Airline Direct Connects</li></li></ul><li>Mis and reporting<br /><ul><li>Limited R&D over the past several years
New features coming in 2011</li></ul>Analytics applied to travel data<br />Don’t just tell me what I’ve done in the past<br />How am I doing relative to my peers<br />Let me select benchmarks for comparison<br />Better forecast spend <br />Tell me what to change and the savings that could result<br />Greater ability to combine global, card, and vendor data<br />Capture of ancillary fee information<br />
Mis and reporting<br /><ul><li>Third party providers:
Agency and GDS solutions</li></li></ul><li>Preferred supplier usage<br /><ul><li>Vendors are requiring a proven ability to shift share in order to keep significant discounts.
Agencies have a growing need to improve incentive revenues.
Becoming a larger percentage of their profits.
Could create a conflict with customers if not done properly.
Solutions are becoming much more sophisticated.
If done right, a > than 20% shift is achievable. </li></li></ul><li>Preferred supplier usage<br />Components of a complete solution:<br />Analytical Engine – review agreements (both corporate and agency), determine vendor mix to maximize incentive or lowest costs, analyze markets for “true” share shift opportunities.<br />Biasing – apply messaging to online booking tools and agent desktop. <br /> Agent/Traveler Incentives – they have to be motivated to sell towards or against a vendor. Tracking agent and traveler usage of preferred suppliers is critical to success.<br />
Merchant model<br /><ul><li>Definition – a seller’s profit based upon their ability to markup a rate. Similar to most retail models. They buy at a reduced rate and markup within guidelines.
Corporate agencies are looking very seriously at this model to offset lost revenue due to reduction in transaction fees costs.
Merchant model is already in use by online agencies for hotel net rates. Working very well (i.e. Priceline).
Corporate travelers will migrate to this model in search of better deals. Happening today (leakage).</li></li></ul><li>Merchant model<br /><ul><li>Opportunities for markup:</li></ul>Airline net fares – international, business class fares<br />Hotel net rates – every hotel has rooms at these rates<br />Ancillary fees – baggage, seats<br />Packages<br /><ul><li>Advantages over current model:</li></ul>No more transaction fees, negotiated rates with corporations, etc. What does it cost you to negotiate deals every year? <br />Larger retailers (Amex, BCD, CWT) are rewarded with lower costs and negotiate on behalf of all their customers.<br />Consortiums can provide real value through bulk purchasing and negotiation.<br />
Merchant model<br /><ul><li>When will this happen:
It already has in the online leisure market – Expedia, Priceline, Travelocity.
Corporate agencies need the ability to markup dynamically at both the agent point of sale (GDS) and in the online booking systems.
Analytics need to improve to determine the right amount of markup.
AA is no longer in either Travelport or Sabre for a period of time.</li></ul>Similar to SWA situation back in 90’s.<br />
Airline direct connects<br /><ul><li>What a corporation flying AA needs to do now:
Make sure your online booking tool provider is talking to Farelogix</li></ul>Don’t expect GetThere to connect. They’ll have to go to AA.com.<br />They’ve already done the work for SWA and AC. <br /><ul><li>Make sure your agency is looking at point of sale solutions (i.e. SWDirect).</li></ul>Integrated at agent workstation<br />Passive segments created <br /><ul><li>When a booking is made, make sure down stream applications work properly.</li></ul>Itinerary delivery via email<br />Ticketing, Refunds/Exchanges<br />Backoffice data for reporting is complete and accurate.<br />
The R group<br />Steve Reynolds<br />President and CEO<br />Steve.Reynolds@TheRGroup.net<br />214-363-9630<br />