There are worse places to find yourself drinking an espresso than on a sunny terrace in the South of France in October. I was there to attend my first meeting with the UK and Ireland Customer Advisory Board (CAB). Each year Amadeus hosts the CAB visit to one of our main sites to provide an up close view of Amadeus’ development priorities and a peak “under the hood” of what’s coming out of the factory.
The Customer Advisory Board is designed to facilitate dialogue. It’s important that Amadeus understands the needs of customers in key markets like the UK and Ireland and it’s important that our customers are able to understand what’s next for Amadeus Research and Development.
Even before joining Amadeus I was impressed by the company’s track record in R&D investment, so it was useful to see what being ranked number 1 means in practical terms.
One discussion that I found illuminating was around airline ancillary services. Initially, a number of airlines didn’t see a value in opening up the sale of ancillaries to travel agencies. But more recently, with the 90% annual growth in the sale of ancillary services from online travel agents, the value in using this channel has been clearly demonstrated.
Monetisation versus customer value
But what surprised me is a reluctance among some travel agents to invest the necessary time and effort into selling ancillaries. I had assumed that travel companies would be interested in learning ‘how’ to sell ancillaries, but I found the conversation is still about ‘why’ sell ancillaries. When margins are tight, it is perfectly understandable that businesses need to focus on growing revenues. But I feel that there’s a big risk in doing nothing around ancillaries.
For example, recent research in traveller trends identified a specific segment as “Simplicity Searchers”. These people are a prime market for travel professionals in both business and leisure sectors. They want to outsource travel planning and booking to trusted third parties. The more relevant services and door to door solutions you can offer this group, the more they’re going to love you for it – and most importantly, keep coming back for more.
Redirecting customers to airline websites to book their own seats and meals undermines an agent’s value in providing a one-stop shop. Understanding the value equation – what customers want on the one hand and what the business is able to deliver on the other – is the formula for long-term success. Even if it isn’t possible to monetise every service component, if it creates customer ‘stickiness’ it has a value to the bottom line of the business because we all know that developing existing customers’ business is less costly than having to replace them with newly acquired ones.
Value creation isn’t unique to travel agents or TMCs. There are parallels with the GDS industry. In Amadeus’ case we’ve moved beyond pure distribution to develop technology that helps meet the need for a more personalised, joined-up, omni-channel sales and service experience. We see our value as developing the ultimate traveller experience, which is why we’re investing in building a new travel ecosystem.
The danger in purely focusing on monetising the sale of ancillaries is the risk of missing the bigger picture. Eroding the value an agent offers customers who want choice and transparency only plays into the hands of those whose agenda is to create a disintermediated selling environment.
For our part we’re championing the opportunity that selling ancillaries through travel intermediaries offers the airline industry. And we’re developing technology for agents that seamlessly integrates the process into existing workflows so it can be done faster and more efficiently than ever before.