At last, global travel industry gathering momentum

Issues & Trends – March 2014

At last, global travel industry gathering momentum

GORDON Wilson sits in an ideal position to gauge the health of the global travel industry.
Across the desk of the Travelport chief executive and president come the financial performance reports of its GDS operations around the world.

Generating revenue from air segment bookings – and, increasingly, from a range of non-air travel activities – they provide a reliable measure of the state of the industry.

And right now, says Wilson they depict a buoyancy that suggests the spluttering recovery from the dark days of the global financial crisis (GFC) is at last well under way.

He spoke with travelBulletin following the release of Travelport’s 2013 full year financial results. They show that, as the year went on, business was clearly improving for agents booking through Travelport GDSs.

In the last three months of 2013 the company recorded its highest volume growth in three and a half years, Wilson told travelBulletin.

For Travelport, this translated into net revenue of $US480 million, up by five per cent on the equivalent three months of 2012. These end of year gains led to an overall four per cent jump in revenue for 2013.

A key figure for Travelport executives is RevPas (revenue per passenger) which climbed $5.58 in the quarter, boosting the figure for the 12 months of 2013 to $US5.49 compared to $US5.28 in 2012.
And Wilson revealed to travelBulletin that figures for January show the momentum continuing into 2014.

Particularly significant, he suggests, are the figures showing year on year growth for January in the supposedly ailing European economies of Italy, Portugal, Greece and Spain which were severely impacted by the GFC.

In Greece, for example, overall air ticketing volume was up 20 per cent while Travelport itself registered a staggering 50 per cent increase.

Asia Pacific, where the GFC did not send figures diving to the lows seen in Europe, has performed solidly. Ditto for Australia specifically where the company benefited from Virgin Australia fully embracing GDS fares distribution over the course of 2013.

For this reason, the Travelport boss was reluctant to quote a year on year comparison because, he said, the Virgin Australia shift meant January 2013 was not a like-with-like comparison with January 2014.

Apart from painting an upbeat view of travel industry prospects, Wilson also claims the Travelport results show his company adapting to the demands of a changing travel industry.

For example, the GDS is continuing to grow its non-air travel business which, he said, increased by 16 per cent in 2013. Last year it comprised 18 per cent of Travelport’s total revenue compared to 14 per cent in 2012.

On this front, Wilson foreshadowed a “dramatically improved hotel offering in 2014, promising corporate travel users “more of a consumer experience, more of a self-service approach”.

Meanwhile the GDS and its agents are picking up additional business from low cost carriers who are increasingly recognising that the agency network can deliver them extra passengers particularly from the corporate sector (travelBulletin, February).

Travelport has now announced an agreement with Ryanair, linking it to last year’s launch of the Travelport Merchandising Platform (TMP) that enables agents to see, compare and book LCC fares and ancillaries in the same way as traditional carrier offerings.

The TMP is an integral part of the Smartpoint technology which Travelport will be rolling out to agents in 2014.

Wilson claims its “full rich content and branding, enabling agents to make full graphic comparisons” between airline offerings will be “a huge differentiator” between Travelport and its rival GDSs.

Of course, IATA’s development work on a New Distribution Capability (NDC) is about the same thing but Wilson, who has met with IATA director general Tony Tyler on a number of occasions over the past year, is relaxed about this.

While he suspects that some individual IATA members may have had “over-extended” ambitions for the NDC, he says the airline body’s NDC work is now about setting standards which is appropriate for a trade association.

Wilson was this month not just celebrating Travelport’s results. He also heaped praise on the latest figures released by Flight Centre, describing them as “pretty stunning for a mature company like that”.

And he was quick to claim the chain’s introduction of Travelport’s Universal Desktop will have helped deliver “the efficiency of conversion” that contributed to the results.


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