This year's Travel Industry Survey revealed that preferred air suppliers are booked less frequently than any other sector of the travel industry. Moreover, the largest agencies used preferred air suppliers less often in 2018 than their smaller counterparts did. Travel advisors are also markedly less concerned about rising airfares than they were four years ago. Airlines editor Robert Silk talked with Brian Chapin, Ensemble Travel Group's senior director of airline supplier relations, about these findings.
Q: Are you surprised that airlines have the lowest percentage of sales through preferred suppliers of any sector of the travel industry?
A: There's a lot of competition among airlines. I find the numbers interesting, but there are a lot of airlines that are doing different things to try to attract customers away from another airline. I don't want to say I'm completely surprised or shocked. We still see a lot of loyalty among the clients of our member agents for our preferred airlines. But then again, there's always questions. There's a lot going on out there. Especially with airlines changing amenities, increasing amenities and changing their offerings.
Q: Any thoughts on why the biggest agencies are using preferred suppliers for air less often than the smaller agencies?
A: At least in the case of our member agents, the goal is to sell the preferred suppliers. But you ultimately have to do what the customer wants. So if the customer is asking for [an airline that] is not preferred, in the end you are going to have to do what the customer wishes.
Q: Turning to a different finding of the survey, the largest traditional agencies are three times more likely to receive overrides and corporate incentives from airlines than the smallest traditional agencies and six times more likely than the smallest home-based shops. Does the size of that gap surprise you?
A: Normally, you would think the larger agencies may have some sort of an agreement which would entitle them to an incentive or override, whereas smaller agencies may not. However, if either agency is a member of a consortium, they'd be able to avail themselves of that.
Q: Do you think there's a connection between airlines having the lowest percentage of preferred-supplier sales uptake in the travel industry and their policies related to commissions as well as overrides as incentives?
A: Unlike way back, when everybody got commission for selling an airline ticket, the model has changed. Not every agency is under agreement with an airline. Larger agencies may have their own agreements. And I think in many ways that's why certain consortia have an air program: so they can negotiate for their members and combine the buyer power of their membership to qualify them to be at a higher level.
Q: Only 26% of respondents said that rising airfare had a negative impact on business in 2018. That's down from 48% in 2014. But airfare data is difficult now because even if ticket prices don't rise much, ancillary prices might be going up, and the number of items sold as an ancillary is increasing. Do advisors think about this type of thing?
A: More and more, advisors are really looking at that for their clients and really helping to make an apples-to-apples comparison. And if you have status with an airline or your client has status with an airline, they may be able to reserve a seat at no charge; they may be able to check a bag or two or three at no charge. If they don't, then all things are on the table. You really need to weigh: Do I want to put them on this airline, and they'll need to pay for a seat and a bag? Or do I want to put them on this other airline where the seat and the bag may be included?