ARC Sees ‘Fairly Strong Environment’ For Travel Agencies In 2017
by Michele McDonald /Photo: InSapphoWeTrust
Despite some uncertainties both at home and abroad, U.S. travel agencies are heading into a “fairly strong environment” in 2017, says Chuck Thackston, the Airline Reporting Corp.’s managing director of enterprise information.
While total airline ticket sales processed by ARC are down slightly year over year, this is a result of the overall trend of lower average ticket prices in most markets, he told TMR. “As ticket prices have trended downward, travel becomes a better value. Supply and demand factors will result in more transactions at a lower per-ticket price.”
A particularly good sign is the increase in transactions at the mega agencies that serve the corporate market now that the presidential election is over.
On the eve of the election, Michael McCormick, executive director and chief operating officer of the Global Business Travel Association, said, “The ongoing global uncertainty and added heartburn from a presidential election unlike any we have ever seen are causing many businesses to stay in a holding pattern, taking an extremely cautious wait-and-see approach bordering on paranoia.”
But now, Thackston said, the travel market is loosening up and returning to something resembling “normal.” Overall consumer confidence is on the rise, he said, and “we’re seeing that businesses have increased confidence, too.”
The dollar value of November sales was up 7.54%. The only other month of 2016 that showed an increase in total sales was August, when they increased 1.83%.
Although agents are still a largely untapped channel when it comes to sales of airline ancillary products and services, the numbers “continue to show healthy increases,” Thackston said, especially in paid seats and hotel room.
“Airlines are recognizing the value of agents, and the trends are up in both sales and transactions” of ancillary products, he said.
Some of the other trends Thackston believes will have an impact in 2017 are:
- Airlines have been gradually ramping up capacity with more seats in newer planes and additional flights in some cases. This increase in supply will lead to positive trends in the industry.
- Fuel prices continue to remain at relatively steady levels. This has allowed some airlines to adjust prices to reflect their lower overall total costs.
- The strong U.S. dollar has made the total cost of international travel more economical for more travelers, and this has stimulated demand for outbound U.S. travel.
