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• W163288389 abstract "Cost pressures, changing customer demands, and new technology could herald a dramatic change in the way airline tickets are distributed in the next three to five years. Travel agents, which currently account for 80 to 85 percent of all ticket sales, have most to lose given their market dominance and reliance on ticket sales for much of their revenue. Airlines, on the other hand, have much to gain if they can leverage these changes to control distribution costs. Four industries have traditionally played a role in airline ticket distribution - travel agents, computer reservation systems (CRS) companies, airlines (through their reservation offices), and credit card providers. Together, they account for approximately 20 percent of the price of a typical airline ticket [ILLUSTRATION FOR EXHIBITS 1 AND 2 OMITTED]. But today, the industry is being reshaped by three factors that will not only alter the roles of these players, but significantly reduce the cost of ticket distribution. These three factors are: Airline cost pressures. Losses in the early 1990s forced airlines to take a tough look at their costs. Not surprisingly, distribution costs - which represent approximately 15 percent of the total costs of major US airlines and have been growing faster than passenger revenue [ILLUSTRATION FOR EXHIBIT 3 OMITTED] - became a major focus of attention. Airlines have since been identifying ways to improve internal reservations efficiencies (such as reducing the average length of telephone calls, using lower-skilled, lower-wage employees), as well as optimizing the number and location of their ticket offices for maximum profitability. Importantly, airlines are also putting pressure on intermediaries to reduce costs. They have renegotiated rates with credit card companies, put a cap on travel agent commissions, attempted to limit increases in fees charged by CRS companies, and are trying to control the number of CRS charges incurred (airlines are charged a nominal fee every time a travel agent double books a passenger, puts a passenger on a waiting list, or changes a passenger reservation). This pressure is likely to continue, with airlines gravitating toward channels with lower distribution costs [ILLUSTRATION FOR EXHIBIT 4 OMITTED]. Changing customer habits. Customers are demanding better and faster information management. Corporate customers, increasingly interested in controlling travel expenses, want programs that supply detailed information about their travel spending patterns in order to negotiate better rates from travel suppliers. Leisure travelers also want better information, be it to research travel options or track frequent flyer rewards. This shift in information requirements offers an opportunity for current as well as new channel players - such as online service providers to capture market share by offering targeted, value-added services to customers. New technology. New technological capabilities in the area of user-friendly Windows applications and faster information processing, provide an opportunity to offer customers a myriad of service improvements. New and existing players are attempting to capitalize on this by developing products aimed at attracting and/or retaining loyal customers. Some travel agents and CRS companies now provide corporate booking software that can be tailored to individual travel policies; several airlines supply direct access computer software to preferred individuals and businesses, allowing them to act as their own travel agents, and also make use of smart card technologies; third party providers (Prodigy, CompuServe, and OAG, for instance) are offering online business services that allow users to book airline tickets, hotel accommodation, and rental cars. Future scenarios As airlines maintain downward pressure on distribution costs, and as customers become more demanding and technology more sophisticated, industry players will be jockeying for a strong position in the channel in order to maximize their share of value-added. …" @default.
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• W163288389 title "Trends in US Airline Ticket Distribution" @default.
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