A rush by airlines to offer accommodation and car hire will bring limited revenue and carriers would do better to focus on flight-related sales, according to a senior Amadeus executive.
Amadeus group vice-president Gillian Gibson told the Travolution Summit there was little future for carriers in acting as tour operators or travel agents. “The revenue from third-party sales seems significant, but with hotels or care hire it is only the commission going to the carrier’s bottom line,” she said.
Gibson quoted figures released by Iberia subsidiary Clickair revealing third-party sales – such as travel insurance, car hire and accommodation – comprise just 18% of ancillary revenue, the rest being flight related.
Flight-related charges on low-cost carriers increasingly extend from charging for onboard drinks and snacks to fees for baggage and airport check in – a model now being picked up by former full-service airlines, particularly in the US. At the same time, all carriers are extending their offer of third-party services such as accommodation and car rental.
However, Gibson questioned how easy it would be for airlines to increase sales of hotel and car-hire given a tendency among consumers – other than package holidaymakers – to book the various components of a trip at different times.
Amadeus research suggests people book a flight on average 44 days ahead of travel, a hotel about two days later and hire a car about 19 days before departure.
Gibson also reported an Amadeus survey of 2,000 air travellers, suggesting 85% dislike flight-related fees although more than half accept the reasoning for the charges.
Lufthansa UK general manager Marianne Sammann said: “Airlines are not travel agents but will increasingly look at dynamic-packaging solutions. However, some airlines are charging for services as ancillary that are really essential.”