How United plans to grow Economy Plus sales

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Unitedʼs Economy Plus seating has returned to the Travelport global distribution systems (GDS) Worldspan and Galileo with its Economy Plus extra legroom product after taking a hiatus while the carrier converted to the SHARES reservation system.

After the Continental and United merger, the company migrated from the Apollo reservation system used by legacy United to Continentalʼs SHARES system. With SHARES the company lost the ability to list Economy Plus in the GDS due to limitations of SHARES, explains Hudson Crossing partner Henry Harteveldt. Now United has re- established the capability to list Economy Plus in the GDS companies, and plans to add other distribution system throughout the first half of 2014.

“This will allow our travel management company partners to fulfill Economy Plus transactions through their normal processes,” United chief revenue officer Jim Compton recently remarked. “Importantly, weʼll be able to utilize the same dynamic pricing and offer the same rich information through the GDS providers as we do on united.com.”

For the moment Economy Plus is Unitedʼs signature ancillary offering in terms of sales. Compton remarked that during the fourth quarter of 2013 the carrierʼs overall ancillary revenue grew 18% year-on-year, led by Economy Plus, with a jump in revenue of 31%. “On a per seat basis, Economy Plus revenue increased 36% as we leveraged our pricing tools to better adjust our pricing based on the demand forecast.”

Given the revenue Economy Plus garners, GDS are a “critical distribution gateway”, says Harteveldt, since travel agents using those systems work with a large portion of corporate customers. However, he remarks that presently booking extra legroom seating from the GDS “is not the most elegant process” for travel agents.

Travelport and firms who operate the other main GDS Amadeus and Sabre are working to improve the booking process for agents, Harteveldt notes. “GDS know they need to improve and have announced platforms to make it easier for agents to purchase the product [extra legroom] even in the so-called ʻgreen screenʼ [text based] display.”

In unveiling Travelport as the first GDS company to list Economy Plus inventory, United noted in particular that the new technology would allow its travel company partners to “utilize the same dynamic pricing and to provide the same Economy Plus shopping experience as we do on united.com.” That is a key element for all carriers going forward, as they refine revenue management of their ancillary products in part to better match pricing and supply with high- and low-demand travel periods.

Re-listing Economy Plus inventory in the GDS seems to be a small step towards Unitedʼs ambitious ancillary revenue goals. The carrier has stated it intends to record more than $3.5 billion annually from ancillary sales, and Compton boasts the carrier is well-positioned to achieve that target. “Weʼre positioned to achieve this goal as we generated $2.8 billion from ancillary revenue in 2013 and expect to grow this by approximately 8% in 2014.”

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