Airlines push for direct sales amid weak market

As travel agents take up much of airlines' sales revenue, a new ticketing standard is proposed

PUBLISHED : Tuesday, 26 February, 2013, 12:00am
UPDATED : Tuesday, 26 February, 2013, 5:22am

The airline trade body is pushing for a new ticketing standard to promote more direct sales online and enable customised ticket sales.

Airlines are estimated to have this year earned net profit of US$8.4 billion for a margin as thin as 1.3 per cent, a typical year in a highly volatile industry.

Meanwhile, they had to pay about 15 per cent of their ticket sales to global distribution systems (GDSs) and travel agencies, a transport analyst said.

"In every market, airlines are paying a lot to GDSs and it's not a secret that airlines are not happy about it," said Tony Tyler, the director general and chief executive of the International Air Transport Association, which has 240 airline members.

Airlines were keen to see a new initiative to let them sell tickets in their own way, Tyler said.

"But it is not our intention to cut out GDSs," he said, adding that travel agents and GDSs played some roles that could not be replaced.

The new distribution capability proposed by Iata is to align the booking interfaces of airlines with that of the travel agents so as to provide more transparent information to the travelling public when they make the purchase.

The bread and butter of what Iata does is setting global standards for the industry and enabling air travellers to compare fares and see how the entire travel offer measures up, Tyler said.

But the new programme has inevitably generated some friction with GDSs. Amadeus, one of the largest GDSs, is sceptical about the airlines' proposed system.

About two-thirds of the tickets in full-service carriers are sold through travel agents, while budget carriers sell 80 to 90 per cent of their tickets directly from their websites.

Carriers in Asia-Pacific face a challenging time due to the softness in the air cargo market.

With 40 per cent of global air cargo destined for or originated from Asia, Asian carriers are exposed more to the air cargo market than their international rivals. Asian airlines' earnings fell to US$3 billion last year from US$5.4 billion in 2011 and US$11.4 billion in 2010.

Iata expects some recovery in the cargo market this year, with the overall market remaining challenging.