Big news from Expedia, and for my way of thinking much bigger news than the earlier moves by the OTA’s to drop online booking fees. From November 5th they have eliminated the fee for customers making telephone bookings!
Internet I totally understand as it is a low cost channel, but I had to think a bit harder to understand how it could make sense for telesales. Part of the answer came to me from an impressive statistic I saw from major offline travel agency Flight Center (owner of Liberty Travel in USA) claiming that 76 percent of people buying a flight also purchased non air content from them. I can’t find a link to this statistic, but I’m reasonably sure my memory serves me correctly in this instance. Assuming it is true, this is massively better than any airline website I know if (don’t get me started on how to improve that), but if the Expedia call center staff are well trained and sufficiently motivated (ie. financial incentives) to get a number anywhere close to 50%, then I am sure the commissions on land based content will more than compensate for the drop in booking fees – especially if their call center business volumes increase significantly as a result of them eliminating the service fee. And I’m pretty sure this will be the case.
Also, I seem to be oscillating in my view on in-flight wifi quite a bit lately. Last month I swung back in favour of this as a potentially decent ancillary revenue stream, but thinking about it some more I’m moving back to closer to my original position. Two things are causing this. Firstly, the fact that so many airlines are currently offering free trial periods. But secondly, and more importantly, is the story of what has happenend with hotel wifi. It is becoming much more common for the low to mid range hotels to offer wifi included with the room rate as business travellers are obviously placing a heavy emphasis on this when choosing where to stay. Assuming it is largely business travellers who will be the primary market for in-flight wifi, then when one airline offers it is included in the ticket price (or maybe even smarter to include it in a higher fare family), then other airlines would have little choice but to follow this lead; all of a sudden in-flight wifi becomes an essentail service included within the ticket price rather than a source of ancillary revenue. It was back in March when I first mentioned rebundling, but maybe you’ll see it mentioned here more often in future.