Changing Times Bring New Opportunities In Travel – What’s Your Plan?

Changing Times Bring New Opportunities In Travel – What’s Your Plan?
By Maxim Sevastianov, CEO Traveknowledgy (www.traveknowledgy.com)

The annual Global Travel Forecast was released recently and we finally received some good news. It seems that prices in the global travel industry are likely to slow down next year. Well, that’s good to hear. We can all relax a little. Falling prices will certainly put a smile on your buyers’ faces, as well as your customers, so maybe over the next six to eight months you can focus on other areas of the business that may have fallen by the wayside recently.

Well, I’m sorry but you absolutely cannot afford take your eye off the current situation for a second, and here’s why.

There are myriad factors causing this economic slowdown in every region across the globe. Rising oil prices, trade wars and slow GDP growth are just a few contributory reasons. Despite this, there are areas that are less affected and continue to prosper. Asia Pacific is one part of the world that enjoys slow but steady growth, due in no small part to its overwhelming sense of optimism. That said, tight financial conditions make this area just as volatile as the rest so this could change very quickly.

2020 prices in the global travel industry are expected to slow down, with flights rising by just 1.2%. That’s the overall report from CWT. So, there we have it. Look a little deeper however and you’ll find plenty going on in the aviation world that will ultimately affect prices. These industry moves need to be monitored very closely. It’s likely that we’ll see spikes in air fares over the coming months that will hit buyers hard and if agents and TMCs fail keep on top of them it will eat into their margins.

Growth markets

India is enjoying strong economic growth which is boosting demand for business travel and driving up prices. For the last few years reports like this have made headline news across the world and, as per the forecast, airlines will mark a 5 per cent increase in fares. Unfortunately, that claim is becoming increasingly unsupportable. According to The Economic Times in India the country is not growing at the rate claimed by the government and is in fact stagnating or in some cases declining. If this report is correct, then it won’t be long before industries start to see the reality of the situation and prices will fall as a result. If that happens you need to be ready to take advantage.

New Low Budget Airlines

Earlier this year Vietnam announced Bamboo Airways, the country’s third budget airline which is now heightening competition between other budget carriers like VietJet Air. These new low-cost players are pushing down fares in what is becoming an overcrowded aviation market across the globe. However, in the case of Vietnam, the economy is growing and the demand for air travel will surely increase. It’s likely therefore that fares will also rise, and agents need to be ready and in a position to grab the best deals.

Political Factors

The current China/US trade war, uncertainties and confusion after Brexit and other political factors across the globe need to be closely monitored. In the case of Brexit, the many complex factors that make up airfares mean that it’s difficult to say what will happen or actually figure out the precise degree to which Brexit would affect airfares compared with other factors. Airfares in Europe are already under huge pressure for decarbonization reasons so it will be hard to ascertain what will cause price fluctuations, but these factors will undoubtedly make a difference.

Fare Optimization

The point is that you can never take your eye off the ball because it’s constantly moving on a global scale. Economic reports vary and misinformation can hit the business hard, with wildly inaccurate forecasts.

However, whatever the reasons may be, it is possible to take advantage of fluctuations in airfares and big savings can be made. Airlines have traditionally focused on how to price core tickets, however an increasing percentage of revenue now comes from ancillary items. Airlines optimize total revenue by taking attribute-level customization further – bundling tactics, product-suggestion analytics, and dynamic pricing to create customized recommendations for additional purchases. This is both at the original point of sale and over the course of the travel journey.

This is where automation will help. Programmes that continuously monitor airlines inventory and reserve the lower fare as soon as it becomes available. In fact, up to 6% of potential reservations are being optimized to an average value of $80 per reservation. By applying office IDs (PCCs) for various markets, agents and TMCs can benefit from differences in point-of-sale inventory control as a lower reservation class may be available at another location.

This industry, like many others, is awash with reports, forecasts and predictions. You need to decide what’s likely to hit your business the hardest. Automated systems can rub alongside these decisions and ensure that when the results of industry or economic changes move down the chain you’re ready and in a position to strike.