Low visibility on demand for OTAs

Six experts discuss the emerging credibility gap being built in the travel chain and the challenge of predicting green shoots of demand, during an OAG webinar. A key challenge that remains, all agree, is the dynamic nature of policies today, leaving the intermediary and the traveller, and oft times the airline, in a fix.

John Grant, Chief Analyst, OAG

Many airlines have never built sufficient cash reserves to withstand normal events, let alone something like COVID-19. Many LCCs live from month to month on cash flow. So, a learning for the industry from this is that there must be some sort of requirement for a bond or a cash reserve to be established for airlines that want to trade in international markets, to avoid such events happening again.

Chetan Kapoor, Co-Founder & Chief Strategy Officer, VIDEC

Capacity is being changed at the last minute by many airlines, sometimes three days prior to the flight. This builds a lot of complexity for retailers and travellers. Cancellation rates have become, in some cases, 10 times higher than normal. This poses a huge challenge in terms of cash flow for retailers. Excessive capacity optimism is probably unrealistic and therefore anyone booking more than two months in advance is very brave.

Dean Wicks, Chief Flights Officer, Wego

A lot of consumers don’t realise the difference between the Meta and the OTA, and they will call us to change their bookings. We have introduced into the search results what airlines are flying and when, and which countries have restrictions, and putting it upfront in the search results so people are more aware while they are searching because there are so many changes happening on a daily basis.

Muzzammil Ahussain, EVP – Consumer Travel Unit Seera Group

Dealing with flight cancellations has been a challenge. The important thing to do right now is to be transparent with customers. The credibility gap is in two areas. One is that airline refund processes are extremely cumbersome now and most won’t give refunds. That’s been a big problem in maintaining trust. So we are restructuring a lot of our processes during this time. For instance, informing them about the airline policies before they book.

Rajeev Kumar, Founder – CEO and Managing Director, Mystifly

The challenge is also in terms of the airline policy changing within a few days of making a particular announcement. So you inform your customers about the policy and within no time the airline has changed it. This creates further confusion and impacts the credibility of the retailer as well as the intermediary. Changing market dynamics and policies at government level are also influencing airlines to flip-flop on their decisions

Gilles Karlé, Chief of Strategy, Kiwi.com

Cash flow for an agent or an OTA is significant at this point. And honestly, I don’t think it has anything to do with the processing time of airlines for refunds. They are just holding on to cash that they have already spent so they don’t have it anymore, to be blunt. They are just keeping hostages. The key is to be agile in adapting to any change because there are going to be many changes coming.

Inputs by Hazel Jain