Amadeus: Agency Airline Sales Outpacing Direct Sales
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Amadeus is seeing a trend toward “re-intermediation,” according to chief executive officer David Jones.
Jones said that the growth of airline bookings through the Amadeus GDS — in other words, air bookings made by travel agencies — is outpacing the growth of airline traffic.
GDS bookings grew 9.6% in the first quarter of this year, he said, and, during the same period, airline traffic grew by 8.6%. For GDS bookings, the highest growth rates were in central and southern Europe, with North America also showing “a strong recovery.” For airline traffic, the highest growth rates were in the Middle East and Africa and the Asia-Pacific region; Europe and Latin America showed more modest growth.
ARC, which processes transactions by travel agencies in the US, found that total transactions were up 10.96% for the first quarter. ARC data also show that transactions at traditional agencies in the last couple of months have grown faster than those at online agencies.
The earliest data issued by the Transportation Department’s Bureau of Transportation Statistics, which tracks U.S. airline traffic figures, is for February, when traffic dropped slightly from the year before. In the same month, on the other hand, ARC figures showed that total transactions were up 9.16%.
The comparisons are not apples-to-apples because booked segments, ARC transactions and airline traffic don’t make for precise mathematical comparisons. Nevertheless, they indicate a general trend: Business handled by travel agencies is indeed growing at a faster pace than airline traffic.
“Disintermediation,” which means cutting out the middleman, was the airlines’ watchword for more than a decade. The airlines worked hard to attract travelers to their Web sites, saying it was their lowest-cost distribution channel, largely because they avoided GDS segment fees and, since 2002, base travel agency commissions.
The airlines have gotten some argument from GDS companies on that score. Traditionally, GDS companies have said that airlines were not taking into account the full range of costs associated with their Web sites, including the hits on their own systems, maintenance, marketing and other issues.
They have also noted that GDSs do more than process transactions: When an airline launches in a new market, the GDS makes the carrier’s presence known to travel agents in that market. GDS companies repeatedly have pointed out that is particularly valuable to airlines entering a new international market, where the carrier may have little-to-no brand recognition.
Airlines have succeeded in attracting healthy numbers of leisure travelers to their Web sites, many of whom still equate “online” with “cheaper fares.” However, the airlines have not made serious inroads into the higher-yield corporate managed-travel market. That remains the province of corporate travel management companies that perform many pre- and post-trip services that airlines are not equipped to handle.
It is not clear what is causing the “re-intermediation” trend or whether it will continue, but it certainly defies the many predictions over the years that “the traditional travel agency is dead.”
