During last week's Business Travel iQ TMC fees webinar Paul Tilstone mused about what might be happening to fees in the future. Given the spectre and possible consequences of IATA's long-incubating NDC, he asked buyers to think about whether changes such as purchasing ancillaries for a journey along with the ticket potentially have an effect on the level of travel management companies' fees.
This is a hot topic at the moment coming quickly on the heels of two new reports released by IATA. One is based on a survey of leisure and business travellers; the other is based on a survey of travel agents, the intermediaries in other words.
The travellers' survey reveals that travellers and bookers would welcome more information at the time of booking. It says, "More than 70% of business fliers and 65% of leisure travellers would be more likely to purchase optional airline services if presented with information about the services in an NDC-based display."
It also found that "68% of business passengers and 64% of leisure passengers would be comfortable with an airline or travel agent informing them about the availability of optional products based on previous purchase data."
Not surprisingly those booking journeys see a benefit in having more information and, indeed, more targeted information to hand at the time of booking.
Intermediaries, ie travel management companies, however, have a slightly different view. The report, based on research among agents in seven countries, found that most intermediaries are now booking ancillaries for their clients. Most importantly, "A majority of agents believe NDC can help them be more competitive and customer-focused and will make selling ancillary products more efficient" BUT "Travel agents expect to be compensated for selling ancillary products and services."
The Beat quotes a US agent putting the case very succinctly at a Travelport customer conference by saying the following: "It's not reasonable for the airlines to say, 'OK, travel company, sell our services, but we're not going to compensate you for it.' It costs me $12 to have my agents spend that five minutes selling your seat. So you need to compensate me. If you don't compensate me, the business model does not sustain itself."
If the consequence of a new distribution model is that TMCs either need to invest in new technology or have their staff expend more time on a transaction, their costs will go up but only the airlines' revenues will go up. The customer — whether the corporate buyer or the traveller — will also receive a better service for the transaction.
As the webinar pointed out, TMCs — like any other business — expect remuneration for services done for customers — whether as agent of a supplier, ie selling more for that supplier, or as service provider for a buyer, ie providing more service for that client.
The cost of any incremental technology and/or labour by the TMC will need to be covered.
The question is by whom? The airlines or the customer?