NDC-enabled airlines, and the likes of Google, Amazon and Facebook, are challenging the OTA business model, a panel at the World Aviation Festival in London heard on Thursday (5 September).
“We all know why OTAs started, but I don’t see that as a reason to continue,” said David Gunnarsson, chief executive of flight comparison website Dohop.
“I think they won’t necessarily disappear, but they must vastly improve the experience for the customer or they go away.”
NDC – new distribution capability, an updated version of the traditional GDS – means airlines can emulate a lot of what OTAs now do and turn them into general travel retailers, rather than just airline brands.
However, American Airlines’ director of global sales and distribution Neil Geurin said OTAs “have some of the very best tech teams in the industry” and had “a really good chance to succeed long term”.
David Greer, Virgin Atlantic’s senior vice-president, revenue management, distribution and digital, said Virgin “had the vision to be the most loved travel company as opposed to airline”, with Virgin Holidays playing its part as the airline became a retailer. Greer said he viewed brands like AirBnB as “partners”.
Airlines have failed to move as quickly as other industries like telecoms in harnessing digital capabilities, the session was told. This, delegates heard, was because carriers had to make vast investments in fleet and infrastructure and had low profit margins.
Issues like money laundering meant globalisation of sales was more difficult, while alliance membership and joint ventures also posed issues.
Bryan Porter, chief commercial officer at travel tech company OpenJaw, said enhancements by airlines might be too late. “Google has already won,” he said. “The airline industry made $28 billion in profits last year – Google made $30 billion, and a substantial chunk of that came from airlines.”
However, Geurin added: “I’m not afraid of Google. Who is going to have the power in 10 years? The customer – and they will shop with the one that has the best value.”
