A massive study of the data flowing between agency systems and airlines has shed light on processes that cost carriers millions in fees every year.
Agentivity took a look at data from 2.6 million passenger records over a 12-month period, covering 101 travel agent brands (both business and leisure) in 1,744 locations and through 7,863 individual agents.
This equates to around 6.7 million segments.
The background to the study was to examine the ways in which airlines can reduce the charges they face every time an agent makes a change to a trip, known as the segment charge.
As Agentivity, a real-time agency reporting tool, puts it:
"Airlines often highlight the high fees demanded by the GDS and the inefficient ways in which their legacy systems distribute and market fares.
"With the costs of technology reducing as more innovative solutions are designed, why does the GDS model still have such a high perceived cost of distribution?
"What is not always taken into consideration is the number of amendments, changes and bookings that are left in the GDS systems, all at the cost of the airlines.
"Put simply every time an airline ticket is touched in the GDS there is a cost and this cost is picked up by the airline."
Here follows the results and analysis:
The 3.2% and 30.7% figures incur additional GDS fees and action by agencies respectively, effectively meaning that a third of all segments require some form of intervention (and sometimes costs).
Perhaps the most troubling issue to come from the data is that some 80% of all UK bookings that have an itinerary change are still never actually ticketed.
Agentivity says:
"Churning of bookings is also a problem when agents repeatedly cancel and re-book on the same or different flight altering the class, date or route, to in some instances circumvent ticketing time limits.
"This leads to unreasonably high booking/cancelling volumes resulting in higher GDS fees for the airlines."
This equates to a massive 24.5 minutes per hour for an agent where they are effectively not earning any money - a massive 41% of their time.
So what else impacts on the agency time and potential to increase costs to a carrier?
Pre-ticketing changes and post-ticket changes.
Obviously there are multiple reasons why such things can occur, such as an agent holding multiple flights or classes or dates for a customer before they get confirmation from the passenger.
Pre-ticketing:
Post-ticketing:
When a cancellation takes place, Agentivity says, this contributes to a higher distribution cost for an airline, and can even hit the agency itself if it doesn't follow-up quickly and thus incurring an ADM (Agent Debt Memo) fee.
Interestingly, Agentivity found in the data another major source of segment fee increases to airlines - capturing passenger information.
For example, in Europe roughly a quarter of agencies did not take note of the customer's email address at the time of booking, compared to 94% in the US.
Same again for mobile telephone numbers:
Agentivity says the GDS model "continues to be an efficient and cost effective distribution channel", but agencies - travel management companies, in particular - should consider focusing on service rather on supplier revenue.
The company adds:
"Agents should manage supplier relationships carefully balancing the value proposition they offer their clients with the value received from suppliers.
"Airline suppliers are likely to be more supportive of agents, if they can demonstrate that they are a viable retailer for the airline, upselling ancillary services, using CRM effectively and driving sales on behalf of the airline."
NB: The full study is available here.
NB2:Airlines and passport image via Shutterstock.