A survey conducted by Sabre Airline Solutions of
90 airlines across the globe revealed that while fuel cost
instability and revenue management are among the top challenges
for carriers over the next 18 months, it is customer loyalty and
retention efforts that are viewed by an overwhelming majority of
survey respondents (86%) as having the most positive impact on
Customer experience was ranked by nearly 50% of those surveyed as the primary issue related to customer
loyalty and retention.
A similar survey done by Sabre two
years ago revealed that carriers in Asia Pacific found barriers to
change were limiting their progress with merchandising strategies.
This year’s survey, however, show that APAC carriers seem to be
pushing through these challenges, citing multi-channel
distribution and merchandising as being positive factors – more so
than carriers in the other regions.
“Airlines in APAC are
perhaps beginning to realise that offering merchandising options
to customers can be a win-win situation – it gives customers a
more complete and personalised way to travel, and it can also
generate additional revenues for airlines. We will likely to
continue seeing more such moves among airlines here,” said Gordon
Locke, vice president of Airline Marketing for Sabre.
According to 58% of those surveyed, merchandising and
ancillary revenue will help airlines’ bottom line results. Baggage
fees, travel insurance, and vacation packaging were rated among
the highest in the survey to generate revenue.
Multi-channel distribution is another area that airlines in APAC
are seeing as positive, both for the airlines and the customers.
While budget carriers have in their early days shunned the travel
agency channel, opting to sell only direct to the customer via the
internet, for example, some are now slowly coming back to
the agency channel to complement the other channels.
“When these value-focused carriers start entering interline
agreements, and flying further afield, the value of the travel
agency channel becomes more apparent. While the direct online
channel is suitable for selling point-to-point tickets, it becomes
less so when a customer has to buy a multi-segment ticket, using
more than one airline,” said Locke. “Additionally, many
value-focused carriers are now working to attract more business
travellers and they recognisze that global distribution systems
(GDSs) are the preferred channel by business travellers.”
This year’s survey also revealed that the majority of airlines in
APAC (69%) will be focusing on increasing revenue in tandem
with reducing cost. Some 16% said they would focus only on
increasing revenues, and another 15%will focus on reducing
The primary tactic that airlines will use to
increase revenues is through effective revenue management,
followed by maintaining a distribution mix (travel agents, direct,
etc) and ancillary revenues.
Reduction of costs will be
done largely through staff/crew optimisation, flight planning
optimisation, and fuel optimisation.
Other key Sabre
survey findings include:
- Previous concerns over rising fuel cost has
now evolved into 57% of those surveyed saying fuel price
instability is the biggest challenge facing their business.
- Increasing revenue and reducing costs is among the most
significant challenges in managing airline profits over the next
18 months, according to 67% of those surveyed.
Managing revenues (44%) and distribution mix (12%)
are the top two tactics survey respondents plan to use to increase
revenues. Ancillary revenues followed closely behind with 11% of those surveyed planning to employ this tactic.
Government regulations were identified by 55% of survey
respondents as problematic. Specifically respondents view airport
and passenger security (21%) and environmental standards
and regulation (21%) as top government regulatory concerns.
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