The travel industry has been disrupted
Historically, the relationship between airlines and travel agencies was one in which the airlines truly had all the power. The travel industry at that time included a highly fragmented set of agencies for distribution and each one of those agencies had their own segment of the market. During this time, the airlines, the travel brands themselves, had most of that control.
Today OTAs have grown into global entities with massive reach and the ability to scale infinitely to capture as many customers as possible. This upended the control of the value chain to where the brands, the airlines, no longer had the same standing that they did before. The disruption this caused in the travel industry persists today.
OTAs have been able to commoditize the airline, creating no differentiation in their products, or in the airline’s brands. Airlines struggle to bring offers in front of customers at all the various touchpoints, whereas OTAs can present offers at every touchpoint, including powerful comparison-shopping tools. OTAs have intercepted airlines’ customers and captured an outsized percentage of travel demand.
The opportunity to “Undisrupt”
When COVID-19 hit, non-essential travel came to a halt and the travel industry was severely affected. As a result, OTAs reduced their spending in paid media and on innovation, creating an opportunity for airlines to close the gap and move a higher percentage of sales to their direct channel.
Direct sales are not only more cost-effective, but they also build brand loyalty between the passenger and airline and provide more leverage to the airline in the market overall. When passengers purchase flights through OTAs, airlines become a commodity to the customer.
“Airlines have recognized for years the importance of driving online direct sales to reduce dependency on Online Travel Agencies for market share and own the relationship with the customer. This increases loyalty and lifetime value of their passengers,” said Seth Cassel, Co-Founder, and President of EveryMundo. “COVID-19 has been damaging for airlines, but it has also been a wake-up call: airlines must do more to own their customer relationships directly, and they require technology from partners such as EveryMundo to accelerate this effort. We are seeing energized motivated airlines use our fare marketing software like never before.”
We believe now is the time for airlines to take advantage of this unique opportunity by prioritizing customer acquisition and direct sales to drive customer lifetime value. It is time for airlines to “undisrupt” the industry and take the power back from OTAs. A key factor in capturing travel demand is improving the customer experience, including user engagement technology, enhanced visualization in offers, calls to action, and more that supersedes that of OTAs. By utilizing technology airlines can increase website traffic, improve booking conversion rate, enhance online user experience, reduce their dependance on OTAs, and drive brand engagement on and off the airline’s website.