Emirates is offering customers the ability to temporarily lock in airfares before deciding to buy their tickets, the latest move that puts airlines in direct competition with the travel agency industry for revenue.
Customers booking flights online in the UAE and some overseas markets can now select and lock in fares for up to 48 hours for a fee, which is calculated according to the route or destination, Emirates said yesterday.
The fee is returned once the flights are paid for. The facility is available in the Middle East, Arabian Gulf, Iran, Indian Ocean, Africa, Australia, New Zealand and some countries in South East Asia, Europe and North America.
Travel agents are expected to feel an impact, according to Saj Ahmad, the chief analyst at Strategic Aero Research.
“They will feel an impact but because Emirates still uses agents, their revenue channel isn’t cut off,” he said. “Eventually it will hurt them because Emirates will be more inclined to advertise and freeze fares on its site rather than push that off to travel agents who could conceivably undercut Emirates themselves.”
This month Germany’s Lufthansa said it would apply a levy of €16 (Dh66) on tickets booked through third-party systems such as the travel technology provider Amadeus, starting from September 1.
The move is expected to increase the number of bookings through Lufthansa’s website and improve its revenue from ticket sales. Shares of Amadeus and other travel IT companies tumbled on the news.
Airline passenger revenue in the Middle East was US$49 billion last year, up 44 per cent from 2011, according to a study from Amadeus in April. The figure is expected to reach $67bn in 2017.
Of that amount, online bookings account for 23 per cent and are expected to reach 33 per cent of airline gross bookings in 2017.
The UAE accounts for 52 per cent of all airline sales in the region, the Amadeus report said.
“We are providing our customers added flexibility,” said Thierry Antinori, the executive vice president and chief commercial officer for Emirates.
However, the Sharjah-based online travel agent Musafir.com, which has been offering its corporate customers the option to hold their fares for free on its website since 2009, said it was not worried by Emirates’ new service.
“We expect no impact on [online travel agents], because most travellers have very little to benefit from a 48-hour hold,” said Albert Dias, the co-founder and marketing and technology director.
As the flight ticketing segment gets more competitive, travel agents also trying to stay competitive. Musafir.com, for instance, gives discounts for tickets booked on its website.
Last week, during the Iata annual conference in Miami, the Emirates president Tim Clark said the carrier was working on its own distribution system for more control over ticket prices and customised offers.
For the airlines, such a move cuts out a middleman who takes a commission on the ticket price, Strategic Aero’s Mr Ahmad said.
Customers, on the other hand, will not have to chase an agent or a third party for refunds, and given the proliferation of mobile apps, online transactions from phones are more convenient, he said.