Asia Pacific airlines are not often placed behind their European or Middle Eastern counterparts, but it seems airline merchandising may be the rare exception. Amadeus has revealed that while more than 50% of European and Middle Eastern carrier bookings through the Amadeus system were already eligible to include ancillaries and fare family content in 2015, that figure was just 33% for Asia Pacific airlines.
That lead may soon disappear however, with Asia Pacific airlines rapidly picking up the pace on merchandising. The percentage of Asia Pacific airline bookings in the travel agency channel that can include ancillaries and fare family content is expected to almost double in 2016 to 64%, growing faster than airlines from all other regions. This also significantly narrows the gap with European and Middle Eastern carriers, who are expected to grow their merchandising content coverage in the indirect channel to over 70% this year.
Hazem Hussein, Executive Vice President, Airline Commercial, Amadeus Asia Pacific said, “Merchandising delivers a more personalised customer experience across all touch-points while at the same time increases revenues not just for airlines, but travel agencies as well. It’s simply good business. We saw a huge shift amongst online travel agencies and airlines in 2015 towards merchandising, and we expect this trend to continue in 2016.”
According to Amadeus data, sales of ancillaries by travel agencies – especially online travel agencies – grew almost 100% in 2015, generating average estimated incremental revenues of 10–15% per booking for airlines that have implemented Amadeus Ancillary Services. Research commissioned by Amadeus and conducted by Frost & Sullivan in 2014 indicate that merchandising is expected to bring in an additional US$ 130 billion in revenues for airlines by 2020.
“For many travellers today, the best fare isn’t necessarily the cheapest, it’s the one that offers the best value for the services they want and at the right conditions for their needs. Ancillary services and fare families allow airlines to personalise their offers and give customers more choice, and Amadeus is partnering with our airline customers to integrate these offerings into the travel agency platform to provide a consistent, personalised shopping experience across all channels. As merchandising evolves, we continue to work closely with both our airline and travel agency partners to deliver more value and better choice to travellers,” added Hussein.
To date, 109 airlines including 29 Asia Pacific-based carriers have signed up for Amadeus Airline Ancillary Services, with 76 having already implemented the solution, compared to only 51 airlines offering ancillaries at the end of 2014. In addition, 27 airlines are now offering Airline Fare Families through Amadeus, with another 10 airlines signed up for the service and in the process of implementing the solution in the next few months.
Online Travel Agencies are also playing a critical role in driving the trend towards merchandising. At the end of 2015, Amadeus had 30 OTAs with ancillaries integrated, and 6 with Fare Families. This trend is being driven by some of the world’s largest OTAs: Expedia, eDreams ODIGEO, Travix, Fareportal/CheapOair, Logitravel, Voyage Prive and Tripsta are just some of the OTAs selling ancillaries or Fare Families. Some OTAs expect revenues to increase between 5% and 15% thanks to merchandising sales.