The COVID-19 pandemic has been a shock unlike anything felt
before by the travel industry, and a survey of airline executives from around
the globe signals they see the crisis as forcing them to fundamentally change
how their companies do business.
The survey, conducted by Atmosphere Research Group for
Accelya, is analyzed in the report Airlines: A Path Back to Profitability. It
includes responses from 62 airline executives to an online survey and 10
one-on-one telephone interviews.
More than half of respondents agree the crisis has created
opportunities for “positive transformation of process and technology” and that
in the next five years it will change both how the airline does business and the behaviors and expectations of passengers.
When asked about their distribution strategies, airline executives
say they expect B2C digital direct channels, such as their brand’s website and
app, to grow from current share of 40% to 47% by 2023. During the same period, respondents
say they expect GDS channels to drop from the current level of 42% of share to
31%, while the scope of what the report calls “direct connect/GDS bypass tech
aggregators” - is expected to grow from 4% to 9%.
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The report states: “...The GDSs need to understand that if
they aren’t more accommodating at working with airlines on NDC distribution
commercial terms, they risk aggravating their distribution problems... The
growing universe of NDC-based aggregators, such as Travelfusion, Duffel and
Peakwork, enables airlines to sell their products through their third-party
partners in a cost-effective, retailing-centric manner.”
When asked how COVID will impact their airlines’ direct
connect efforts third-party intermediaries, about two-thirds of respondents say
they intend to increase direct connect with retail travel agencies,
consolidators and online travel agencies and that they intend to increase the
number of connections to metasearch engines and TMCs.
Regarding NDC, the report states there was “great enthusiasm”
for it expressed during phone interviews, and 68% of survey respondents say
their airlines use or intend to use NDC as part of their retailing and
On average across all respondents, airlines expect to
generate nearly 12% of their 2021 revenues from ancillary product sales,
however respondents from low-cost and ultra-low-cost carriers say they expect ancillaries
to account for nearly twice that much (23%).
But executives do not expect innovation to come with ease.
Two-thirds of respondents say an inadequate budget will be the biggest
impediment to their ability to create new retailing solutions in the next two years.
Other challenges will be commercial/vendor constraints (33%) and inadequate IT