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Airline Distribution Strategies: Navigating Costs and Innovations in a Competitive Landscape

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The Airline Distribution conference 2006 in Dublin focuses on key strategies for mitigating costs such as GDS and credit card fees while enhancing revenue. Distinguished speakers, including Richard Clarke, address the implications of rising credit card charges and discuss innovative models for airline distribution. UATP, a major player in reducing distribution costs, showcases how airlines can save significantly through their network. Engage with industry leaders to explore next-generation payment models and emerging trends in the travel technology space.

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Airline Distribution Strategies: Navigating Costs and Innovations in a Competitive Landscape

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  1. Airline Distribution 2006 Welcome to Dublin!

  2. Airline Distribution 2006 Great Keynote Speakers Impressive Executive Panel New Airline Distribution Strategies Data Privacy & Fraud Prevention The Next Generation in Payment Models Rise & Predominance of the OTAs

  3. Agency fees . . . ? GDS fees . . . ? WHAT’S NEXT?

  4. “If the airlines think GDS fees are expensive, wait until they start looking at credit card fees.” -- Richard Clarke, Director Travel Technology Group, Ltd Airline Distribution 2005 Bangkok

  5. 2005 Airline Losses May Triple Past EstimatesLisa DiCarlo, 01.24.05, 5:30 PM ET American Express reports record earnings Revenue increase driven by strong growth in card business Updated: 6:19 p.m. ET April 26, 2005 US$7.4 Billion Losses for Global Aviation in 2005 Credit Card Industry Profits “The credit card industry is the most profitable one in the United States with annual earnings in the $30 billion range.  Many people might be surprised to learn that a single credit card issuer - MBNA - earned 1.5 times more profit than McDonalds in 2004.  Citibank, another major credit card issuer, earns more profit than both Microsoft and Walmart.”

  6. Credit Card Industry Profits“The credit card industry is the most profitable one in the United States with annual earnings in the $30 billion range.  Many people might be surprised to learn that a single credit card issuer - MBNA - earned 1.5 times more profit than McDonalds in 2004.  Citibank, another major credit card issuer, earns more profit than both Microsoft and Walmart.”

  7. The Airlines’ Major Cost Centers • Four major components • Fuel • Labor • Equipment • Distribution • The first three are hard to control • There is still room in Distribution to save money, however

  8. Airline Distribution Costs • Agency Commissions • GDS Fees • Credit Card Fees • Ticket Fulfillment • Reservations Support

  9. Credit Card Distribution Costs • Credit Card Merchant Service Fees • Expensive: 2-3%, on a € 5,000 ticket . . . • GDS Fee: € 3-13 • Credit Card Fee: € 100-150 UATP “On-Us” transaction = 0% msf

  10. The UATP Network • Airline-owned “global corporate travel payment network” founded in 1936 and owned by 19 world airlines; first charge card, all accounts begin with “1” • Tool to lower airline distribution costs by eliminating or reducing credit card fees • Mission: to provide the best air payment vehicle in the market while lowering airline distribution costs UATP saves the airline industry approximately USD 200 million in credit card costs per annum

  11. Authorise transactions Collect & pass data Card Network Accept Form of Payment for ticket sales Establish Accounts and manage customer Merchant Issuer Travel Agents Merchant Airline Issuer Airline The UATP Network Operates Like Other Major Payment Networks

  12. . . . and solutions 6 - 8% 2 - 3% 1 - 2% 2-3% 1 - 2% Self Booking Systems GNEs Alternate CRS Direct Links Electronic Ticketing Lower Cost Cards Direct Settlement Travel Management systems UATP’s Role in the Distribution Process Each step has costs . . . Access Information Make Reservation Make Payment Manage Information Issue Ticket

  13. The UATP Ownership GroupShareholder Airlines

  14. “If you have a UATP program, you should be growing it. If you don’t have a UATP program, you should ask ‘Why not?’” -- Dave Hilfman SVP Continental Airlines Airline Distribution 2003 San Francisco

  15. ENJOY THE CONFERENCE! Ralph A. Kaiser President & CEO Universal Air Travel Plan, Inc. +1-202-626-4222 ralph.kaiser@uatp.com uatp.com

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