Travel Weekly's Travel Industry Survey 2017

Air fare

It seems as though airline bookings have plateaued: In this year's survey, air bookings as a percent of total revenue increased to their 2012 level of 19%, still a long way from the 36% in 2003 but up from 17% last year. Contributing editor Sarah Feldberg talked to Shreyas Nanavati, deputy CEO of AirlinePros, an airline representation and distribution firm that helps airlines from around the world enter the U.S. market, about what might be causing the shift. 

Q: Are airlines making it worth agents' while to book air?

A: Air is the first component of getting from point A to point B for whatever the individual is trying to accomplish. So if you are going to be an agent who can provide head-to-tail service, air is part of that equation.  Are the airlines making it worth an agent's while? Think about it another way: You've got more capacity of airlines flying here, you've got fewer travelers from abroad flying to the U.S., you've got a lot of Americans with a strong dollar and [benefitting from] a strong economy looking to fly out. So airlines do need to work with travel agents to get some of their share, because they need American travel agents to fill up their planes. The majority of [our airline partners] offer a standard commission. Many more are willing to do private programs with those that produce. Especially with foreign carriers, because they're not the dominating force in the States and they're looking at generating traffic they need to fill up their planes.

Q: How are agents making money off air?

A: A standard commission is still offered by many ARC-participating carriers, including more than half of the 50-plus ARC-participating airlines we represent in the States. But airlines do other programs, as well. There might be enhanced commissions privately to those that produce. There might be private fares filed to certain agents that allow them to mark up as much or as little as their end client will pay.

Q: According to our data, the largest traditional agencies make 33% of their gross revenue from air bookings, but that number drops considerably for smaller agencies or home-based agents. Why is that?

A: If you [are] an individual agent or a smaller agent, you might not necessarily be pulling your air from your own GDS or your own ARC accreditation. You could be using a host agency or a consolidator, and you might be finding other channels that are able to aggregate volume and get a better deal on air than you as an individual are able to. Through technology and other means, people are able to shop around and book that same price ticket, but get a little bit more money booking it elsewhere than booking it through their own GDS.

Shreyas Nanavati
Shreyas Nanavati

Q: Do you see revenue from air continuing to hold steady? Will it grow?

A: At some point, even an airline that currently only has a single point of sale, their website, over time as pressures build up in their market to grow, they're going to look for other sources of revenue. That's where the whole idea of a hybrid carrier comes in. As an airline does that, they'll be looking to the travel agent community more and more to fill in the gap. That, to me, is really the future model. To use a really bad example, if the greatest rock band of every generation put on a concert, they could still sell out today. But it's very rare for a band to be a Rolling Stones or a Bon Jovi, like it's rare for an airline to be a Southwest or a Ryanair. It costs millions of dollars to maintain that model. So that's why you have summer concerts where Poison, Warrant and Winger play together. 


JDS Travel News JDS Viewpoints JDS Africa/MI