At the Technology and Innovation in Airline Distribution Conference 2016 in Hong Kong, Amadeus reported that more than 50% of European and Middle Eastern carrier bookings made via Amadeus were eligible to include ancillaries and Fare Family content in 2015.
By comparison, only 33% of Asia Pacific airlines were eligible, however this figure is expected to almost double to 64% in 2016, as Asia Pacific airlines rapidly pick up the pace on merchandising. This significantly narrows the gap with European and Middle Eastern carriers, who are expected to grow their merchandising content coverage in the indirect channel to over 70% this year.
According to Amadeus data, sales of ancillaries by travel agencies – especially online travel agencies – grew almost 100% in 2015, generating average estimated incremental revenues of 10–15% per booking for airlines that have implemented Amadeus Ancillary Services. Research commissioned by Amadeus and conducted by Frost & Sullivan in 2014 indicates that merchandising is expected to bring in an additional US$ 130 billion in revenues for airlines by 2020.
To date, 109 airlines, including 29 Asia Pacific-based carriers, have signed up for Amadeus Airline Ancillary Services, with 76 having already implemented the solution. This is compared to only 51 airlines offering ancillaries at the end of 2014. In addition, 27 airlines are now offering Airline Fare Families through Amadeus, with another 10 airlines signed up for the service and in the process of implementing the solution in the next few months.
Online Travel Agencies are also playing a critical role in driving the trend towards merchandising. At the end of 2015, Amadeus had 30 OTAs with ancillaries integrated, and 6 with Fare Families. This trend is being driven by some of the world’s largest OTAs, such as Expedia, eDreams, ODIGEO, Travix, Fareportal/CheapOair, Logitravel, Voyage Prive, amadeus.com and Tripsta. Some OTAs expect revenues to increase between 5% and 15% due to merchandising sales.
Hazem Hussein, executive vice president, airline commercial, Amadeus Asia Pacific, said, “Merchandising delivers a more personalised customer experience across all touch-points while at the same time increases revenues not just for airlines, but travel agencies as well. It’s simply good business. We saw a huge shift amongst online travel agencies and airlines in 2015 towards merchandising, and we expect this trend to continue in 2016.”