Phocuswright @ ITB Berlin: Chinese Airlines Get Serious About Online Bookings

The Chinese government’s early-2016 directive, calling for China’s state-owned airlines to sell at least half of all tickets directly by 2018 and avoid online travel agency (OTA) commissions, pressured airlines to get much more aggressive about selling online last year.

And they have a long way to go. In 2015, just 16% of overall bookings went through airlines’ websites. Airline call centres account for a low-single-digit share, meaning that just over one- fifth of bookings come through combined direct channels.

China’s airlines have been cutting commissions for years, and now only the biggest agents receive them. But even in a segment dominated by three airlines, distribution partners continue to play a key role. Airlines need better tech to pursue state-mandated direct booking targets, while OTAs want to ensure access to content. Several OTAs formed alliances with airlines in the form of major investments.

“China’s airlines lag far behind OTAs in the technology department,” says Phocuswright’s senior research analyst, Maggie Rauch. “But after treating web- and then mobile-based distribution as an afterthought, these state-owned behemoths have begun to take digital distribution seriously. They’re growing their in-house mobile teams, and optimization of user experience and marketing are now strategic priorities.”

Loyalty programmes are getting more attention, too. Members enjoy easier reservation changes, and access to private sales. China’s big three airlines expanded their loyalty partnerships to include more airlines, as well as other travel suppliers.

Airlines’ focus on digital distribution, reining in intermediaries and loyalty programmes will push direct bookings to 60% by 2020.

EUROPEAN TRAVELLERS BECOMING MORE COST-CONSCIOUS

Travel plays a significant role in European culture and more adults are packing their bags than ever before. However, in the face of a weakening currency, many European travellers are cutting back where they can and choosing cost-conscious means of getting to their destination.

“With travellers spending less on leisure trips, air and rail transportation took a hit in France, Germany, and the UK,” says Phocuswright’s research analyst, Brandie Wright. “Less air and rail means more drive trips. In France, which had the biggest jump in budget travellers, nearly two thirds of travellers who didn’t book airfare ended up driving to their last destination.”

In a marketplace of mixed signals, intentions for transportation purchases in the coming year remain modest. Intentions for car travel is decreasing in France, where one in ve travellers plan to travel more by rail. On the other hand, Germany is likely to continue seeing more leisure trips close to home, as travellers have much stronger intentions for increasing road travel than air or rail trips.

Complex trips that involve both lodging and air purchases have historically been high among British travellers, and intentions – albeit pre-Brexit – are even more optimistic for next year.

Travel indeed plays a significant role in European culture. Even in the face of a weakening currency, consumers are relentless with their travel plans and more adults are packing their bags than ever before. Travellers are cutting back where they can, meaning fewer trips and packaged holidays. However, they are holding out for long, international excursions to new destinations. Together, France, Germany and the UK comprise approximately 60 % of the total European travel market, or 158 billion in gross bookings in 2015.