How will Skyscanner and Travelfusion evolve post-pandemic?

... international lawyer and British travel-tech entrepreneur, certainly has his hands full, being CEO of Travelfusion and Skyscanner. Home > > HowwillSkyscannerandTravelfusionevolvepost-pandemic? HowwillSkyscannerandTravelfusionevolvepost-pandemic? 09/18/2020| 8:02:18AM| ChinaTravelNews 中文 NowunderthesameCEO,thetwocompaniesareinabetterpositiontoexplorenewopportunities. ChinaTravelNews,JerryTang-TakinguptheresponsibilitiesasCEOoftwomajorcompaniesisnodoubtamassiveundertakingalready.ItgetsmoredauntingwhenbothcompaniesaregoingthroughtheunprecedentedchallengesposedbytheCOVID-19pandemic.  MosheRafiah,aqualifiedinternationallawyerandBritishtravel-techentrepreneur,certainlyhashishandsfull,beingCEOofTravelfusionandSkyscanner.  Mr.Rafiah,whohasbeenthefounderandCEOofB2BtraveldistributionplatformTravelfusionfortwodecades,wasappointedtodoubleupasCEOoftravelmetasearchgiantSkyscannerinJune,bothundertheumbrellaoftheTrip.comGroup,aftertheChineseonlinetravelgroupacquiredTravelfusioninearly2015andsnappedupSkyscannerthefollowingyear.  Theprosandconsofglobalization BeforeCOVID-19,Skyscannerasoneoftheworld’slargestconsumer-facingtravelcontentaggregatorswasgrowingfast.Accordingtothelatestpublishedannualfilings,thecompanyrecordeda22%riseinrevenuefor2018andmorethan81%oftherevenuewasgeneratedbytheflightbusiness.Thetravelmetasearchengineboastedthatitservedover172millionflightpassengersinthe12monthsfromAugust2018toJuly2019.  SistercompanyTravelfusionalsoprovedtobehighlyprofitablebeforethecoronavirusoutbreak.Astheworld’sbiggestglobaldistributionsystemforlow-costcarriers,thecompanyregisteredastaggering99%grossprofitmarginin2018.  BothSkyscannerandTravelfusionhavebeenplayinganimportantroleintheglobalambitionofparentTrip.comGroup.ThetwounitsgeneratedatotalrevenueofGBP304million(USD404million)in2018,accountingfornearly9%ofTrip.comGroup’srevenuethatyear. JamesLiang,executivechairmanoftheTrip.comGroup,saidinanearlierinterviewwithChinaTravelNewsafewyearsagothattheinvestmentinTravelfusionmarkedthegroup’s“firststeptowardsglobalization”. Mr.RafiahstressedthatbothTravelfusionandSkyscannerareoperationallyindependenttoTrip.comGroup.  “Trip.comidentifiedearlyontheimportantpartthatlowcostcarriersplayinthefutureofaviation,andthisiswhatledthemtoinvestinTravelfusion,”hesaid,“TravelfusioncontinuestoplayadominantroleinLCCandNDCdistributionfortheworld’sleadingOTAs/Meta-Search/TMC/OBTcompanies.”  Mr.Rafiahalsorecognizedthe“hugebenefitinSkyscanner’slargeinternationalfootprint”forTrip.comGroup.  ButtheideaofgoingglobalcanbeasmuchacurseasablessingfortheChinesetravelgiant.  Thetravelindustrytumbledinthecoronaviruspandemicthisyearandallbusinessesinthesectorhadtotakeproactivemeasurestoalleviatetheirfinancialburdentoweatherthisdifficulttime.  InlessthantwomonthsaftertakingoverthechiefexecutiveroleatSkyscanner,Mr.Rafiahhadtolayoff20%oftheUK-basedcompany’s1,500employeesworldwide.Mr.RafiahsaidinacorporateblogthatheisstillconfidentofSkyscanner’srecoveryinthelongrun.  Fornow,theunpredictabledevelopmentofCOVID-19continuestowreakhavocandposeathreattothetravelbusiness.  TheTrip.comGroupitselfhasalsobeendevastatedbythepandemic,reportinga42%dropinnetrevenueinthefirstquarterthisyear.Withinternationaltravelstillinastandstill,theShanghai-headquarteredonlinetravelgiantisnowrelyingonChina’sdomestictourismtomaintaincashflowandoperation.  InsteadofaimingtocontributeprofitstotheChineseparentgroup,thegroup’soverseasunitsshouldprobablybemorerealisticallyfocusonmitigatinglossesthisyear,andcuttingjobsandexpenseswillnotsuffice.  Tobetteradjustthemselvestothenewnormalpost-pandemic,SkyscannerandTravelfusionwillneedtoeffectivelystreamlineoperationandfurtherimproveefficiency.WiththetwocompaniesnowrunbythesameCEO, willtheybeinabetterpositiontoexplorepotentialsynergy?  “ThesynergiesarethesameasanyotherTravelfusioncustomerswhichusetheTravelfusiontechnologiestofeatureandfacilitatebookingsonLCCsandNDCcarriers,”Mr.Rafiahemphasized. Synergyanddifferentiation Whilerecognizingthatbothcompaniesdoworktogetherunderthesameparentgroup,Mr.RafiahsaidthecorefocusesforTravelfusionandSkyscannerareverydifferent.  B2B-focused Travelfusionconnectstravelsupplierslikeairlines,hotelsandrailoperatorstobothonlineandofflineagenciesthroughitsDirectConnectsolution,whileconsumer-facingSkyscanneraggregatestravelcontentacrossdifferentonlinetravelplatformsincludingTrip.com,BookingHoldingsandExpedia,andofferspricecomparisonandreservationservicedirectlytotravelers.  