Time for GCC airlines to change?
A new study that shed light into the changing dynamics in the travel industry in the GCC has suggested that the region’s airlines should transform their distribution business models and how they sell to customers.
There are three global trends that are reshaping GCC travel distribution business models and threatening to weaken the connection between airlines and customers, according to management consultancy Strategy&, part of the PwC network.
1. Shifting customer behaviour
With such high Internet penetration in the region, customers are said to have been making their searches and bookings through online channels. But they said they often encountered issues that eventually led them to other websites that worked better.
Customers also use multiple devices during the research and booking process. Some airlines have a feature that allows passengers to connect across those gadgets but some don’t.
Also, social media is the buzz word in the region and travellers are vying to make full use of it.
The region’s customers are all also after loyalty programmes. This provides an opportunity for airlines to increase engagement with their customers.
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2. Changing dynamics within direct and indirect sales channels
Globally, airlines’ websites (direct channel) and online travel agents (indirect online channel) are forecast to grow most rapidly. Airlines consequently have an opportunity to strengthen relationships with customers by offering solutions that personalise travel research and booking.
3. Rise of digital technologies
Airlines have a powerful array of digital platforms at their disposal that can help enhance direct revenue channels, while reducing reliance on indirect channels.
Emerging technologies can now improve airlines’ merchandising capabilities to sell additional travel-related products and services, such as hotel stays, when booking a flight.
“The challenge in the Middle East is the rapid adoption of mobile, with online channels now being the fastest-growing source for travel planning,” says Alessandro Borgogna, a partner at Strategy& in Dubai leading the aviation, travel and aerospace practice.
“Fast-growing GCC airlines have an opportunity to adapt to changing consumer behaviour if they adopt a distribution strategy that is enabled by technology and partner with travel players and content providers, tailor their travel distribution model by market segment, and build internal digital capabilities to collect, analyse and use customer data,” Borgogna adds.