The launch of AirAsia X last year, a low-cost long-haul airline, yet again underlined the fact that the aviation industry continues to embrace new business models with open arms. The airline has emerged from a region which is known for its diversity and geographically huge structure. As experts acknowledge that managing scale-to-scale differences in maturity across the region, while changing the distribution channel mix, is among the major issues for the travel distribution business. So how does the airline see the distribution landscape shaping up?
Assessing the situation, Air Asia X’s CEO Azran Osman-Rani says a major shift has taken place in the last few years across a broad spectrum of demographic profiles. There is a proliferation of LCC carriers and meta-style search engines, delivering customisable and up to date information for travellers of both airlines and land-based products, which offer the consumer choice at their finger tips like never before.
Osman-Rani, who is scheduled to speak in the inaugural session of Travel Distribution Executive Conference to be held in Singapore (March 18 and 19), told EyeforTravel.com’s Ritesh Gupta: “The digital platforms that most businesses operate in now can only be seen as a benefit across the diverse ASEAN region, allowing many people who may not have considered travelling in the past an access point to seek and book travel. Many secondary services are catching up with this demand through Internet cafe’s and the like, offering more accessibility to the average user.”
During EyeforTravel’s conference last year, a senior GDS executive stated that while every airline is considering customer direct – experience has proven this is difficult and not suitable for every airline. It was acknowledged that airlines are expected to use online as one of the several channels to reach to their customers – especially for domestic – but there was no evidence of any conventional airlines in the region having significant volumes except LCCs.
On this Osman-Rani said, “I would agree that not every airline can operate in a direct to market model. Legacy carriers have indeed shackled themselves to the more traditional distribution channels, and even as hard as they try to extradite themselves to bring their distribution costs down, they cannot do without the ‘brick and mortar’ travel agencies. On the other hand LCC’s have proven that direct to market is sustainable in most (if not all) markets. I feel tenacity is key to ensuring the model succeeds, and the consumer will slowly be won over once they do their research and find that direct to carrier deals offer (usually) the lowest fares.”
When queried whether we need to understand that a traveller is not a LCC customer or a traditional customer, but rather the modern traveller who mixes and matches based upon the requirements for that journey and the products value, he said “I agree you cannot ‘pigeon hole’ the traveller into one or the other bucket.”
“I do feel however that there is a global shift towards a LCC option in most travellers’ eyes, as the majority of mass travel is tourism and cost is an important deciding factor. With the growing LCC carrier start ups and the new plane technology, any doubts on safety and security is slowly dissipating amongst travellers. I also add that some LCC’s are addressing the two-cabin seating configurations allowing the traveller choice at a cost to upgrade to a larger business class style seat, but keeping costs low with single service principle,” said Osman-Rani.
“The legacy carriers have their place, but mass global travel is clearly heading towards the LCC model and travellers are voting with their wallets. A good analogy is in mobile telecommunications, with post-paid and pre-paid products catering to distinct customer segments.”
Osman-Rani will present alongside: Cyril Ranque, Vice President of Asia Pacific Partner Services Group, Expedia; Berthold Trenkel, COO Asia Pacific, Carlson Wagonlit Travel and Brett Henry, VP Agency Marketing, Abacus.
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