Churning – How is this still impacting the travel industry?

In the current travel industry environment, the practice of churning remains a huge concern and continues to have major implications for all parties involved in the travel process. At the GBTA SA conference in Sandton last week, a panel headed up by Kate Nathan sat down to discuss just how repeatedly making the same booking in a GDS to avoid ticketing deadlines continues to impact the industry, and what can be done about it.

Wendy Clausen of Comair Ltd. was clear about how this affects their airlines. “The biggest impact is that we can’t resell the seats that are continuously being rebooked. This costs us a lot of money because we are charged by our GDS’ each time a booking is made, and sometimes we see the same seat being booked up to 10 or 15 times.” As Nathan summarised, churning has a huge cost implication for airlines, plus their inventory is occupied by bookings that are never going to materialise, but which prevent other travellers from booking these seats.

Marco Chiocchetti of Sandown Travel also highlighted that, while airlines suffer when churning takes place, so does almost everyone else. GDS’ and TMC’s also lose money: a GDS will need to supply the data that never gets used, and a TMC will have an HR cost for organising the bookings, which will never come to fruition.

So why does churning continue to take place, when it has such a negative effect on all involved parties? Choicchetti believes that churning continues to exist because it provides something that all corporates require from their travel bookings: flexibility and time.

The challenge lies in being able to provide corporates with the flexibility and time that they require when booking travel, but without causing a loss to the other parties involved in the process. Richard Addey of Sabre believes that there are two ways of managing the service that GDS’ provide to the corporate in this way: charging, or leveraging technology. The first option would involve charging corporates based on each booking made, so that even cancelled seats would incur a cost, and perhaps if corporate travel buyers were aware of the cost implications, there would be less churning. Many U.S. airlines already charge travel buyers for every ‘abusive’ booking that is made, but as Choicchetti pointed out, this only works when everyone is doing it, otherwise all buyers would simply move to those not charging. The second option, leveraging technology, would involve leveraging the sharing of data to create the technology that offers alternatives to churning. For example, acting GM of Amadeus, Immanuel Banza said that Amadeus already has the technology that allows TMCs to track how many changes have been made to a booking, and raise an alarm when the number is getting high. On top of this, Amadeus also have the tools that allow TMCs to provide quotes to their corporate travellers without actually making a booking. By giving TMCs these tools, they should be empowered to create a deterrent to churning for their corporate clients.

Going forward, there seemed to be a general consensus among the panel: churning has a negative impact on all parties, and the only way to minimise or eliminate this impact would involve cooperation and allegiance from all. Once airlines, GDS’, and travel buyers all come together to find an alternative means to provide corporate travellers with the flexibility and time that they require, churning, and its impact on the travel industry, will cease to exist.

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