Airlines and the GDS incentive

By Johanna Jainchill
Johanna JainchillA recent PhoCusWright study raised the question of whether airlines have any incentive at all to put their ancillary products into the GDS if travel agents already are booking them for clients outside of the GDS.

The study did not attempt to answer that question, but it did assert that most agents book some airline ancillary services, despite the fact that they are predominantly inaccessible via the GDS and despite earning no commission on them.

The study also suggested that those agents might make it easier for airlines to continue to bypass the GDSs by booking directly through the airline sites.

The study, "Travel Agents and Ancillaries: The Game Is On," found that nine in 10 corporate agents and more than 70% of leisure retail agents have booked air ancillaries over the past year.

"Agents' willingness to book without compensation implies that the demand for handling ancillaries as part of the flight reservation is customer-driven," the report said. "Booking air add-ons is a part of the travel agents' drive to differentiate their business through customer service and maybe add a fee or justify standard fees for booking flights."

The report also said that agents' willingness to book these services even when they are not in the GDSs weakens the argument that airlines should make such services available via the GDSs to grow agency sales of ancillaries.

American Airlines, for one, was "encouraged to hear that some agencies are willing to source attractive content" outside of the GDSs, according to an American official commenting on the study's results.

What's a GDS subscriber to do? In the Internet age, an agent's real raison d'etre is to provide customer service. An agent is not likely to sacrifice that cornerstone of his or her business to make a point to the airlines.

Airlines, meanwhile, should note that other studies have found that agents would be more likely to book ancillaries if they were in the GDSs.

In PhoCusWright's study, it said that because it did not look at the incidence of bookings, it was difficult to know whether agents would book more ancillaries if they could access them via the GDSs. But it acknowledged the other studies -- even if their source might seem a bit biased.

Travelport, for example, in February published the results of a survey that asked agents why they didn't offer ancillary airline products. In the Americas, the most common reason was that most services are not available for agency booking (33%). In Europe, the most common answer was that it generated no additional revenue (41%).

Eighty-four percent of respondents said it would be a considerable benefit to sell ancillary services through the GDSs, with time savings and improved service as the top two reasons cited.

The survey, based on answers from 610 Travelport GDS users in 12 countries, found that in the Americas, 30% of agents said they sold ancillary services to some clients and referred others to the airlines to do it themselves, while 19% said they provided the service to all customers and 23% said they provided it to some customers.

In Asia, Europe and the Middle East, agents were more likely to book the services for their clients all the time.

At the World Travel & Tourism Council Global Summit in Tokyo this month, Travelport CEO Gordon Wilson told me he was not convinced that agents book a huge amount of ancillaries directly and that simple logic dictated they would book them more if they were in the GDSs.

"The easier you make something to book, the more likely that it will be booked," he said. "It's rather like the reason you put all your fares in the GDS when not every fare in there gets booked. ... You put it on the shelf so it's available."

Wilson said a lot of agents were telling their customers to book ancillaries themselves and that the airlines would make more money if it were something that agents could do more easily for their clients.

"If it makes it easier, why wouldn't [the airlines do it]?" he said. "If an airline can earn $25 more, why wouldn't they?"

Tom Klein, president of Sabre Holdings, made similar arguments when I spoke with him at the Tokyo summit.

"One of great values that airlines get out of comparison shopping is that consumers are confident, and therefore they buy," Klein said. "If you make them question whether they have good information, they are less likely to buy. That's true of any marketplace, from the medieval to electronic."

Johanna Jainchill is Travel Weekly's editor at large, focusing on retail and distribution. Contact her at jjainchill@travelweekly.com and follow her on Twitter @JJainchillTW. 
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