Travel Agent Or Virtual Airline – A new mindset
A few years ago I was talking to a really clever CEO of an OTA. This guy is a mover and shaker in the industry and most conversations with him are very interesting. At that time I was consulting to them with regards to revenue and margin optimisation.
We were at that time travelling over the Sydney Harbour Bridge (with a picturesque view around us) and he said something that has stayed with me for a long time which I would like to share with you.
He mentioned that he does not view the business as an OTA or a travel agent – rather he manages the agency as a “virtual airline”. WOW! What a concept that is. Not only are you not constrained as a travel agent but your strategy can be about prioritising what you want to sell by bringing about an airline mentality.
Think about that a bit more – suddenly your business is not just a travel agency business selling tickets for airlines but you adopt the mindset of an airline. If you adopt that attitude you bring about profound changes in your outlook on selling air. It means you proactively changing the sales culture and targeting what you want to sell. These would apply to all agency types – consolidators, OTAs, Retail agents and also TMCs. TMCs may say they have very little control as the clients choose which airlines and routes they fly. To a degree that is true but if you adopt the virtual airline principles there are definitely opportunities to score points with both clients and carriers which bring benefits to you. I’ll name just a few of these below to highlight this thinking:
- Adopt a revenue management culture: Airlines have nailed this. They maximise revenue on seats even for passengers sitting next to each other. Why not do the same at your end? A Revenue Management culture means having a disciplined focus each month on your top carrier performances and ensuring you will optimise your targets. Approach airlines where you do not have any incentives in place and look into top destinations being sold on various carriers. Follow the story the numbers are telling.
- Seasonality Matters: High seasons are not just for high sales volumes – they need to be viewed as margin maximisation opportunities. Have you got a strategy for this?
- Proactive Sales: In most cases demand determines which airlines are sold on which routes. However, have you mapped out markups or sales strategies for carriers that provide you the maximum income? Which airlines are struggling on which routes? Are you able to go out and negotiate some special fares in exchange for higher volumes on those flights? If you approach the airline and tell them you want to promote their (struggling) O&D sector – in most cases they should be willing to work with you. Remember the onus is always on you as an agent.
- Yield Management: Are your sales consultants or online booking engines tweaked to maximise yields? This is a whole different topic. Bring this up in your negotiations with carriers and watch the account manager’s eyes light up.
- New Routes: As a rule of thumb an airline launching a new route will need 2 years to break even and then make profits. Go after sales for these new routes proactively. Ask airlines to support you aggressively. It’s a win-win proposition. You will end up making more.
- Connectivity: I must say some OTAs lead the pack here. They have some fabulous algorithms that maximise their yield on certain carriers and bring about connections that may combine two competing carriers for a much better margin option. Have you exploited these opportunities?
- Route Analysis: Where possible carriers providing a higher margin should be promoted on certain routes. Conduct regular route analysis to ensure that market share on your key O & Ds are skewed to carriers providing you maximum returns.
Obviously there are more “virtual airline” principles but hopefully the above bring about a renewed focus to your air sales strategy.