Airlines expect most ancillary sales to come direct, Sita summit told

Airlines expect the vast majority of ancillary-sales revenue to continue to come direct rather than through agents and online retailers despite airline association Iata’s push to develop a New Distribution Capability (NDC).

Iata has argued the need to expand ancillary sales beyond airlines’ own websites lies at the heart of NDC.

However, the Sita aviation technology summit in Brussels heard that travel agents still sell 60% of global airline seats, and the annual Sita IT Trends survey forecast 89% of ancillary sales would be direct in 2016.

Sita market insight senior manager Thomas Knierim said: “Ancillary revenue is increasingly important. It could be 20%-25% of total revenue for some airlines. But most comes through the direct channel.

“Iata’s NDC aims to close the gap. If it succeeds it could unlock significant revenue potential.”

Knierim said direct sales continue to come overwhelmingly through websites, with only 3% made by mobile or tablet.

There is also little sign of ancillary sales growth through mobile to date. However, Knierim said: “Everyone expects an explosion in mobile sales.

“Mobile allows an airline to present relevant offers at the time a passenger is most likely to buy … for example by offering last-minute priority boarding.”

However, he said: “A significant ramping up of functionality on phones is needed if mobile ancillary sales are to increase.”

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