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The Airline Ancillary Fee Conversation Needs to be Redefined

By October 14, 2011 No Comments

The ancillary fee discussion between the airlines and the Global Distribution Systems (GDSs) is centered on the following premise, as viewed by the airlines:

    1. Airlines want to develop a more intimate relationship with the travelers, along the lines of the Amazon.com model.
    2. Airlines want to differentiate their product so they are not compared in the “GDS green screen”, with other products, based upon price alone.
    3. Airlines believe that the current GDS technology is not able to meet these needs.

It is important for the airlines to understand the position on Ancillary Fees, as viewed from a Travel Management Company (TMC) perspective:

    1. We support the concept of airlines selling ancillary services. We want the airline industry to be strong and in order to do that they need to be profitable. We want to be able to book/sell ancillary services for our clients.
    2. Airlines want to establish preferred sales agreements with the companies that travel frequently and a “managed travel” program requires a TMC and a GDS for it to work effectively.
    3. TMCs want to help find a solution, with regards to ancillary fees, that allows the airlines and the GDSs to work together in a way that will meet the needs of the traveler, the airline, the GDS and the TMC.

We need to redefine the conversation, in two ways:

1. We need to separate the airline’s ancillary services strategy into two segments:

    • Business-to-Consumer (B-to-C)
    • Business-to-Business (B-to-B)

Amazon.com is a B-to-C platform. Airlines must understand that a managed travel program is B-to-B and that relationship does not typically allow a traveler to make a decision at the time of booking which does not support the airlines and companies’ contracted goals. It can’t work both ways. You can’t expect a company to choose not to comply with their contracted agreement because another vendor has a more graphically appealing marketing-pitch at the time of booking.

We need to redefine the conversation so that when we are talking about airline/GDS/TMC ancillary technology needs, we are only talking about managed travel; the B-to-B segment.

2. We need to separate Airline Ancillary Services into three categories:

    • Time of booking services
    • Time of check-in services
    • Time of travel services

The industry conversation about ancillary services implies that they need one-size technology to fit-all marketing needs. Realistically we should only be talking about the GDS technology that is required at the time of booking. This basically narrows the technology conversation down to only seats and bags and possibly a few other choices. The rest of the “intimate customer relationship experience” can be done by the airlines, with their own technology, at the time of check-in or onboard the airplane at the time of travel.

The airline ancillary fee conversation has gotten way too complicated. If we could redefine the conversation and only talk about the “B-to-B” segment in the “time of booking” category, I think we could all find common ground in a hurry

Mike Cameron

Mike Cameron

Mike Cameron is the CEO of Christopherson Business Travel, which he and his wife Camille have owned since 1990. They have four children, nine grandchildren, and one great-grandchild.

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