Air Transport World

Dynamic duo: the emergence of real-time do-it-yourself travel planning and the rise of LCCs are forcing change upon Europe's package tour industry.(Distribution)(low cost carriers)(dynamic packaging)

DYNAMIC PACKAGING, A HOT topic in the US for a couple of years, has been slow to take off in Europe but is widely anticipated to become a force. For the package tour and charter airline segment, already struggling to come to grips with changes wrought by the advent of low-cost carriers, that looms more as a threat than a promise (ATW, 11/02, p. 30).

Loosely defined, dynamic packaging is a system that allows consumers or travel agents to bundle trip components. The definition is applied to systems that use different methodologies: Some respond to requests with pre-packaged and pre-priced trips, others allow consumers to select each component--air, hotel and/or car rental--in real time. The buyer is shown only the total package price.

In the US, this has been a boon to suppliers because they can move distressed inventory without damaging their brand integrity--a lesson they learned through working with opaque sites such as Hotwire and Priceline. In dynamic packaging, the identities of the suppliers are not masked but the individual prices are. One or more of the component suppliers can offer deep discounts but the buyer doesn't know which supplier is discounting its product. The most sophisticated versions allow suppliers to price their products in response to real-time sales information.

However, the European leisure market has operated much differently than the US version and the buying habits of European travelers historically have been markedly different from those of their US counterparts. …

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