Airlines giving free tickets or gift vouchers to incentivise sales is passe. In a first, Etihad Airways is offering a lucky agent a reward of Rs 15 lakh to “take care of all annual expenses”.
For the record, corporate clients and travel agents contribute 85 to 90 per cent of the sale of flight tickets in India. The balance is sold through airlines’ own website. With so much reliance on agents, it is natural for airlines to incentivise sales. In addition to regular commission, airlines give agents or their staff productivity-linked bonus, free tickets and gift vouchers if they meet the sales targets.
For instance, Lufthansa runs experts, a portal for its agents, where members earn points for every ticket sold. These points can be redeemed to purchase products on online shopping portals. The airline also runs a scheme called Gold Rush that fetches agents earn gold coins on completing certain sales targets.
Gulf Air, too, offers incentives to counter staff in travel agencies to boost sales during lean season. The gifts include shopping vouchers.
Abu Dhabi-based Etihad, however, has taken one step forward. In a move that surprised travel trade, the airline announced earlier last week that it would give Rs 15 lakh prize to one top performing agent who will be selected from a lucky draw. In order to qualify, agents would have to sell ten business class seats to Europe or US or 30 economy-class seats till March 5.
Only recently had Etihad picked up stakes in Air Berlin and Air Seychelles. Currently, it is said to be in talks with Kingfisher Airlines for a stake in the loss-making carrier. In Indian market, 2003-founded Etihad faces stiff competition from Emirates and Qatar Airways, which are two established carriers with large networks. Etihad’s scheme, dubbed as “Live free for a year”, is driven to encourage more bookings and poach customers from rival airlines, analysts feel.
Etihad is also the smaller of the three airlines as far as Indian market is concerned. In 2009-10, Emirates flew 6.2 million passengers to/from India. Qatar Airways carried 1.64 million and Etihad flew about seven lakh passengers. Etihad did not respond to a Business Standard email query seeking information on its sales in India and competition with other Gulf airlines.
Low season could be another reason for the promotion. “March is a lean season as far as international travel is concerned. This could be a move to boost sales,” notes a travel analyst. Another agent points out that that Dubai is a leisure destination. “It gets more passengers than what Abu Dhabi gets.”
Rivals, too, are surprise about Etihad’s offering a Rs 15-lakh incentive. Some even call it a gimmick. “It is unbelievable. They (Etihad) fly 136-162 seat Airbus A320 planes to India. Why do they need to do this?” says' an executive from a rival Gulf carrier. “We would understand if an European carriers giving such incentive. For, they have to fill up bigger planes such as Boeing 777.”
Pradip Lulla, ex-president of Travel Agents Federation of India, remarks that the scheme is to motivate travel agents to sell more. “But, it comes like a like a lottery,” he shrugs.
An airline executive cautions that incentive schemes may not always be successful in increasing sales. “It depends on market conditions too,” he says. “During the slow down two years ago, corporate travel had cut down on agents and requested airlines to lower the sales targets.”
