A whopping 60% of Airline tickets are sold through indirect channels. With GDS charging anywhere between $10 to $22 per round trip ticket booking, world’s carriers paid about $7 billion in GDS in 2012 alone but the net profit that year was only $3 billion. This is clearly reflected by the survey published by IATA, GDS fees are a major point of concern for airlines:
Distribution Business Issues Frustate Airline Executives More Than Technology
“Thinking about third-party distribution, how much of a concern are the following”
A lot is already being done by some airlines to overcome this high cost of distribution. From LCC’s refraining to sell on external online channels to Lufthansa’s recent decision to add surcharge to all external booking.
The Future: while some tactical steps have been taken in this direction, a crucial component which is still missing in the plan is to tap on the consumer behaviour and habits. A potential buyer visits 4-6 websites to compare rates before booking an air ticket including the brand site. There is a huge opportunity that lies in this area since on an average 80% of the visitors to the brand site don’t convert from lookers to bookers!
To know more, visit RateGain at the Aviation Festival 2015 on 15 – 16 September at Booth #5
Source: Tnooz, Phocuswright, Economist, EyeforTravel