Aviation and Association of Corporate Travel Executives Global Summit in Amsterdam
Ancillary sales: Heywood critical of legacy carriers
A senior global distribution system (GDS) figure called on airlines to work collaboratively to improve third-party sales of ancillary products.
Ian Heywood, Travelport global head of air commerce product and market, told the Capa/ACTE Summit: “Traditional carriers are not making a good job of retailing. “We’ve been talking about ancillaries for some time, but ancillary sales through third parties are poor. About 60% of airline revenue comes through third parties, but only 10% of ancillary revenue does. “Low-cost carriers do a much
better job. Traditional carriers are going through a process of unbundling and making it more difficult for business travellers.” Heywood told the summit: “One
issue the traditional airlines have is the technology they use. It’s not just about digitising the process it’s also about the way everything
“If airlines want direct sales, they have to make the experience superior”
works around the process. It is very difficult if you try to do it in an unstructured way or without the collaboration of the industry.” Speaking outside the summit,
Heywood said: “The airlines need to work with the industry. We have to work together to make the system better, and airlines have to follow the agent booking process.” Qatar Airways group chief
executive Akbar Al Baker told the summit: “In 10 years’ time, people will hardly use the GDS. The whole way of travel will be changed.” But Heywood told Travel
Weekly: “If the GDSs were not around, someone would have to invent them. We have over 400
HEYWOOD: ‘The airlines need to work with the industry’
airlines, plus hotels and car hire selling through third parties. For a third party to pull that together would be complex and expensive. “Four years ago we didn’t
have content available via APIs [application programming interfaces], now 25 airlines connect via APIs. We didn’t have ancillaries available, now 56 airlines distribute 220 types of ancillary. We have 184 airlines live with rich content.” Heywood, a former British
Airways head of sales, added: “I understand the airlines’ desire to grow direct sales. But it’s about customer choice. If airlines want direct sales they have to make the experience superior, not try to force customer behaviour. “Customers want to be able to book in the channel they choose.”
Open skies: Bosses fear protectionist threat
Airline chiefs fear the era of ‘open skies’ and increased liberalisation of flying could be nearing an end. AirAsia group chief executive Tony Fernandes told
the Capa/ACTE summit: “The danger everywhere is nationalism. There are threats of protectionism. The temptation is to say ‘unfair competition’.” He claimed: “Airlines are probably the most-regulated industry – more so than the banks.” Fernandes added: “The Darth Vader of the airline industry are national carriers, many of which are owned by governments.” Qatar Airways chief executive Akbar Al Baker agreed on competition, saying: “There is a huge protectionist tendency, not only in the US but in many other
countries.” But he added: “I feel wise brains will prevail and there will be a liberalised regime.” Al Baker hit out at US carriers’ claims that leading
Gulf airlines have benefited from market-distorting subsidies, saying: “We are accused of help from the government, [but] what we are doing is what the carriers making the noise were doing 20 years ago.” However, Julie Oettinger, Delta Air Lines legal and
regulatory managing director, rejected Al Baker’s claim saying: “Open skies don’t automatically create an open market. There is a need for vigilance to ensure an open market exists. The US government is looking seriously at the massive subsidies the Gulf carriers enjoy.”
FLOATER: ‘Direct sales will bring opportunities for integration’
3 November 2016
travelweekly.co.uk 71
Travel distribution: Expert predicts era of massive change
Travel distribution “is entering a period of unprecedented change”, according to a report by the London School of Economics, commissioned by Amadeus. But report author Dr Graham
Floater told the Capa/ACTE summit: “Indirect sales are going to be a large part of the future.” Presenting the findings of the
report, ‘Travel Distribution: the end of the world as we know it’, Floater forecast “a period of great complexity and confusion”. He said: “How the industry
responds, and whether it responds collectively, will determine whether that period lasts a long or short time. At the moment, we don’t see anything that gives us confidence it will be short. “The direct sales of the larger carriers are likely to grow in the short term, but with more complexity you need more aggregation – so direct sales will bring opportunities for integration.” Referring to the likes of Google
and Facebook as “gatekeepers”, Floater said: “All players are going to have to respond to the rise of the gatekeepers. The gatekeepers are going to grow in power.”
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