Can Air Transport Do Without Travel Agents?

In the face of the rapid evolution of technologies, the question can be asked. Indeed, the arrival of the facilities offered by Artificial Intelligence represents a real evolution in the world of air distribution. The last real innovation before AI dates back to the arrival of the Internet and before that of GDS. This takes us back in time almost 50 years.

For a very long time, the position of travel agencies remained very strong. This distribution channel accounted for 70% of ticket issuance until the early 2000s. It is still very significant, although it has evolved considerably and the marketing methods between OTAs (Online Travel Agents) and traditional distributors have little to do with each other. Nevertheless, they are both recognized intermediaries because they have an operating license and access to airline inventories. In the absence of documented global figures, distributors probably still account for more than 50% of the airline sector’s turnover.

However, relations between operators and distributors have never been simple, and they have sometimes been very conflictual, to the point that they led to the end of the commissioning of travel agencies by companies at the end of the 1990s. This break occurred when carriers were tired of paying both commissions and royalties to GDSs, which pay a significant portion of them to distributors to encourage them to multiply the transactions that are their source of income.

Curiously, these GDSs created by the large companies have become the essential tool for air transport distributors. Their remuneration mechanism, initiated by the carriers, combined with a growing increase in the demand for transport, has led them to a considerable financial valuation. And the traditional companies that own the GDS, in difficulty with the arrival of “low-cost carriers”, have sold these jewels to investment funds who have been quick to increase the price of their service, which is fully paid for by the carriers. This is what is called shooting yourself in the foot.

It was a first step in the breach between the relationships between distribution players and operators. The second was the massive arrival of the Internet. All airlines then developed their own booking sites for their consumers in the hope of avoiding paying the GDS. The latter have reacted by offering distributors ever more efficient tools without being able to curb the proportion of tickets issued by the agencies. The presence of “low-cost carriers”, fiercely hostile to the use of GDS and even ticketing, has accustomed consumers to making their own reservations on the websites of new carriers, which has led traditional companies to equip themselves in such a way as to directly attract consumers who are already familiar with making their own reservations, a way of freeing themselves from distributors.

So to go a little further, IATA has initiated a new, more efficient transactional system called NDC (New Distribution Capability) so that all companies can use this new facility, which is incompatible with GDSs that use another transactional language. But the investments to migrate their operations to this new language are very important and even if the major operators have been able to afford it, the vast majority of carriers still remain attached to their old practice. The rise of the NDC language, which makes it possible both to secure access to the inventory of companies and to incorporate reservations on many other services such as hotels, car rentals, museum entrances and so on, is still very slow. Moreover, the GDSs have also embarked on this adventure, if only to keep their relationship with travel agencies.

And what about travel agents? First of all, they are far from remaining inactive. They are grouped together in groups capable of discussing on an equal footing with even the largest carriers, because they provide their customers with a local service, a personality that airlines are unable to provide.

And then they keep all their influence for long-haul destinations on which they have a great ability to direct their customers to this or that carrier. For long journeys and exotic destinations, which make up the bulk of the development of air transport, they are still somewhat essential, if only to ensure that their customers receive a quality of assistance that is particularly popular with consumers.

It remains for the two sectors of air transport marketing to find a balance in their relationship. One will have to ensure the payment of the sums they receive and the other will have to ensure the service, all with a more balanced contractual relationship.