This year has been particularly tough for airlines and agencies and today we will share some advice on how to make cuts on GDS costs.
When you are connected with a metasearch it can become your most important channel and that is why it can also be the source of plenty of inefficiencies. One of the easiest to solve is GDS cost.
Traffic
The main disadvantage of being present on a major site like Kayak or Skyscanner is that their huge popularity can play against you on this matter. They have millions of daily visitors and even more searches. And of course, every time a new search is executed they will call their providers APIs to retrieve the updated prices. This represents for your company a fixed cost regardless of whether you actually get a lead from that search or not.
Competitiveness
Another factor to consider is that also due to their popularity, this metasearches have deals with pretty much everyone, so the competitiveness is very high. This means that on each itinerary the number of different brands bidding a price is way more than on other smaller players.
Conversion
One of the best ways of solving this problem is looking at conversion ratios. And in this case don’t use your internal traffic vs sale calculation. Instead measure look vs sale conversion, meaning how many actual tickets were sold for every time the meta called your API. This analysis should be done starting on a route level, but once you’ve optimized you can do it again going deeper and considering other variables like airlines or month of departure. When you’ve detected the flights where you are not selling through, start blocking those to the meta and return empty results on those. This applies not only to a bad percentage ratio but also to small absolute total sales. Never let the meta know you are doing this because it’s not in their interest to charge you a higher CPC. You can always justify the empty results on technical issues and you will be fine.
Caches
Another good solution is to build a cache on your API so you don’t go back to the GDS every time. I guess most of you already have this in place, but here is the trick. Don’t set the same cache expiration time for every route. Take the learnings from the conversion analysis and apply them to the cache too. Set expiration times on a route level or even lower, always depending on what you found out on the previous step.
Final Thoughts
All of this might seem small savings but you’d be surprised how much money you are losing on these inefficiencies. While the initial trigger is the current financial crisis, the idea behind it is always the same. Metasearch is a pricing war where the most efficient player wins. The more data-driven you are, the highest return on investment you will always have.
