CHIANG RAI, 28 November 2018: When Finnair says it is now making branded fares available to 425,000 Sabre connected travel agents to shop and book it conjures up the question what were they selling before this ground breaking agreement emerged?
Unbranded fares perhaps? It suggests that all those Sabre agents were missing out on more attractive fares, or at worst the airline dumped “unbranded” deals on the travel agency distribution channel, a kind of white-label assortment promising cheap and uncomfortable travel.
We always assume that the highly profitable global distribution systems, that prosper from generating fees for every fare sector sold by a travel agent, are offering the widest possible range of fares and options. Apparently not if the hype we now encounter daily is to be believed.
Essentially the use of the word “branded fares” is fashionable, but quite inaccurate if you still rely on definitions presented in the world’s trustworthy dictionaries.
The definition is clear enough: “A category of products that are all made by a particular company and all have a particular name.”
That would imply we are really talking about “Finnair” fares and they were not available to Sabre travel agents before last week’s agreement?
Of course, Finnair fares were available to travel agents and that has been the case since the first GDS screen flickered into life sporting a flashing green cursor.
What the press statement is really telling us that travel agents up until now, were limited to selling “base fares” in their system, while airlines had moved on to add value and sold fares on their websites with all the bells and whistles to attract travellers to book directly and in the end drive the strategy to up-sell.
The arrival of IATA’s inspired NDC (new distribution capability), an equally non-informative description, allows airlines to present fares with all the bells and whistles to travel agents using the traditional GDS channel.
It took a painfully long and expensive process to create the interfaces, but ultimately it will bring agents up to speed and allow them to offer an array of fares that travel consumers have been able to book directly for years.
In order to up-sell airlines tweak fares sold directly on their websites with extras and services to improve the bundled fare offer.
But if you turn the pages back to the 1970s today’s “bundled fare,” with all the extras, was actually the base fare. It was an era of inclusion.
Airlines included everything in the base fare such as inflight meals, seat selection, free checked-in luggage, and wine with a meal.
Asian airlines were the leaders in the all-inclusive fare trend, led by THAI, Cathay and SQ. You were treated royally. All you had to do was choose the route and class and all the services that we now consider extras and require an additional payment were included in the fare.
This ultimately forced US airlines to reluctantly abandon their base fare plus paid extras policy to compete with the Asian giants. Up until the 1980s they happily charged for everything except the salted peanuts and the mandatory checked baggage allowance.
We have now gone the full circle to the point where the airlines carry you to a destination for a base fare and the rest – meals and even the peanuts and water are extras to be paid for and are bundled into a pricier so-called “branded fare.”
In a way the original US airline business model has returned to haunt us with an even harsher version as they now have the nerve to charge for even carry-on luggage.
The options offered in an airline’s so-called “branded” fares often include on-board sales of food and beverages, checked baggage and excess baggage, assigned seats, preferred seats (window or aisle) or seats with additional legroom.
But it might extend to a credit card fee waiver, priority check-in and screening, early boarding benefits on-board entertainment systems and free Wi-Fi.
The bottom line is the up-sell. We check out the airline’s website and it plants options to get us to buy more than just a base fare.
Travel agents face the challenge that travel consumers have access to hundreds of apps and tools that provide them with a wider choice of fare options than what agents have at their fingertips.
NDC is about playing catch up and updating booking systems to offer fare options that consumers already enjoy when browsing airline websites. No wonder travel agents are pulling up their tent pegs; surviving off a fare mark-up or commission has turned into a mug’s game.