Ticketing and Distribution in the Airline Industry - International - March 2009
This report reviews developments in the area of airline ticketing and distribution and provides an outlook for future trends. Air ticket distribution is carried out both directly by airlines via their websites, call centres or dedicated ticket sales offices and via third-party intermediaries – including global distribution systems (GDSs) and travel agents – both on- and offline. Most of the major legacy (traditional) airlines continue to sell the majority of their tickets via traditional intermediaries such as GDS, and, by and large, only the low-cost carriers (LCCs) have succeeded in distributing the greater part of their tickets via their proprietary websites.
As the trade association for the international air travel industry, the International Air Transport Association (IATA) plays an important role in the billing of transactions, the accreditation of travel agents worldwide and the implementation of e-ticketing.
While the scope of this report is international, it is not comprehensive and is limited to the scheduled services of airlines. As such, it does not attempt to cover the air charter and flight-only services of tour operators.
In 2007, the worldwide sale of air tickets reached an estimated US$275 billion.
E-ticketing became universal as of mid-year 2008, following a four-year campaign led by the IATA.
Premium tickets accounted for 7% of the total issued in 2007.
Major legacy carriers generally succeed in selling between 10-30% of their tickets via their own websites. Most tickets continue to be sold by traditional third-party channels (travel agents and GDSs).
Proprietary websites are by far the most important distribution channel for LCCs, accounting for between 70% and almost 100% of ticket sales.
While the legacy carriers are trying hard to boost the proportion of bookings on their own websites, most of the major LCCs (with the notable exception of Ryanair) have reached agreements with GDSs and online travel agents (OTAs) to distribute their flight tickets. This move is in a bid to capture a higher share of the managed business travel market, which still tends to book by traditional channels.
Frequent-flyer awards generally account for about 3-8% of airline passengers or revenue passenger kilometres (RPKs).
Third-party intermediaries, including GDSs and travel agents – both online and bricks and mortar – are finding air ticket distribution increasingly unprofitable, since the airlines pay little or no commission on transactions. For instance, only 15% of Expedia’s revenues are generated by selling air tickets.
There have been drastic cuts in airline capacity due to corporate policy, mergers and bankruptcies, which means that load factors are likely to hold up better than in prior downturns. This bodes ill for the merchant business of third-party intermediaries, since it implies a shrinking stock of ‘distressed’ inventory available from the airlines.
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