LCC model is well-suited to emerging markets of Asia
Nick Gay ~ EyeforTravel Ltd.
Tuesday, 11th March 2008
Low cost carriers are growing rapidly in Asia but it is important to keep in perspective that they have just crossed the 10% total market share threshold.

According to the industry experts, LCC model is well-suited to emerging markets of Asia where there are many first time travellers as well as budget conscious short-stay holiday takers.

Assessing the developments in the aviation sector in this region, Peter Smith, VP eCommerce, Amadeus said that the current trends indicated that LCCs are gradually but surely increasing market share.

"Having said that however, the travel industry is very diverse and the travel experience extremely personal.  Full service airlines have revamped and are now offering lower fares to compete with the LCCs. In addition, established airlines, such as Qantas have gone a step further and branched out their operation to have their own LCC, so as to not miss out on the opportunities offered by the lucrative market," said Smith, who is scheduled to speak during the forthcoming Travel Distribution Executive Conference to be held in Singapore.

Smith told EyeforTravel.com's Ritesh Gupta, "Amadeus takes note of the trends in the industry, as well as individual customer needs. For instance, budget holidays are targeting more than one traveller profile. A business traveller is using both LCCs and full-service carriers. The travel industry has diversified into many segments, which has resulted in a wide offering of products and services. However, these services are not confined to a particular group as travellers become price and time sensitive."

He added that this is also a key reason why the company invests in research and studies of the markets – to try and understand the future travel direction adopted by travellers.

Amadeus' global report - Future Traveller Tribes 2020 for the first time, gave an insight into the major trends in consumer behaviour, geo-economics/ politics and technology, to understand what will be the most dominant and interesting groups of travellers in the next 10-15 years. 

The landmark report has identified four traveller tribes, which may emerge in the next 10-15 years, and that have the potential to transform how the airline industry delivers products and services.  These tribes include:

  • Global Executives: elite business travellers that want a private jet type experience, predominantly from emerging economic markets such as Brazil, Russia, India and China.
  • Active Seniors: the wealthy, healthy older travelers, aged between 50 and 75, that will continue to travel for cultural and leisure pursuits.
  • Cosmopolitan Commuters: those that live in one city but work in another and will use air travel to commute."With such findings, it is clear to see that opportunities are vast for both the LCC and full service carriers," he said.
Assessing the role of GDSs, which have expanded with new tools to include new content, such as LCC, merchant hotels, etc, he said, "Since the inception of GDS in the 1960s, we have evolved to keep pace with the changing travel trends. Amadeus has re-invented itself so that the GDS plays a crucial role in supporting the online travel agents, internet booking portals and travel agencies. It is important to explore solutions that will enable other existing systems to work in a more integrated and seamless manner."

LCCs to maintain its low operational costs have traditionally emphasised on direct sales of tickets, especially over the Internet. However, as LCCs continued to expand and prove popular, the importance of reaching a wider customer-base and offering the best available rates and the most extensive booking options to its customers also became important.

"Therefore as LCCs adapt their business models for wider appeal, these carriers are also realising the broad range of distribution that can only be achieved by adopting a GDS," added Smith. "Amadeus' distribution, e-ticketing and interline solutions can enhance the competitiveness of LCCs, allowing them to benefit from wider distribution to GDS and other airlines which are not traditionally available to LCCs, expanding distribution channels and growing interline traffic."

Solutions such as these are being provided by Amadeus to ensure that the airline's strategy to diversify its distribution channels and grow interline traffic. In Asia-Pacific Amadeus partners with 14 LCCs as a dedicated technology partner to the industry.

"In the hotel sector, we recently launched the distribution platform to prepare the hotel industry for a new era in search, reservation and distribution. We have completed the migration of 75,000 hotel properties onto a next-generation distribution technology platform. The open systems technology allows Amadeus to introduce new search capability and provides the foundation for even more advanced search capability in the future. Amadeus' hotel GDS application now runs on the Linux operating system and uses OpenTravel Alliance XML   standards to enable more sophisticated interactions with other systems," he said.

"As a leading technology partner to the travel industry, Amadeus invests heavily in research and development to ensure constant innovation of new technologies. Research needs to concentrate on future travel trends in the markets to ensure we understand the needs of the traveller. In addition, it is crucial that the GDS is constantly evolving to meet changing needs in the industry. Since 2004 Amadeus has invested €1 billion into research and development in technologies for the travel and tourism sectors," shared Smith.

Smith is scheduled to speak during `The Asian Travel Distribution Climate - Sunny or Cloudy?' session of Travel Distribution Executive Conference to be held in Singapore (on March 18 and 19).

For more information, click here: www.eyefortravel.com/tdsasia/executive-conference.asp
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