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Ancillary Sales Add Up—Do They Benefit Agents?

Posted June 2, 2016

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Just selling plane tickets doesn't complete a customer's travel plans. With airlines unbundling components, selling ancillary services is taking more and more of travel agents' time. These fees add up for the airlines; last year, Travelpulse reported they were more than 38 percent of Spirit Airlines' total revenue.

In many cases, travel agents aren't paid for selling these services, which makes agents debate whether selling them is worthwhile. Yet while they take extra time and effort to sell, and agents would like the airlines to pay them a commission or transaction fee for those sales, most agents want to offer these services. According to the travel platform company Travelport, in a 2012 survey, 88 percent of agents said they want to offer baggage allowance and 87 percent wanted to offer seat upgrades. Travel Weekly reported ancillary transactions increased by 350 percent in the first quarter of 2016 compared to 2015.

Scope of Ancillaries

Travel agents who want to make money from selling ancillaries need to broaden their thinking beyond simply seat upgrades. If the airlines eventually start paying for ancillary sales, the opportunities exist to sell additional airline services such as excess baggage fees, priority boarding, and lounge access.

Additionally, ancillary sales exist outside the airline arena as well, and commissions do exist for many of these sales. In the cruise market, agents can add on airfare, hotel accommodations before or after the trip, transfers to the ship, and shore excursions sold by a third party. On flight-plus-hotel arrangements, agents can also arrange ground transportation and sightseeing services. International trips may require passport and visa services. And all kinds of travel offer the opportunity to sell travel insurance.

Technology to Enable Ancillary Sales

Part of the reason airline ancillary sales are so time-consuming for agents is that they haven't been well-integrated into the GDS that agents use for the bulk of their sales work. Agents have had to access additional systems, such as airline websites or the telephone(!), to book their ancillary services on their clients' behalf.

Newer technologies will make it easier for travel agents to sell these services. Although some GDS included ancillary booking options, they were sometimes awkward and difficult to use. Newer versions that smoothly integrate the Electronic Miscellaneous Documents needed for these sales into the GDS and airline systems make the sales more straightforward for agents. Amadeus includes support for commissions on ancillary sales, utilized by its partner Corsair. The New Distribution Capabilities standard will use XML to make sharing information easier, as well.

Other vendors outside the airline arena are using the mobile phone technology favored by clients to increase ancillary sales; mTrip allows agents to receive commissions on additional services booked by the client after the initial booking.

Should Agents Pursue Ancillary Sales?

Despite the limited revenue agents are currently able to derive from ancillary sales, there is one very good reason to continue pursuing them: customers need help.

It's currently very difficult for consumers to identify all these ancillary costs up front, as airlines don't display all possible costs the same way, or even before making a booking. While the lack of integrated systems doesn't make it that much easier for travel agents, because agents book the same airlines over and over, they tend to know many of the costs without having to look them up.

As a result, they're able to provide consumers information that's needed to make a smart booking decision but difficult for them to find on their own. This means that working with an agent adds value to the consumer's travel booking process—which, given all the booking options available to consumers today, can be an important factor in retaining the customer for additional travel bookings at another time. For agents, the value of making ancillary sales doesn’t come from the extra revenue on this sale, but from the extra revenue of the next sale to the customer.

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