TRAVEL AGENCIES' EARNINGS MODEL RENEWED
The Travel Services division provides travel planning and travel management services via its travel agencies Matkatoimisto Area Oy and Suomen Matkatoimisto Oy and through the travel booking and information supplier Amadeus Finland Oy. Estonia's largest travel agency chain, Estravel, is a subsidiary of Suomen Matkatoimisto. In Finland, Mikkelin Matkatoimisto Oy is a subsidiary of Matkatoimisto Area.
The Finnair Group's Matkatoimisto Area and Suomen Matkatoimisto are two or the three biggest travel agency groups in Finland. One of their assets is their strong brand awareness both among Finnish companies and in the leisure travel market.
Recently the operations of both travel agency groups have been developed in response to the travel agency's changing role. Due to weakening demand, lay-offs and reductions in staff numbers were implemented in Finnair's travel agencies last year.
Selling expertise the priority
An upheaval has been under way in the travel agency sector for several years. Airlines, in their search for cost cuts, have reduced the sales commission paid to travel agencies. Finnair discontinued the payment of sales commission in autumn last year and adopted the practice of net pricing in the pricing of flight tickets.
In the new model, a travel agency prices its services and the customer can easily compare the price-quality ratio of different travel agencies' services. In the travel agencies' earning model, the focus has shifted from sales commission to service fees charged from the customer. Travel agencies are now having to sell their expertise, which is consequently highlighted as a competitive factor.
In the area of business travel, the travel agencies have invested in developing and providing travel management services for companies. Through correctly implemented travel management, companies can achieve significant cost savings in their travel budget. In the leisure travel sector, the focus has moved from agent sales of simple packages to personalized travel arrangements.
Companies' price consciousness and their efforts to cut their travel costs have put the relationship between travel agencies and corporate customers under the spotlight. Travel is looked upon by companies as a production factor that must be optimized in order to achieve cost-effectiveness. Companies can outsource their travel management to a large extent, enabling the company-travel agency relationship to be based on a partnership from which both parties benefit.
New, electronic service channels
A significant change in the travel agencies' role has also been brought about by travel sector e-business services, which have developed rapidly in recent years. To an increasing extent consumers are making the simplest reservations themselves.
Airlines are selling flight tickets direct to consumers, but many travel agencies, too, have developed their own Internet services in order to serve their customers. For the needs of corporate customers, the Finnair Group's travel agencies have created targeted extranet services that provide client companies with total travel management packages. Electronic tickets have promoted the spread of self-service among consumers and streamlined corporate travel processes.
Systems improve processes
In the wake of structural change, there are many projects under way in travel agencies to improve the efficiency of processes. The Finnair Group's Amadeus Finland also acts as a systems supplier and integrator for travel agencies.
Work in travel agencies is being done with fewer personnel, creating a need to automate functions and data acquisition. The integrated operational control and reservation systems used by travel agencies, as well as links to electronic services used by customers, facilitate process management.
The Amadeus centralized ticket writing system is replacing the Finnair-developed Finnres system, which has been used for decades. The introduction of the Amadeus system will mean the standardization of domestic and international ticket production. Amadeus will also supply to rail and shipping traffic an Amanda system adapted for the Finnish market. The outsourcing of ticket writing to Amadeus is part of a cooperation agreement between Finnair and Amadeus which will generate for Finnair savings of several million euros. |