Merchandising for travel agencies: Opportunity in all shapes and sizes
With air content being at the heart of your travel agency business, understanding and responding to current changes is paramount in order to maintain a strong competitive stance and enhance customer service.
A new era of competition
Despite huge growth in the number of travellers carried, airlines are struggling to turn demand into profits. With high fuel prices, growing competition from low-cost carriers and a decrease in premium traffic, airlines have been forced to keep a tight control on costs, whilst trying to maintain and grow their revenue per passenger. With the business of flying under extreme pressure, airlines have invested in additional services to drive revenues. To respond to these challenges, airlines are now implementing new merchandising strategies to compensate for lost revenues. They are evolving their offer and heavily relying on ancillary revenues to remain profitable. These additional services now contribute an estimated €10 per passenger globally*, and the shift from providing only a core seat to providing a variety of travel services will continue to increase.
The introduction of all these options has added greater complexity to the air offering. The cost and time involved in booking these services really places pressure on your travel agency as airlines look to maintain their competitive edge. Especially with airlines opting to distribute this content through the direct channel first, places a great burden on you as travel agent to offer the same service to your customers.
However, these introductions also represent an opportunity for you to strengthen your role as travel agent as travellers need your help and guidance to make the right decisions. According to a corporations study performed by Amadeus Scandinavia in June 2014, 33% of business travellers in corporations with travel policy said that Ancillary Services are important*.
Therefore, by offering choice and flexibility in air content, through a combination of travel services designed around your customer’ needs, you can really demonstrate your true value.
Enhancing passenger experience
Introduction of both ancillary services and fare families has been pivotal in the development of airlines merchandising strategy – a change that is impacting the whole of travel industry.
But what is Merchandising? Simply put, it is about providing the right product and service to the traveller, delivered through the right channels, and at the right time, in a way that is visually appealing and easy to understand.
Ancillary services are à la carte services that used to be included the fare, such as check-in baggage, or new value added services, such as more comfortable seats, special meals or inflight Wi-Fi service, or other services which improve the passenger’s travel experience.
Fare families are bundles of fares that share the same conditions, for example, refundable or exchangeable, and include the same services and options, for example, luggage, meals or mileage accrual. With fare families, the traveller can easily compare prices and see the services included in each of them.
The merchandising opportunity
Retailers, as well as airlines, have developed sophisticated merchandising techniques to better serve their customers.
According to IATA, 60% of global airline revenues come through the travel agent channel. Therefore, all stakeholders – airlines, agents and their travel technology partners – can work together to optimise revenues and we are certainly committed to foster this collaboration.
Interested to learn more about merchandising? Read more in the article “Merchandising from a different perspective – Win-win-wins”
Source: Corporations study, Amadeus Scandinavia, June 2014. The study is based on a quantitative analysis of totally 1172 decision makers and business travellers in Scandinavian corporations.