20 November 2010

ARC October/YTD Very Nice for Airlines - Not So Great For OTAs.

So everyone can stop moaning - for now anyway.

ARC numbers show a boost in both transactions for probably now the 18th month since the historic lows in Feb 2009.

The latest data shows a strong increase in transaction (Up nearly 11%) and value (up 19%) year to date. As ARC is showing almost negligible ancillary revenues for the agency channel - we can be assured as we have seen from the Q2 numbers that Q3's numbers will be a bumper crop revenue wise. If there is any airline showing less than 20% sales growth year to date then they are clearly falling down on the job. But the trend is downward for growth. This should be taken into historical context that the end of the year the growth tapers off. This is why we should always look at the first part of the year for significant growth in the USA market.

However there is an interesting anomaly. When one looks at the segmentation of the data. Have a look at the total traffic. Growth for all sectors except corporate has slowed to almost nothing. Corporate Travel as represented by the mega agencies (Amex, CWT, BCD and HRG etc) is the only segment with monthly transaction growth.

That should spell further bad news for Expedia and its generalist OTAs and further distance Priceline from the pack in market value terms. As we can see from the chart immediately above. The OTA share of growth started the year well but has dropped to almost zero in the 10th month.


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