Huseyin Ozyurtcu, the owner of Picasso Travel, remembers a time more
than four decades ago when KLM said that it planned to phase out its use
of air ticket consolidators, of which his company is one.
Such a move might have been damning for Picasso, since KLM, along
with Pan Am, were the behemoths at the time when it came to supplying
"Now, 45 years later, we are still going," said Ozyurtcu, whose company maintains offices in six US cities.
Airlines have made steady efforts in recent years to drive more
ticket sales into direct channels. Many are also making a concerted
attempt to merchandise their flights and seats as differentiated
experiences rather than mere commodities that compete mostly on schedule
But even as surging travel demand has coupled with still-recovering
capacity levels over the past 10 months to create the most pricing power
that airlines have experienced in recent memory, longtime air ticket
consolidators say that business remains solid, and their partnerships
with airlines continue to be strong.
"Airlines recognise this channel very well," said Lali Kumar, vice
president of sales for Austin, Texas-based Mondee Holdings, which owns
five of the top US ticket consolidators, including C&H
International, SkyLink, Transam Travel, Cosmopolitan Travel Service and
Hariworld. "The international airlines, including the US carriers, have
been very supportive of this channel because it creates incremental
According to Travel Weekly's 2022 Travel Industry Survey, 17% of
travel advisors book airfare through a consolidator. That's nearly as
many as the 20% who said they book directly through a GDS platform,
confirming the continued significance of consolidators both for airlines
and for leisure travel agencies.
Airlines "are working with us the same as ever," said Arvin Shah, CEO
of Detroit-based consolidator Sky Bird Travel. "The consolidator is
cheap distribution to airlines. It doesn't cost them anything."
A changed landscape for consolidators
Still, despite the consolidators' relative bullishness, their
business model has become more challenging through the years, said Henry
Harteveldt, who studies airline distribution for his Atmosphere
Though he didn't offer specific figures, Harteveldt said
consolidators now represent less than 5% of the ticket sale channel
share mix for most airlines. That number would have been above 5% a few
He attributes the decline to consumers doing their own discount
ticket searches via OTAs and metasearch sites as well as to airlines'
increased efforts to drive traffic to their own channels, such as their
websites and direct connects.
In addition, Harteveldt noted, with the exception of the Covid
period, airlines have enjoyed strong demand for more than a decade.
Still, every airline will have different needs in relation to its use of
consolidators, Harteveldt said, with those needs often varying from
route to route.
"An airline that is a dominant carrier on a particular route may not
need a consolidator," he said. "But where competition is fierce or an
airline may be new, or an airline has not seen bookings materialise
through more traditional channels, they may turn to consolidators to
help them out."
Consolidators also acknowledge that in some respects, their business
has become more challenging. Ozyurtcu said that Picasso had between 130
and 150 employees handling its consolidation-related business prior to
2018. Today the number is between 80 and 100.
One change, he said, is that margins have dropped as technological
improvements have enabled airlines to be more adept at inventory
management. A decade ago, Picasso Travel enjoyed $30 to $50 markups per
ticket. Now, its average markup on a roundtrip fare doesn't exceed $10.
Travel advisors who use Picasso, Ozyurtcu said, can typically save
their clients 5% to 10% on economy tickets, depending on how much markup
the advisor takes. However, on some high-yield tickets the savings can
be as much as 25%.
Consolidators also emphasise that they focus heavily on their own
technology stacks. Focus areas include agent shopping portals,
post-purchase servicing tools and NDC capabilities.
Kumar, for example, said Mondee has close to 50,000 advisors signed
up for its cloud-based agent portal TripPro, which offers automated
ticketing and support, chargeback management and other tools.
Mondee sells tickets via Sabre and Amadeus or through its own booking engine.
Kumar used the term "Uberization" to describe the at-your-fingertips capabilities that Mondee offers travel advisors.
"The time to market is very important in our business," he said.
Source: Travel Weekly