Online travel firms adapt to cut in air ticket commissions
Revenue effects only temporary, say analysts, as China continues to enjoy international travel boom, especially for holidays booked by mobile
China’s online travel agency revenues are likely to be hit short-term by new domestic airline ticketing policies, coming into effect from July 1.
But experts predict the effects to be minimal longer term, as sites turn to offering a variety of other add-on travel services, and larger numbers of customers use their smartphones to buy overseas holidays, rather than visiting high street outlets.
The country’s biggest airlines have now scrapped paying commission to travel agencies on sales of air tickets to third party sites, for use in holiday packages, to boost their own direct sales.
Ling Vey-Sern, BNP Paribas’ executive director of China internet research, said: “We expect likely short-term revenue pressure on Ctrip [China’s largest online travel site] especially, as the air ticketing industry goes through a transition period of commission reform and volumes shift to direct sales.”
He also warned revenue growth would be affected by the uncertainty created by travel site Qunar’s dispute with a group of airlines at the start of this year, which temporarily suspended their products on the booking platform, citing increasing passenger complaints about price discrepancies and refunds for tickets booked on Qunar. Ctrip, which is backed by Chinese online search giant Baidu, owns the vast majority of Qunar’s shares.
We expect likely short-term revenue pressure on Ctrip [China’s largest online travel site] especially, as the air ticketing industry goes through a transition period of commission reform and volumes shift to direct sales
Ling expects Ctrip’s revenue growth from transportation ticketing to drop to 39 per cent this year, down from last year‘s 62 per cent, due to the changes.
