Airlines typically incentivize travel sellers to help stimulate sales and reward sellers for their loyalty and volumes. To put the cost into perspective, the value can be between 2% and 3% of total indirect channel revenue. In the case of major airlines, that can equate to 100's of millions of dollars in incentives.
Just like distribution costs and payment fees, incentives are an unavoidable cost of sale that airlines factor into their budgeting processes.
When looking at how your airline can maximize the revenue from each incentive dollar spent, we recommend asking these six questions:
Travel sellers have different relationships with different airlines. Understanding the relevance of travel sellers to your airline is a crucial step toward putting in place the right deal at the right time.
We advocate empowering sales organizations to make intelligent decisions at scale. Multi-dimensional understanding and science-backed recommendations are critical to enabling faster value.
We argue that sales strategy needs rigorous testing and outcome alignment. Getting that right up front allows individual sales teams to easily create meaningful deals that drive results quickly. Through automation, efficient planning, and outcome simulation, airlines can allocate more time to making deals work.
The change in dynamic between airline / GDS / travel sellers, the ancillary merchandising opportunity, access to content, and beyond are considerations that extend across the airline commercial spectrum. We see a tight correlation between incentives and executing a modern distribution strategy.
Our view is that machine learning (ML) provides the fastest route to identifying budget deficits, spotting opportunities, and responding with certainty. By bringing ML together with sales team market understanding, intelligent decision-making at scale becomes a reality.
Negotiating with increasingly tech-savvy data-centric travel sellers requires a new set of tools that reflect the articulation of a unique value proposition. Being ready and prepared to engage meaningfully provides a head-start over competitors.
As the budgeting process for 2023 begins and travel sellers start to look to your airline to understand its value proposition, it's worth exploring how commercial strategy and distribution come together to drive revenue from your investment in incentives.