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ONLINE TRANSACTION FEES WILL EVOLVE
As online bookings continue to gain acceptance, transaction costs will reduce – but only when the technology becomes increasingly prevalent, says Jonny Shingles of Egencia
Jonny Shingles MANAGING DIRECTOR, EGENCIA UK Jonny Shingles is responsible for Egencia UK, managing activities on a day-to-day basis. Prior to Egencia, Jonny was part of a senior team responsible for the launch of Jet Republic, a start up in the private jet industry. Additionally, he has worked at Mergermarket, part of the Financial Times Group, where he was the global head of CRM. Jonny’s career began in the Royal Air Force as a fighter pilot, then he went onto instructing fast jet instructors before leaving to complete an MBA at the London Business School.
REMEMBER the telegram? Once upon a time, people used to send messages through this medium. You called or visited a telegram office, took the time to carefully dictate your message and paid by the word. It was slow, cumbersome, and still remains so expensive that even the Queen only sends them to the lucky few who become centenarians. Now, of course, we have email. And
you could say the same evolution is happening in corporate online travel booking. Previously you had to rely exclusively on a corporate travel agent to book your travel. But new travel technology is making – and will continue to make – booking travel faster, cheaper, and more convenient. As more and more companies move
“The barriers to reducing online trans- action costs primarily involves the limitations of GDS
technology”
to online booking to increase efficiencies, how will lower transactions fees evolve? Firstly the pricing between TMCs for online transactions is far less variable than offline. One reason is TMC websites and online booking tools empower travellers to easily compare travel options and online transactional pricing is more transparent as a result. Additionally, the benefits that online transaction fees play in reducing the total cost of ownership can be seen in better traveller behaviour. In fact, 90 per cent of travellers select one of two top choices (recommended or least expensive) when booking travel. The sites with the best user adoption
rates (typically in the mid-80 per cent level) feature a broad array of travel content, intuitive interfaces and excellent ease-of-use – all factors that have helped improve efficiency for travel programmes. It is easy to become fixated on the online
transaction fee alone and not in the important role it plays in reducing overall spend. However, it is not unreasonable to expect online costs to reduce as technology drives competition, but with the market still innovating it is unlikely these fees will reduce significantly in the near future.
Over the next two to three years, you
can expect TMCs to continue to invest aggressively in online traveller, arranger, and travel manager-orientated tech- nologies. Key areas of investment include driving online adoption via self- service in ways that transcend simple air transactions, such as pre-travel and en-route flight exchanges, booking of carrier amenities, split ticketing, and enhanced group booking capabilities. Likewise, improving the end-to-end traveller experience via integration and proactive service means automating receipting, integration with expense management tools, and proactive fare alerts. This innovation comes at a significant cost and businesses have to invest significant amounts into research and development to achieve this. In due course, as more online systems become available, greater economies of scale will drive down pricing. Already we are seeing mobile technology expanding in the marketplace and becoming more integrated with booking tools. The ability to book travel, change reservations, receive flight and destination alerts, and coordinate with traditional customer support via your mobile device will continue to add
downward pressure on costs. The Trainline, for example, is already seeing five per cent of transactions being delivered through their mobile app. Today, the barriers to further reduce online transaction costs through self- service primarily involve the current limitations of GDS technology and constraints related to agency connectivity with suppliers – factors that will improve as the industry evolves. The benefits of self-service are far- reaching and powerful, encompassing cost savings and increased visibility of data while generating higher levels of traveller efficiency and satisfaction. Over time, even more complicated transactions currently handled by an agent will become more straightforward online. Investment will be required and TMCs will have to strike a balance between innovation and focusing on the service needs of travellers. For now, the offline transaction will remain an essential element of a TMC's service. In the past, ‘telegrams’ could only be sent from a few set locations and it is the technology of mobile that will equally help pave the road for lower transaction fees irrespective of when and where a booking is made.
12 I THE BUSINESS TRAVEL MAGAZINE
BIGSTOCKPHOTO.COM
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