Posted on: March 10, 2014
As of last week Delta Airlines and Azamara Club Cruises have something in common, and our first impression is that it's something we'd like to see more of.
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What is it? For lack of a better word, we could call it value recognition.
Azamara late last year rolled out a program with the Virtuoso consortium to pay overrides based not on traditional measures of "volume," but on the value of the business, factoring in the room category, length of cruise, how far in advance it was booked, etc.
Delta has now done something similar with its frequent flyer program, awarding miles not merely on the distance flown but on the value of the business, based on factors such as the fare level and passenger's elite mileage status.
Both of these initiatives implicitly repudiate the idea that miles or cruise days are commodities. Clearly, if a mile in business class is not the same as a mile in seat 38B (and it isn't), then it's appropriate for Delta's loyalty program to recognize that fact.
Likewise, it's commendable for Azamara to acknowledge the same about a seven-day cruise in a balcony suite, booked far in advance by a cruiser with a propensity for onboard spending.
Which brings us to the topic of today's cover story, the explosive growth in onboard spending by cruise passengers, at a time when ticket prices (and agency compensation) are barely rising. The report notes that if onboard revenue were commissionable at 15%, the 2013 onboard sales reported by the Big Three would be worth about $1 billion to agents. Instead, they get nothing.
We think it's time for the needle to move off of that zero.
If agents are delivering that much value to the cruise lines, then the best minds of the industry ought to be able to figure out an appropriate way of recognizing that contribution without sending their shareholders into a panic.