OTA’s play a vital role in helping airlines operate more profitably, the boss of European travel retail giant eDreams Odigeo told a UK trade audience this week.
Speaking at a Travel Weekly Business Breakfast eDreams chief executive Dana Dunne said the company helps airlines by advertising their product in its marketplace, thus bringing more customers to the table.
He said this means eDreams helps airline partners sell seats at higher prices, which boosts profits in a sector traditionally poor at providing long-term return on capital invested.
The Opodo parent is currently embroiled in a bitter legal dispute with Ryanair, which is taking action against both it and Google for the way it advertises the budget carrier’s fares.
Ryanair argues eDreams’ misleads customers into thinking they are booking direct and adds costs, whereas eDreams says it is giving customers more choice and a platform to shop for fares.
Dunne, a former business consultant who originally entered the travel industry as chief commercial officer at easyJet, would not comment directly on the Ryanair case, but said:
“Having worked in the airline industry, what you’ve got is a fixed asset – a £50 million aircraft. That’s the number one cost and it swamps any other cost in the business.
“In any fixed asset business, the more footfall you get the better your economics and your profitability are.
“At EasyJet we had an aircraft with, say 184 seats flying on a certain date at a certain time. So you are basically an auctioneer running an auction.
“So the more people you bring to that auction, the more likely you are going to increase profits. If you bring ten more to the auction, then you have to think one in ten are going to pay more for a seat.
“If I can bring more and more people earlier to that auction, I will sell out my cheapest seats much quicker, which means my yield curves will push up and I have more time to sell my more expensive seats.
“Trying to bring as much volume as possible is important in any fixed asset business.”
And on the Barcelona-based OTA, which Dunne described as foremost a technology company, and its partnership with Google – which has its own flights search product – he added:
“The world is not like the world of 20 or even 50 years ago, where things are black and white and if one company does anything in my space I won’t speak to you.
“That’s an old world mindset that you can’t take any more. You have to be clear that you may compete in certain areas and may collaborate in other areas.
“If you don’t get emotional about it and you just look at it rationally and say they have shareholders and a business interest – and if you were them, you’d do it as well – you can figure out where it is win-win and begin to trust each other.”
At the business breakfast Dunne also said eDreams had suffered “no material impact” since Lufthansa introduced GDS fees. But he highlighted a market shift.
“We saw a significant drop in our sales of Lufthansa and we saw a real increase in our sales of Lufthansa’s competitors. So it had no real material impact on our business,” he said.
Future gazing, he said the OTA had made a “really serious and significant investment” in its mobile offering, which he said was a “priority” and revealed that one third of eDreams’ bookings, globally, were now via mobile – higher than the 21% industry average.
In the UK, the ratio of mobile bookings is even higher, he added. “We prioritise mobile over any other platform,” he said.
Dunne said the “secret” to a well rated app – eDreams is rated 4.5 out of 5 stars for its flight app on Apple’s App Store – was “great design”.
“People just want to get from A to B,” he said, adding that eDreams invited 1,500 customers to its lab each month to test products.