By Mary Li, Founder & CEO at Atlas
I’ve talked briefly about collaboration over competition before. I’ve not been quiet about the fact that I believe the travel industry is an eco-system that requires symbiotic partnerships to thrive.
So, it should come as no surprise that with Valentines Day hitting this week, I want to share all my thoughts on partnerships and why I think they are especially important for low-cost carriers and travel sellers.
1. Controlling distribution is a myth
Last year I sat on a panel with some of the industry’s most influential low-cost carrier (LCC) CEOs. While it was an honor to share the stage with such industry leaders, I couldn’t help but walk away from that discussion disheartened by many of their views on partnerships.
The idea that these days LCCs can ‘own’ their distribution is a myth. The future of business and technology is such that holding everything tightly to yourself is never going to generate the most revenue – for you or anyone else. I think it’s naïve and detrimental to believe that you can grow and prosper in an industry that is all about shared experiences, without collaboration.
And, I think it’s an outdated business model.
Travel agencies are in business to serve travelers and if their travelers want low-cost solutions, agencies will find low-cost content, regardless. Having a partnership in place will mean the difference between a sale and a competitor winning that sale.
Many LCCs are already partnering directly with agencies or reaching more agencies via content providers, like Atlas. You can guarantee that given the choice, agents are going with the option that is fastest and most rewarding for them and their customers.
Having a partnership in place will also mean LCCs can more easily control the customer experience, via a reasonable commission structure. Afterall, it’s only fair the agent be remunerated for their service.
2. It’s all upside
Enabling travel sellers to access and be rewarded fairly for selling content generates incremental revenue for LCCs. LCC target audiences are not the same as those served by travel agencies. Travelers using an agent are unlikely to spend the time researching and booking directly online. Agents don’t take distribution from LCCs, they supplement with even more!
Let’s take China as an example. Since the start of the year (less than two months in), Atlas has processed over 135,000 segments from Chinese-based agents with European LCCs at a total transaction value of over $6m. The average Chinese traveler isn’t likely to be aware of the variety of low-cost travel options in Europe. They may not be able to speak the language and may be nervous about making a decision. Without an agent, these bookings are unlikely to have been made.
Now, imagine LCCs having a partnership with all top five agencies in China. Through one source… Atlas. It’s all upside.
The partnerships we have with LCCs are exactly that – symbiotic partnerships. By its very nature, both parties must benefit. We work with our agencies and LCCs to understand the market and what’s appropriate for both sides. Together, we come up with a reasonable fare structure that suits the volume and nature of the relationship. Add to that the availability of a wider range of payment options and the partnership becomes even more valuable.
Ultimately, travel sellers know their markets. They know what sells and when the best time to promote is. Partnerships with agencies and content providers can help LCCs access new markets more efficiently.
Which reminds me of one of my favourite African proverbs: “If you want to go fast, go alone. If you want to go far, go together.”
3. Retailing is changing and social is winning
This one is an understatement.
With the advent of super-apps and social media on the verge of offering better booking experiences in-app, LCCs and agencies need to reassess their definition of distribution competition and broaden their expectations of partnerships.
Technology is enabling social selling. It is navigating new ways around the blocks many LCCs have historically put in place to inhibit agencies accessing their content. Can LCCs keep up with these technological advances? Will they be ready for them?
I think it’s a far easier and safer option for them to collaborate than compete.
The time to partner is now. LCCs need to front-foot this evolution because waiting until the changes are in place to partner will impact negotiating power and likely put their airline at the bottom of the integration list.
I share this with (valentines) love and a hope that we can all forge better partnerships this year.
If you agree that partnerships are necessary for the future of LCCs, please like, share or comment on this blog!