Unbundling Services Helps Generate Profit for AirAsia

Abacus International recently implemented its advanced end-to-end technology platform for the AirAsia group of carriers, providing the airlines additional revenue streams through ancillary services and mechanising growth.

AirAsia has just migrated to the enhanced Abacus proprietary system, which allows the LCC to achieve optimal operational efficiency and cost effectiveness across its regional business. In turn, the upgrade also provides travel agents an additional source of revenue via the ability to offer bookings of ancillary items, automated infant seat reservations, search mask usability and Asian language support.

“The unbundling of airlines services – previously the domain of the LCC – is a hot trend in the travel industry, with many airlines and travel agents incorporating it as an essential part of their business strategy. Abacus is delighted to be the first travel solutions and services company to offer this robust back-end distribution and booking system, the first of-its-kind capability in Asia,” said Mr Brett Henry, Vice President, Marketing of Abacus International.

According to a report from the Centre for Asia Pacific Aviation (CAPA), LCCs started the successful trend of unbundling its costs such as baggage handling, changing reservation and inflight food and beverages service, turning it into a major source of income. Based on the success evidenced and additional revenue potential of unbundling ancillary services, CAPA has forecast that airlines worldwide are expected to generate US$58 billion in ancillaries this year, or 12% of the airlines’ global revenue.

“The airline industry is showing signs of recovery, with Abacus seeing a 30% increase in booking volumes during the period of January to May this year, compared to the same time in 2009. Of this increase, there is strong demand for LCC flight bookings. Savvy network carriers that understand the revenue generation potential of unbundled services would capitalise on the upward booking trend to harness the extra revenue opportunities presented by all their distribution channels,” said Mr Henry. “Airlines unbundling their services also allow travel agents to elevate their business offerings by being creative in their packaging of products and services for their customers. They can customise each offering to meet customers’ specific needs, thereby providing further value-add and creating that competitive difference.”

Mr. Thomas Chong, Managing Director of Holiday Tours & Travel Sdn. Bhd. said that with this new system, the travel agency is able to broaden its offerings to travelers. “From a travel agency’s perspective, we can benefit from increased productivity as the new system captures relevant information on seat price, meal description and baggage allowance on one screen instead of having to toggle multiple screens. In addition, the ‘real-time’ seat reservation and booking of ancillary items allows completion in one single transaction,” he said.

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