Airlines and OTAs have long used portions of hotel and car-rental commissions to offer bundled discounts for booking a flight in combination with those services. Now at least one airline is looking to make revenue from those commissions a fundamental part of its fare pricing and marketing
Skuli Mogensen, founder and CEO of the upstart Icelandic ultralow-cost carrier Wow, said he's experimenting with a new way to harness technology in which air-ticket buyers will transparently see the cost of their flight go down as they purchase other services through the Wow website.
In addition, Mogensen said, Wow plans to begin paying people for postings on social media that lead to purchases at the airline.
"If you are spending enough money on other services on Wowair.com
, or if you are really active on social media so you are making money for Wow Air, I think you can end up getting paid to travel," he said in a phone interview with Travel Weekly.
Mogensen isn't certain when Wow will go live with the innovations but said it is already experimenting on both fronts.
His concept related to flight discounts is a simple one: Consumers would select plane tickets at the price they find on Wowair.com
. Then, as they are looking at options for hotels and car rentals, they would learn how much less the plane ticket would be with each potential selection. Wow would accomplish this discount by directly applying a portion of the commission it receives on a hotel, car or other travel-related booking to the ticket price.
For example, if someone reserved a hotel room for a week at a cost of $1,500, and Wow received $150 on that booking, the airline would reduce the plane ticket by a portion of that commission. For an airline that is offering introductory one-way tickets from Miami to Reykjavik, Iceland, for $199 this spring, even $75 can make a big dent in the cost of an international flight.
Mogensen said he believes airlines are perfectly placed to offer such a service, since travelers often begin their planning by buying their plane tickets. Further, he added, plane tickets are becoming an ever-smaller portion of the cost of most trips, as their prices go down while hotel prices go up.
"The airline is more and more becoming the total travel agent, if you like," he said.
Remarks like that aren't likely to please actual travel agents. But so far, Wow tickets aren't available through GDSs for U.S. travel agents in any case.
Henry Harteveldt, founder of the travel industry research firm Atmosphere Research Group, said that Mogensen's model might make some agents unhappy, but he praised the idea as "creative and clever."
"I think it's a smart way of approaching it," Harteveldt said. "I'm surprised that no other airline thought about doing something like this first."
He added that he would not be surprised if other carriers imitate the concept.
On the social media front, Mogensen intends to begin paying what he called a "kickback," perhaps of 5%, to those whose postings are responsible for Wow ticket sales.
For example, he said, a Twitter user might post about a Wow flight using the #Wow_air hashtag. Wow would then track other users as they click the hashtag link and move into the ticket-buying process. Similar procedures would be used to pay for successful postings on other social-media outlets.
Mogensen equated the payouts he is proposing to fees that his and other airlines pay for sales in other outside channels, including through OTAs and travel agents.
"We can enable our passengers to become our channel," he said.
He also compared individuals with a far-reaching social media presence to bloggers and traditional media outlets, which are sometimes provided free services by airlines due to their influence in reaching markets.
Like Harteveldt, Bob Offutt, senior technology analyst for Phocuswright, is bullish on Mogensen's concepts.
"The travel industry has really been slow to embrace social media," Offutt said. "It's about time they started to understand how they could leverage social media to sell tickets."
He added that it is easier for a new carrier like Wow, which launched in 2012, to innovate than it is for older carriers whose display offerings are constrained in some ways by legacy GDSs.