appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Vivian Lin

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 Vey-Sern, BNP Paribas’ executive director of China internet research
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.
As well as the loss in commission, experts also expect the country’s state-owned carriers to introduce more passenger incentives to book direct, putting further pressure on the online industry players,.
As a result of the moves, Ctrip, Qunar, as well as Alitrip and Tongcheng Tourism, have already become more stringent on their partnerships with third-party ticket agents, and on ticket sourcing.
The BNP Paribus research, however, still remains positive overall on Ctrip’s outlook, as packaged tours accounted for just 12.8 per cent of its group revenue last year, while hotel accommodation bookings represented a strong 40 per cent.
According to data from The China National Tourism Administration, there was a near-20 per cent increase in the number of overseas travellers in the first quarter of this year, with experts already predicting continued demand as mainland income levels keep rising.
Ling noted, particularly, that many tourists have already shifted their buying online rather than visiting a traditional travel agency.
Data released by eMarketer on Wednesday predicted online agency sales on the mainland to reach US$121.98 billion next year, up from an estimated US$95.29 billion this year.
Chris Bendtsen, the company’s forecasting analyst, said the growing use of smartphones for mobile spending has been crucial to the industry, in turn prompting airlines and hotels to further invest in their own mobile apps.
Ctrip and Qunar were the mainland’s most-downloaded travel app at the turn of the year, said eMarketer.
As the travel apps also link to other value-added services, including travel insurance, VIP lounge access, airport pick-up and ground transport and overseas WIFI access, there will be much less reliance in future on airline commissions, he said.
On the positive, Bendtsen also said the changes coming into effect from July 1 will also help growth in the online travel industry to normalise, forecasting a 34 per cent compound annual growth rate for Ctrip’s transportation revenues to 2018, with international flights continuing to be a key driver of the business.
According to the Civil Aviation of China, international airline passenger numbers grew 34.5 per cent last, more than triple the growth rate of domestic airline passengers, which was 9.2 per cent.


Online travel firms adapt to cut in air ticket commissions

According to the Civil Aviation of China, international airline passenger numbers grew 34.5 per cent last year, more than triple the growth rate of domestic airline passengers, which was 9.2 per cent. Photo: AP

A crew member of Spring Airlines talks with travelers onboard an Airbus A320 aircraft at Hongqiao airport in Shanghai July 6, 2012. Wang Zhenghua employs a simple philosophy for surviving in China's state-dominated aviation sector. "You have to take it a bit slowly, rather than being too aggressive and making enemies everywhere," Wang, founder and chairman of the Shanghai-based airline, says of the approach that has enabled him to successfully carve out a piece of the $56 billion-a-year Chinese airline industry. Wang has come a long way since his start in 1981 running a tourist agency out of a tiny stall in central Shanghai, beating the odds to build up not just one of the country's most prominent travel agencies but also its biggest private budget carrier, with nearly 60 routes in China and seven overseas. Picture taken July 6, 2012. To match Interview CHINA-AIRLINE/ REUTERS/Aly Song (CHINA - Tags: TRANSPORT BUSINESS TRAVEL)

Business

Companies

Money

China Business

Revenue effects only temporary, say analysts, as China continues to enjoy international travel boom, especially for holidays booked by mobile


Online travel firms adapt to cut in air ticket commissions

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Revenue effects only temporary, say analysts, as China continues to enjoy international travel boom, especially for holidays booked by mobile

Revenue effects only temporary, say analysts, as China continues to enjoy international travel boom, especially for holidays booked by mobile