Published 14 January 2019

by Madeleine Kvarnhem
Expert in helping business travel agencies to create customer value

Are you claiming your share of the ancillary revenues?

Ancillary services are a great way for airlines to stay close to travelers and earn additional revenue. Let me tell you why it’s now time for the business travel agencies to step up their game. Let’s face it, if travel agencies are not offering ancillaries to the traveler, why shouldn’t they book directly via the airline?

It’s no secret that the airlines – especially the low cost carriers (LCCs) – have been super successful at pushing for ancillary sales, making it an important source of revenue for them.

Other airlines such as SAS have focused on driving traffic to their apps to personalize their customers’ experience and build brand loyalty. It’s now a fact, up to 40% of the airlines’ revenues come from ancillary services*.

Don’t miss out on the post-sales opportunity

Then, we come to a big black cloud – the passengers who have booked a flight via a business travel agency (BTA). Most airlines are so good at selling ancillary services that they often step in and take around 29% of the seat sales and 36% of the baggage sales directly from these BTA passengers**. It seems like many BTA passengers prefer to book these extras directly with the airline rather than through the BTA. If we take bags for instance, the sales peaks close to departure – and the airlines get the majority of these bookings.

What does this mean? To be blunt, it means that the BTA’s need to be more proactive in selling ancillary services, both at the time of booking, but also after. If they see that the passenger has not booked luggage, why sit around waiting for the traveler to contact them to add a bag? The chances are higher that the passenger will go directly to the airline to buy this ancillary service.

It’s all about being relevant to the traveler…

Selling ancillary services is a huge opportunity for the BTA to stay relevant to their business travelers. Not just during the booking process – but also post-booking, and during the trip.

With NDC, the need for relevancy will increase even more.

So the question is: if the travel agency is not offering ancillary services both at the time of booking and up until departure, why shouldn’t the traveler go directly to the airline?

…and being relevant to the airline

Selling ancillary services is also about showing that the BTA remains relevant to airlines in their growing retailing approach. If the BTAs are not selling what airlines want to sell, they will fall behind. It is really key to show what an important sales channel they are for the airlines; to establish an even better relationship (not least useful when it comes to negotiating better conditions!)

So, are you ready to claim your share of the ancillary revenues?


*) The 2017 CarTrawler Yearbook of Ancillary Revenue

**) Amadeus booking data, May 2018

 

About the author

Madeleine KvarnhemMadeleine Kvarnhem joined Amadeus in 2005. In her current position as Regional Portfolio Manager for the BTA segment she acts as the bridge between our commercial and product portfolio teams. Actively involved with our business customers in Scandinavia and beyond, part of her job is to spot customer needs and share these insights within Amadeus. When not working, she enjoys excercising and spending time with her family either in the Stockholm archipelago or at her holiday home in Croatia.

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