Christoph Klenner of the European Technology & Travel Services Association explains why the organisation has issued a formal complaint against Lufthansa’s GDS fee
One point two billion tourists travelled the world in 2014. Business travel spend mounted to several hundreds of billions of euros in that same year.
The seismic uptake of air travel has been driven by an impressively synchronised value chain, consisting of airlines, service providers, technology innovators, and travel agents.
Thousands of dedicated professionals who have helped make the world a smaller place, who drive global commerce on a daily basis, who promote the exchange of ideas and values across boundaries.
But industry participants must never lose sight of the fundamental fact that it is the universe of travellers that underwrites all of our business.
For the air travel market place to function properly, for consumers not to be deceived, for airlines of all sizes to be able to compete fairly, there is a clear need for transparency of prices, for neutral and unbiased travel information.
Why are choice and transparency essential pillars of a consumer-centric travel sector?
The rapid growth of air travel has led to a bewildering array of choices for consumers.
They must select their itinerary based on price, convenience, carrier, schedule, comfort, time spent on-the-go and myriad other factors.
The adage that information is power is nowhere more true than in air travel. Consumers who can access information about their air travel options easily, reliably, and efficiently will make the best choices.
A sustainable travel industry will recognise that; it will adapt to the needs of these travellers. And technology plays an essential role to make this a reality.
As we move forward and seek to meet consumer demand in a dynamic and ever-changing travel market, transparency and choice become even more important for both leisure and business travelers.
In a world of brands and allegiance, independent providers of pricing information provide healthy and much-needed inter-channel competition, keeping suppliers honest, and consumers happy.
Any effort to deprive travellers of the information they need to make the best choice, or to make it more costly, inconvenient, and time consuming for them to find that information, reduces the traveller’s power to make optimal decisions. And it shifts that power to those who benefit from opacity.
What are the risks associated with a fragmented travel distribution model?
Fragmentation of content – that is, requiring consumers to hunt for their travel options in multiple places – undermines price transparency.
It raises consumer search costs and is of interest only to suppliers and not consumers. In fact, if an airline drives consumers to shop directly with that airline, consumers forfeit the virtues of unbiased and efficient comparison shopping.
A recent study conducted by Charles River Associates in the US found that lack of transparency comes at a high cost to consumers.
The study concludes that potential airline restrictions on access to fare information would result in a price increase of more than 11% for US leisure travellers.
And that the lack of transparent and comparable fare information would cost the US flying public $6.7 billion more in air fares over the year, and may discourage up to 41 million consumers per year from flying.
It is obvious that fragmentation of travel information threatens to throw travel consumers into a state of confusion, leads to significant detriment, and moreover rolls back the progress and innovation that the travel technology sector has brought over recent years by helping to create a fair, accessible and competitive airline and wider travel market.
How can the travel sector fortify the position of the consumer?
McKinsey, in its landmark report ‘The Trouble With Travel Distribution’ dating as far back as February 2012, was right when it said that travel suppliers, including airlines, need to focus on “customers, not channels”.
The report suggests that suppliers should spend efforts on winning customers rather than fighting a zero-sum game with the intermediaries that bring them major revenue streams.
It is whether a practice is positive or negative for consumers that should be the litmus test of whether it is good idea or a bad one.
Hiding the ball, avoiding transparency by making a consumer work harder to find the best option, risking that he or she is not able to find the option that best meets his or her requirements and preferences, may result in that customer going away.
The online revolution, followed by the mobile revolution, have fundamentally changed the way in which consumers consult travel information, make choices, and transact.
A mobile screen is a small area of real estate, so for a consumer to make an informed purchasing decision, he or she will demand all options, transparent information and no nasty surprises.
In this respect, consumers who shop for travel are expecting no more and no less than when they shop online for life insurance or cars or numerous other services or products.
They expect the ability to compare prices and products efficiently and comprehensively at sites that carry the offerings of multiple suppliers – without being penalised by some suppliers for having exercised their freedom to shop as they choose.
The consumer’s trust and confidence is at stake, as is the ability for suppliers to fairly compete.
Transparency, neutral information, and equitable access to content are more important than ever. And they will become even more vital as the travel industry evolves.