Plenty of room for improving sales distribution via web in Eastern Europe
eyefortravel | Central & Eastern Europe Special
Balancing the existing channels whilst growing the new ones for distribution and keeping the costs competitive in each channel are among the key challenges for any airline.
According to Malev Hungarian Airlines' Head of Western Sales & Acting International Sales Director, Bjorn Brandt, the priority in the decision process is radically being set on cost.
"In the light of the recent changes in the industry, managing the diversity of distribution channels has become a circus balancing act. Cost structures are tightening and it has become impossible for airlines to simply distribute commissions and rewards for services delivered by partners," Brandt told EyeforTravel.com's Ritesh Gupta.
Brandt, who is scheduled to speak during Travel Distribution Central & Eastern Europe 2008 Conference, to be held in Prague on November 19-20, says, "The big players are showing the example, using their market share power to brutally cut down on commissions and incentives, while the smaller players including Malév can be opportunistic and use that trend as an opportunity to specialise in selected market segments, offering more flexibility to those players adapted to their needs."
"Still, the global picture is clear and still remains unchanged : direct is cheaper than indirect, online is more efficient than offline, and consequences from there are quite obvious. Staying friends with the big travel agency partners has become hard for the big guys; smaller airlines are generally being considered more partner friendly."
There is no one channel that suits all the needs. There are different customer needs, and factors such as technology, reach and price/cost, all leading to requirements for a different mix. Each channel has a specific appeal, dedicated audience and loyalty.
From Malev Hungarian Airlines' perspective, Brandt said the secret generally lies within a mix of channels, aiming to make the proportions within the mix as efficient and profitable as possible. "Not an easy game of course," he said.
"But there also is a tendency in each individual becoming more adapted to all customer needs. While direct will always easily be differentiated from indirect, the flexibility of online has been getting closer to offline thanks to technological improvements. In the same way, offline is moving from its traditional complexity towards online-type simplicity. Generally, sales channels are growing towards each other – e.g. travel agents developing their own direct tools," he said.
It is said that the power of the web-based channel has changed the air travel purchase process; air travel purchases are now driven by low touch simple transactions via the web and pricing parity in all channels has created partial commoditisation of air fares. On how has this impacted the distribution strategy, Brandt said, "Distribution strategy used to focus on getting the right fare placed into the right channel. Web-based channels have opened up doors and made all fares more transparent and accessible. Everything has become visible for everyone; restricting a fare to a select group has become challenging, and therefore differentiation is now being made through fees, commissions and incentives. While fares are identical, low cost distribution channels link with lower fees, while the higher cost distribution channels imperatively link with lower commissions and incentives. Especially, when looking at the current cost challenges of airlines."
Travel Distribution Central & Eastern Europe 2008 Conference
For more information about Travel Distribution Central & Eastern Europe 2008 Conference, to be held in Prague on November 19-20, click here: http://events.eyefortravel.com/tdcee/agenda.asp
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