Wednesday, September 26, 2012

Now, lets look at the balance of the 13,000+ agencies in the agency community (non-MEGAs). The story




Today's consumer can access goods or information on the Internet that traditionally required the assistance of an intermediary such as a retailer, travel agent, or banker. By cutting out the middleman ( disintermediation ), e-businesses are able to sell goods and services more quickly and efficiently, and for lower prices.
If we look at this hotly debated topic in the travel industry from the consumer perspective, we can come to one set of conclusions and if we put on our supplier hat, we come up with an entirely different answer.
Let's look carefully at the latest Airlines Reporting Corporation numbers. ARC reports tickets car rentals jackson california sold by the travel agency community, including Mega Agencies (TMCs), Online Agencies (OTAs) and all other agencies.
In the first quarter of 2012, 25% of all domestic airline tickets car rentals jackson california sold by the agency community and 28% of all revenues from the sale of domestic airline tickets by agencies were attributable to the top MEGA agencies (Amex, CWT, BCD, HRG, Maritz, Omega and SATO). The average ticket price (based on fares versus taxes/fees) was $395.76. This is $84.50 and 27% higher than the average online ticket. The assumption here is that the average online ticket price is very similar for OTAs and for airline/supplier direct. This can be demonstrated easily by searching on any of the metasearch tools, such as Kayak.
Now, lets look at the balance of the 13,000+ agencies in the agency community (non-MEGAs). The story is actually not so different. The average ticket price is $393.58, which is $82.32 higher than the average online ticket, or 26% more than an airline gets when selling through their own site (or via an OTA). These agencies issue 34% of all domestic tickets sold by agencies in the US and produce 37% of all revenues from the sale of domestic airline tickets sold by agencies.
From the consumer perspective, it is important to understand that the airline car rentals jackson california ticket does not COST more through the agency channel. It is that the dialogue is simply different. Online typically presents the lowest car rentals jackson california cost first, even if price is not the consumer's criteria. An agency asks lots of questions - who are you traveling with, when do you need to be there, do you want a non-stop. Each of these helps refine car rentals jackson california the process to produce what the customer actually wants for a given trip.
For international, a much smaller percentage of transactions (13%) sold by the agency community comes through the MEGA channel, but the average fare is more than twice that yielded by their brick and mortar agency counterparts and three times that of their online counterparts.
The story here is that the MEGA agencies are by and large handling a more complex itinerary and these large TMCs sell more first and business class travel internationally than their brick and mortar counterparts. The online international transaction is a simpler one and more focused on finding great deals, which may in fact drive the destination choice.
There should be no doubt in the minds of an airline executive car rentals jackson california that selling a ticket that is $1,020.39 higher than the average online transaction through a MEGA agency is a good thing and even an international ticket that yields on average $262.31 more than an online transaction is also good. Both amounts are more than sufficient to cover a commission and a GDS booking fee AND still produce a higher profit than online.
It is clear from all these statistics that consumers will still advocate for disintermediation and the right to choose and that there is a time and a place for booking online or supplier direct and a time to put yourself car rentals jackson california in the hands of a professional to guide you through your options.

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