By Team Mystifly on Jan 23, 2018 10:44:01 AM
For over 40 years, the airline distribution environment has been relatively consistent. There was direct distribution, where the customer went to the airline’s website to make bookings. And there was third-party distribution, which included internet sales through travel firms. Airlines continued to use these two age-old selling techniques that mostly incorporated outdated technologies. Adapting to changes and newer methods were not at the optimum speed.
Gradually airlines realized that their current distribution methods were passé. With travel businesses depending on cutting-edge technologies to keep up with the changing customer demands, it was about time airlines changed their distribution model. To adapt to the consumer market behavior, airline distribution firms began to design relevant and helpful flight shopping experiences.
In 'The Future of Airline Distribution, 2016-2021' report, Henry H. Harteveldt analyses the current state of Airline Distribution and predicts the possible changes that could transform the face of airline distribution by 2021.
Travel firms too, will be able to serve the travelers of the future by keeping the following changes in mind:
Geographically Diverse Passenger Base
2016-2021 will see numerous emerging markets contribute to passenger growth. It is estimated that the Gross Domestic Product (GDP) will grow faster in ‘Emerging Markets and Developing Economies’ (EDME) than in high-income countries. Studies show that there will be an increase in the number of first-time flyers during the next five years. What does that mean? Airlines will have to confront a series of distribution challenges.
Serving these travelers is an operational challenge, as they are new to air travel, do not have bank accounts, and prefer simpler ticketing processes. However, catering to these new groups of travelers will become a necessity for travel businesses in the years to come.
Increase in Older Passengers
By 2021, airlines will see an increase in elderly population choosing air travel. Why does this matter to airline distribution? There has been a decline in business travel over the years owing to technology solutions like online conferencing, budget constraints, and logistical challenges. An aging population will only aggravate this trend.
52% of senior travelers allow their budget to determine which airline they fly whereas 44% of them view travel as a leisure trip. As travel service providers it is important to personalize offerings for different categories of senior travelers. This can be achieved by offering products like priority airport screening, premium economy, wheelchair or transfer cart.
Reverse in Passengers’ Negative Opinions
Over the next five years, the industry could witness the birth of new distribution channels. The onus is on travel businesses to understand the role of technology and how to effectively use it to achieve commercial objectives. It is imperative that the dependency on technology is not too visible to the travellers.
A study conducted by Atmosphere Research tells us that there are two ways in which airlines can achieve commercial success - convincing passengers that airlines are not equally substitutable commodities and making flight shopping a pleasant experience for passengers.
Need for Smart Retailing Experiences
The current experiences provided by both airlines' direct channel and travel businesses can be improved. 38% of global business passengers and 41% of leisure passengers want flight shopping to be as easy as shopping for a mobile phone online. Another consumer related challenge faced by airlines and travel service providers is successfully tapping into the two wallets that every passenger has. They are – ‘first wallet’, which reflects the passengers’ desire to spend less money and ‘second wallet’, which reflects their desire to make discretionary purchases.
Airlines and travel businesses could consider evaluating their retailing strategies for the next five years so that they can cater to the needs of their customers and successfully meet customers challenges.
Catering to a Mobile-Centric World
Worldwide, nearly 17% of business passengers and more than 23% of leisure passengers have stopped the usage of desktops and laptops in favor of mobile phones and tablets. What does this signify? 2021 will see mobile as the main channel that passengers, travel firms, and others will use to connect with airlines. The travel industry will evolve into a mobile-centric world enabling consumers to book tickets at the click of a button. This calls for better digital retailing strategies that will make visual-based flight shopping in the future a reality.
How can airlines embrace the change? A Peek Into The Future of Airline Distribution describes what airlines can do to keep up in their ever-evolving quest to enable travellers find the value they seek.
Mystifly has been and will be an active part of the change that is foreseen. The future of airline distribution offers us a perspective on where we stand in the industry. It also offers us insights into the strategies that need to be implemented to ensure that we are at the forefront of the industry. We are creating and enabling the transition of driving value to the airfare marketplace model by opening up wider spectrums and allowing our customers reach out to larger markets.
There is no doubt that the industry is going to be disrupted by the changes that are set to take place. From receiving real-time updates to never needing to hold the paper, the airline industry will see a monumental transformation in the years to come.
Will these changes rattle the traditional airline distribution model? What are your predictions? Comment below!