We’re at the Eye 4 Travel conference this week. Generally we dread these conferences – but this one is in Vegas so it’s all good. You may not have noticed – but we love Vegas.
Eye 4 Travel is boasting that they have like 800 people, but they are totally cheating because they are combining three pretty unrelated conferences (distribution, revenue management, and CRM) to get these numbers. We think we have to face the fact that E4T is really stretching their limits of being relevant…
There is an interesting dynamic happening here this year. At conferences, there is always a main villain (GNE’s, Metasites, etc), and this year it’s the Online Travel Agents. FMV loves that – we’re totally on that bandwagon!
John Slater of Continental took the first speaking position and simply told the airline point of view when it comes to distribution. Slater has a great way of telling you bad news in such a reasonable way that you find yourself wanting to apologize. You kinda feel like it’s your dad explaining why you are grounded. Anyways, we think he had 4 interesting points.
1) Continental.com accounts for 67% of online revenue while OTA’s account for 33%. This is a pretty good penetration of the large supplier sites and we wonder if this is their plateau.
2) OTA’s average fares are around $250 – we’re talking pretty cheap fares here folks. Slater was pretty blunt that they don’t really need much help in selling these fares to Orlando.
3) International issues are next on the reduction of distribution costs war. While the last round centered on North America – it didn’t address the overseas markets – where costs remain pretty high.
4) Interestingly – Slater mentioned that OTA’s buying their brand name for searches on Google is really starting to chap their hide. They consider this poaching and follows American airlines actually suing Google for the same thing. So much for “Do No Evil” huh?
OK – Off to the Craps tables – man we love Vegas !
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CO can probably push that 67% higher. Per John, the average CO.com fare was about $300 while the average OTA fare was $250, implying an online *transaction* split of maybe 63/37 between CO/OTA. If CO can shift more transactions from OTAs (clever marketing?), and boost the relative fare premium (upselling?), they'll hit 70% of revenue no problem.
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