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Posted Feb 25, 2010
Ancillary fees have become the Susan Boyle of the travel industry. That’s right, they aren’t sexy, but people still love to talk about them. Plus, nobody agrees on the magnitude of these things, and how could they, when tracking them is such a daunting task. For example: The Beat reported that TRX found that "ancillary airline fees account for between 0.75% and 1.5% of the total air spend."
Posted Feb 4, 2010
No more pithy intros or recaps of the last article; it's time to get right into it. Here we go: The search for truths and myths about airline merchandising. For some, the reality of developing, implementing, and distributing an effective airline merchandising product is way too complex to even imagine. This is a myth.
At a macro level, there are really only two major challenges that need to be overcome in order for merchandising to flourish. There needs to be a solid value proposition to motivate buying behavior, and there needs to be operational and technical process to allow the transaction to take place. This is a truth.
Posted Jan 21, 2010
Last week, I introduced a blog series on merchandising. The first installment focused on the fact that there is a wide range of opinions and emotions across the travel industry regarding this new phenomenon called merchandising. I also pointed out that there is a fair amount of misinformation and misunderstanding on the topic, and this often inhibits effective discussion and debate. So, in the hopes of leading to more fruitful and informed discussions for all of us, this second installment is a short primer on merchandising lingo. The intent here is to give us all a baseline understanding about this powerful movement that is unfolding in our industry.
Posted Jan 13, 2010
There, we said it! The question everyone always has but seldom asks in public--what's in it for me?--is now out in the open, so we can talk about it more freely. We can finally begin to have some much-needed, intelligent conversation and debate about airline merchandising, without hiding behind fear, apprehension, or lack of understanding. We can begin to address questions such as these: What is it, really? In what shape and form will this new industry beast show itself? What are the technological, commercial, and adoption implications? Why is it so scary? And yes, we can even address the big question: What's in it for me?
Posted Nov 19, 2009
The airlines' continuing strategy to unbundle products and pricing remains troublesome for corporate travel managers keen to measure total trip costs. According to a recent survey conducted by the Association of Corporate Travel Executives, just 20 percent of 297 corporate buyers said their organizations track total trip expenditures "very well." When asked if they tabulate total trip cost for top destinations, more than three quarters of respondents said "no." Yet more than 40 percent said "unmanaged ancillary fees" of all flavors represent between 5 percent and 15 percent of their organizations' total T&E costs. Another 27 percent said such fees represent even more of the total.
Posted Jun 9, 2009
Since I retired from my previous role (Sabre Travel Network president) in early 2008, I've watched with interest as "merchandizing" has become quite the buzz phrase in the travel space. In some ways, it seems it's the new slang term for airline "pay for seats" and other things that you might consider as ancillary sales items for a reservation.
This subject has been viewed as a "savior" for airlines in search of new revenues or much needed brand differentiation ... and viewed by some "industry experts" as the Achilles' heel of the global distribution systems that are often painted as not being able to accommodate "merchandizing."
Posted Feb 26, 2009
RECAP: Sabre Travel Network claims nearly 100 participants in its authorized developer program, which requires fees for certain services. The program recently lost a member when Sabre expelled Farelogix for "actively encouraging fragmentation." American Airlines wants Sabre to play nice because AA said Farelogix is "developing" merchandizing technology for diversified airfares and ancillary products. Pioneered by the likes of Air Canada and Ryanair, such unbundled pricing is found on an increasing number of airline Web sites. Sabre, too, is working to enable such functions in its agency interfaces and thus far has activated a limited set of fare flavors with a short list of airlines. That list as of this week includes United Airlines, which is offering the extra-legroom Economy Plus seats to users of Sabre's MySabre and Turbo Sabre interfaces. In the midst of all this, a column by the head of a third-party developer that works with Farelogix raised ire in the GDS community. Travelport responded last week with a piece in The Beat and here's a comment from Amadeus ...
Posted Jan 6, 2009
Re: GDS Execs Agree: Need Standards on Fees
It was refreshing to hear such candid talk from top executives of the three largest global distribution systems, and we couldn't agree more with the statement, "The industry needs technical standards for booking and processing the airlines' unbundled, a la carte, ancillary fees."
Posted Mar 12, 2008
The airline industry's move toward unbundling pricing (like Air Canada's strategy) and instituting new fees for certain services (as United and US Airways have done for checked baggage) has only just begun, according to Bear, Stearns & Co.'s Frank Boroch, speaking at yesterday's NBTA Financial Forum in New York.
Posted Feb 29, 2008
We checked in with Air Canada and ITA Software on the progress of their new airline reservation system, which Air Canada calls Polaris.
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