Airline Sales and Distribution Channels: The Impact of New Technology

Abstract

Airline sales and distribution costs have been increasing faster than other costs over the past decade, particularly travel agent commissions and incentive payments. At the same time ticketless travel and the development of on-line services offer airlines an apparent solution to the dilemma of achieving both increased market share and reductions in sales costs. It is argued here, however, that travel agents will maintain their dominant position in airline sales distribution, because they will continue to offer the consumer the best response to their disadvantages of small size, ignorance and immobility. This will involve agents making full use of new technologies, offering a wider range of value added services, and moving to a pricing system which will be more acceptable to both travellers and airlines.