Airline earnings from unbundled items are set to double this year, with business travel buyers facing increased costs as a result.
Speaking at a Business Travel and Meetings Show seminar, Hamish Broom, Sabre’s Europe, Middle East and Africa airline distribution director, said airlines had earned €18 billion from unbundling in 2010. This figure, he said, would jump to €35 billion this year as more carriers charged for baggage and things like seat selection.
The figures include leisure travel, but Paul Tilstone, chief executive of the Institute of Travel Management, said they would impact business travel, which makes up roughly 40% of the $395 billion air travel market.
Broom said the opportunities for more ancillary sales were “vast”. “It is a global trend,” he said.
Tilstone said he did not blame airlines for adopting unbundled pricing. “They operate in a frankly unsustainable market, two years of profits, two years of losses,” he said.
Tony Berry, HRG’s director for industry and air fare distribution, agreed unbundling had “turned unprofitable carriers into profitable ones,” but added that check-in desks were now “more of a check-out desk”.
Booking tools needed to get ahead of airlines on the unbundling issue if true travel costs were to be reflected, he said.
“You can’t have a procurement department trying to organise a managed travel programme and then finding out that every single booking has a hidden cost associated with it.”
The panel called for an industry agreement to make costs transparent on Global Distribution Systems.
“To make the system work we need transparency and we believe that is achieved by following industry standards to make comparison shopping such that there are no surprises,” said Broom.