Toofferitsend-usersmoreflightoptions,SkyscannermayconnectwithTravelfusionforlow-costcarriercontent aswellasNDCcontentasairlinescontinuetorampuptheirdirectdistributionstrategies,oftenattheexpenseofthemore traditionalGDSplatformslikeAmadeusorSabre.  ButSkyscannerhas initiatedits DirectBookingplatform toworkdirectlywithairlinesandofferconsumersdirectreservationserviceonitssitewithouthavingthetroubleofjumpingtothebookinginterfacesoftheairlines’officialsites.SkyscannerhassofarworkedwithcarrierssuchasScoot,CathyPacificandSingaporeAirlinesonitsDirectBookingprogram.  WillthatpotentiallycreateacompetitivepositionagainstTravelfusion’sdistributionservicetoitsairlineclients?  Mr. Rafiahdoesn'tthinkthereisany competitiveissuehere."Inmostcases,themetawillchoosetoworkwithanaggregatortoconsumethesearchandbookingcontent,buteveniftheycarryoutsomeoftheirowndirectconnects,thereisnoconflictwiththeservicesTravelfusionisproviding." WithmoreandmoreairlinesworkingwithSkyscanner’sdirectbookingservicetotheconsumers,furthereliminatingintermediariesbetweenairlinesandconsumers,willTravelfusion’sB2Bconnectivitysolutiongraduallyloseground? “TravelfusionisaseparateB2BunittotheB2C-focusedSkyscanner,andtherearenocompetitivecrossinglinesbetweenthetwobusinesses,”Mr.Rafiahstressed. Mr.Rafiah alsoexpressedastrongbeliefinTravelfusion’sDirectConnectsolution.  “IstronglybelievethattheDirectConnecttrendisgoingtocontinuetogrowatpaceandbenefitsairlinesaswellasmetaandOTAplayersinsomanyways.TravelfusiontechnologiesarebasedontheDirectConnectmodelandIfeelcertainwe’llcontinuetoseeitplayanever-increasingroleinactingasthemaininfrastructureproviderdrivingtheDirectConnecttrend.” Complexitiesanduncertainties  Still,therearebothtechnologicalandcommercialdifficultiesforSkyscannertosubstantiallyexpanditsDirectBookingproject.  SkyscannermentionedthatakeybenefitofthisdirectbookingsolutionisofferingusersafrictionlessexperiencebybookingflightsimmediatelyonSkyscannerinsteadofbeingredirectedtoacarrier'swebsite.ThisisachievedbypartneringdirectlywithairlinesandusingacombinationofdirectintegrationsaswellasaggregatorslikeTravelfusion.  WhileLCCcontentisavailableviaAggregatorssuchasTravelfuison,whenitcametoFullServiceCarriers(“FSCs”)bothTravelfusionandSkyscannerturnedtothe NDCdata-transmissionstandard,whichwasestablishedbytheInternationalAirTransportAssociation(IATA)in2015tohelpairlinesbettercommunicatewithtravelagentsandthusenhanceairlinemerchandisingcapability. Buttoday,airlinesworldwidewithlegacysystemsarestillslowinadoptingthenewAPIstandard,asonly91airlinesoutofIATA’s294membersworldwidehavesofarbeenlistedasNDCCertified/CapableCompanies.  TravelfusionisoneoftheearliestNDCadopters.InaninterviewwithBTNlastDecember,Mr.RafiahsaidthatTravelfusioncurrently"commandsabout50%ofNDCbookabletraffic".  OtherthanbalancingthecomplexrelationshipbetweenSkyscannerandTravelfusion,Mr.RafiahalsohastodealwithmorecompetitionfromtraditionalGDSplayersnowenteringthelow-costairfaredistribution.Forexample,SouthwestAirlines,theworld’slargestlow-costcarrier,hasteamedupwithAmadeusandTravelporttoofferfullbookingcapabilities,inanefforttoattractmorecorporatebookingbusiness.  Mr.RafiahsaidTravelfusionhasalsoestablishedaleadingroleasthelargestNDCaggregatorconnectedto40+NDCFSCairlinesandpoweringthelargestnumberofOTA&corporatecustomerswithliveNDCcontent. “Travelfusionissupportiveofanyplayer-GDSoranyotheraggregator/startup-participatinginLCC/DirectConnectdistribution.Travelfusionisaclearleaderinthisspace,withaprovenandscalablesolution,themostadvancedtechnologiesandfunctionalitiesandmostimportantly,themosteconomicallyefficientplayers.” TravelfusiondifferentiatesitselffromtraditionalGDSgiantslikeAmadeusandSabreinthatitoffersanext-generationDirectConnectsolution,especiallyforlow-costcarriers.ButwiththedevelopmentofnewAPIformatsaswellastheconstantevolutionofthedistributionlandscape,theDirectConnectleaderandthetraditionalGDSgiantsmaystepuptheircompetitionacrossdifferentsectors.  ThedecisionbyTrip.comGroup’smanagementteamtoappointMr.RafiahasCEOofbothSkyscannerandTravelfusionmayindicatethatthegroupisconfidentinthepotentialopportunitiesofitstwointernationalunits.  ItremainstobeseenhowthetwocompanieswillevolvetheirbusinessamidCOVID-19andthechanginglandscapeoftheindustry. 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