as people often fit more than one segment as their travel plans change. European budget carrier easyJet recently claimed that almost 20 percent of its passengers were corporate travellers.[1]
In order to explore the lucrative corporate market further, easyJet last year signed a breakthrough distribution deal with Amadeus and Galileo allowing greater accessibility and options for corporate travellers. In addition, more airlines are now selling e-tickets on their own website rather than through agents and paying commissions. By exploring the advancement in technology, such as Web 2.0, airlines can compete as an equal competitor in the distribution sector.
Nowroz: With the growth of the Internet, our traveler is becoming more discerning and demands choice. It is therefore very important that airlines, supplier and travel agents understand the psychographics and the demographics of their customer in order to implement CRM strategies to meet their specific needs. Travelport offers mid/back office systems like Cross Check Travel which have CRM capability to enable agencies to organise and group data about customers and segment them accordingly.
Travelport also offers airlines and suppliers various means to communicate with their customers; through merchandising, partner marketing opportunities as well as through ancillary sales programmes.
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