Sabre’s Klein Predicts Agents Will Deliver Growth Of Airline Ancillary Revenue

The next avenue of growth for airlines’ ancillary revenue will be the travel agency channel, according to Tom Klein, president and chief executive officer of Sabre Corp.

“Ancillary revenue has been the greatest source of revenue growth for airlines over the last several years, driving approximately $50 billion or so of industry revenue last year,” Klein said.

But, he added, the lion’s share of that revenue has been driven through the direct channel, and the airlines are looking for new opportunities.

“We expect the next spate of growth will be driven through the GDS,” he said. “Our technology is ready, and we believe the commercial willingness is there.” In fact, he said, all of the North American major airlines that offer paid seats are committed to distributing them via Sabre.

“These airlines recognize that meaningful revenue can be generated through our network of travel agencies,” he said.

Klein, who spoke during Sabre’s second-quarter earnings call, took the opportunity to tout the new Sabre Red platform, which offers new merchandising capabilities and builds “on our industry-leading hotel room night volumes through the GDS.”

During the second quarter, Sabre Travel Network revenue increased 20.9%, to $597.9 million.

Total bookings increased 23.9%, due largely to the now wholly owned Asia-Pacific region and incremental growth in all other regions. Excluding the impact of the Abacus International acquisition, bookings increased 1.7% in the quarter, with 1.3% growth in North America, 3.2% growth in EMEA and 1.5% growth in long-languishing Latin America, which Klein said was “very exciting.”

During the quarter Sabre renewed its two biggest customers, Expedia and American Express, as well as BCD Travel and Flight Centre, “so it really was a big chunk of activity,” Klein said.

But Sabre lost a small bit of share in the quarter, from 36.8% to 36.7%, although its year-over-year share was “nearly a full point higher” for the first half of the year. 

Sabre reported net income of $72.02 million for the second quarter, on total revenues of $845.24 million.