EXCHANGE FOR TRAVELAssociation pour le Développement des Technologies du Tourisme

La survie des Packages passera-t-elle par les Low-Cost ?

2- « Aérien – LCC, à la rencontre des nouvelles offres des compagnies et

besoins voyageurs »

Paris le 22 juin 2016

Martijn van SchalkwijkDirector Products & Solutions

Low Cost Carriers represent an ever higher share of traffic

2 speed growth over the last 5 years

63%LCCs

11%Rest Top10Rank Airline Pax number

(Millions)

1 Ryanair 79.32 Air France - KLM 76.43 Lufthansa 74.74 Easyjet 58.45 British Airways 37.66 Air Berlin 33.37 SAS 25.88 Alitalia 24.39 Aeroflot 17.7

10 Norwegian 17.7

LCCs represent 35% of PAX carried by the top 10 airlines in Europe…

Stagnant LCC capacity – Western Europe

Growing LCC capacity – Eastern Europe

Hybridization

Convergence of airline models

LOW COST

ULTRA LOW COST

REGIONAL

TRADITION

AL

$49bn global

ancillary revenues in

2014

North Amer-ica 37.5%

Europe 29.9%

Asia-Pacific 22.4%

Middle East - Africa 6.0%

Latin Amer-ica 4.2%

Ancillaries – revenues by region

Price is obviously a key consideration for flight planning

Offering the lowest available fare is a key measure of search performance…

…but it is not the only thing that should be considered when evaluating performance

Series151%

55%

52%

47%

42%

Price

Most convenientflight times

Fewer stops / better

connectionsAirport location

Past experience with airline

Features rated “extremely important”

when choosing airline tickets

leisure travelersbusiness travelers

Source: Google – The air traveler’s road to decision

Series1 74%

42%

41%

37%

31%

The lowest fare is not always the most convenient

How does an 8 hour stopover with a 2 year old after getting off a 12 hour flight sound?

Airlines are mastering the art of upsell

Frontier Airlines:

22% revenue increase Air Canada:

47% of domestic

consumers chose

a higher branded fare

• Basic fares allow scheduled carriers to compete directly on price with LCCs

• Applying retail psychology by assigning a simple price point to a better bundle of amenities

And created a more complex product most clearly presented on their own site

How airlines present their offering…

How OTAs present the offering…

And has the potential to influence the online landscape…

“The evolution of airline products and merchandising

is also contributing to a major shift in online air

sales…

ancillary distribution strategies are pushing

OTAs’ air bookings – and their share of online air –

down at an unprecedented rate.”

Source: PhoCusWright 2013

US online air spend (US$B)

46 57

18 17 Airline via OTA

Airline website

In the US, the gap between the airline

websites and OTAs is widening

The impact…The majority of Retail Leisure Agents feel they are at a strong disadvantage compared to airline websites:79% perceive they are at an extreme

or moderate disadvantage to compete with airlines to sell ancillaries

71% perceive they are at an extreme or moderate disadvantage to compete with airlines to sell branded faresSource: WTAAA/IATA NDC

Awareness Survey October 2015

Travelport – ‘Direct merchandising’ made real today within the indirect channel

Improvedfunctionalityandcontent access