In the Wednesday 26th of August edition of Travel weekly Graham Turner, managing director of Flight Centre, made the comment that, “There is some potential for growth [in Webjet] but I don’t think it will take significant amounts of revenue away from us”. That is very bold, considering how prolific the internet has been in almost every other industry on the planet.
I spent some time thinking about this, specifically why do flight centre have an online site if they don’t believe there is a future in it? From what people tell me, they like the idea of booking with an agent because they have someone with industry knowledge to fall back on, but like the freedom of booking online because of convenience and honestly, its where they spend most of their time. This puts Flight Centre in the perfect position to capitalize on a hybrid business model of both systems, with the ability to assist consumers who have made a booking online in person, putting to rest the inherent fear of the “faceless” online experience. Customers may not need the service, but knowing the option is there could have a positive effect.
As perfect as this opportunity seems, it does not fit Flight Centres current marketing strategy. OTAs use social media and dynamic pricing to attract customers, where agencies use commission as an incentive for their agents to generate their own sales along with more traditional marketing campaigns. The commission model does not lend itself well to my proposed hybrid online model. Just the distribution of commission for online bookings handled in person would be a nightmare and could be the reason the system hasn’t been introduced thus far.
I can’t imagine we will see any huge changes coming from the Flight Centre group any time soon. With some agents making upwards of $300,000AUD in commission annually, they won’t be excited to service online bookings for free. Graham Turner is ultimately correct for the time being, the overall revenue generated by Webjet is miniscule compared to Flight Centre, but how long will that last? The results from my very small poll only sent out on Twitter and Facebook show that people that are already online will want to book online, which is only going to get more prevalent as the internet, smart phones and online services get introduced at a younger age. It has yet to be seen if this new breed of consumer will be as game changing as some like to predict, but the potential is there and shouldn’t be easily discredited.
Flight Centre rejects the prowess of online travel
I spent some time thinking about this, specifically why do flight centre have an online site if they don’t believe there is a future in it? From what people tell me, they like the idea of booking with an agent because they have someone with industry knowledge to fall back on, but like the freedom of booking online because of convenience and honestly, its where they spend most of their time. This puts Flight Centre in the perfect position to capitalize on a hybrid business model of both systems, with the ability to assist consumers who have made a booking online in person, putting to rest the inherent fear of the “faceless” online experience. Customers may not need the service, but knowing the option is there could have a positive effect.
As perfect as this opportunity seems, it does not fit Flight Centres current marketing strategy. OTAs use social media and dynamic pricing to attract customers, where agencies use commission as an incentive for their agents to generate their own sales along with more traditional marketing campaigns. The commission model does not lend itself well to my proposed hybrid online model. Just the distribution of commission for online bookings handled in person would be a nightmare and could be the reason the system hasn’t been introduced thus far.
I can’t imagine we will see any huge changes coming from the Flight Centre group any time soon. With some agents making upwards of $300,000AUD in commission annually, they won’t be excited to service online bookings for free. Graham Turner is ultimately correct for the time being, the overall revenue generated by Webjet is miniscule compared to Flight Centre, but how long will that last? The results from my very small poll only sent out on Twitter and Facebook show that people that are already online will want to book online, which is only going to get more prevalent as the internet, smart phones and online services get introduced at a younger age. It has yet to be seen if this new breed of consumer will be as game changing as some like to predict, but the potential is there and shouldn’t be easily discredited.