Where do OTAs Stand in the Covid-19 Era?
Covid-19 (coronavirus disease/2019-nCoV) has impacted the airline and the overall travel industry in unprecedented ways. According to OAG, the number of scheduled flights is down 12% year-over-year compared to the third week of March in 2019. Given the force majeure nature of the situation, airlines have decreased capacities, withdrawn from routes, issued free cancellations and refunds to travelers, enacted flexible amendment policies to accommodate itinerary changes. However, these initiatives have also had negative impact on airlines’ operations and the balance sheets.
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When one considers the distribution chain, online travel agencies (OTAs) are a prominent source of flight bookings. Over the last two decades, OTAs have evolved from a niche to a mainstream billion-dollar distribution channel. From Expedia to Booking.com to eDreams ODIGEO to Despegar to Ctrip to Webjet – OTAs are now a household brand, and often the first access point while flight shopping, subject to digital evolution across markets.
As airlines face a formidable test, OTAs had to brace for impact – being the merchant of sale in many cases. Unlike previous crisis, which curtailed domestic or regional travel, the Covid-19 outbreak has pulverized travel worldwide. Historically, OTAs would offer alternate destinations or flight options to its travelers in times of crisis – hoping to still put a sale on its books. This time around, it is different. With several travel advisories, quarantine measures, and lockdowns in effect, people are least likely to spend their disposable incomes on travel just as yet.
Hopefully this impact will be for a shorter term, and travel will eventually get back on track – perhaps even emerge as the fastest-growing industry – OTAs are no doubt heading for uncertain times ahead