What are the differences between B2B and B2C distribution channels in airline marketing?

Airlines need to focus more on B2B sales than B2C sales so that they will have more time to focus on their core operational aspect of their business which in most cases is suffering. That is why we have the travel agents whose main responsibility is to generate sales for the airlines. One of the ways to make travel agents carry this sales burden on behalf of the airlines is to make airlines' products available for travel agents at a discounted rate which cannot be found in the B2C unlike it is now where fares on airlines' websites are cheaper than what you get from GDS.

Airline distribution channels categories include traditional direct (retail) and indirect (travel agents) channels, as well as digital direct (airline website, mobile app) and indirect (OTAs and aggregators) ones. It is important to have specific strategies for these 4 categories, rather than just make a B2B vs B2C distinction.

B2B is an acronym for Business to Business, as the name signifies, it is a type of commercial transaction where the purchasing and selling of merchandise are performed between two business houses, such as entity supplying material to another for production, or entity providing services to another. Business to Consumer is another model which is abbreviated as B2C, where the business sells its goods and services to the final consumer. Those companies whose products and services are consumed directly by the end user are known as B2C companies.

Airlines use both B2B & B2C distribution channels to reach customers. B2B channels include partnerships with travel agencies, corporate travel managers & GDS like Amadeus & Sabre, which facilitate bookings through intermediaries. B2C channels focus on direct sales via airline websites & mobile apps, offering a streamlined booking experience & real-time travel management. Mobile apps enhance customer convenience, while call centers provide personalized assistance for complex bookings. Airlines should balance their focus strengthening B2B relationships involves competitive rates and support, while B2C strategies optimize digital platforms & marketing. Managing both channels helps expand their reach, boost customer satisfaction & drive growth.

The key difference lies in the nature of the relationship: B2B is relationship-driven with long-term value propositions, while B2C is more transaction-oriented, emphasizing convenience and personalization to attract individual consumers. A successful airline marketing strategy requires a balance of both, maximizing reach and efficiency across channels.

B2B and B2C channels differs in airlines in many respect like customer accessibility, servicing, costing, support, etc. In the B2B space for airlines Global Distribution Systems (GDSs) take the market lead, they comes the aggregators or online travel agencies. Even major online travel agencies are either owned by GDSs or depend on the data provided by GDSs. Major GDSs include Amadeus, SABRE, TravelPort, TravelSky, Infini etc. while major online travel agencies or aggregators, meta search engines, include, Expedia, Booking.com, Trip.com, Skyscanner, google flights, etc. In Direct channels or B2C airlines usually sell through their website, mob apps, Airport Ticketing Offices (ATOs), City Ticket Offices (CTOs), or call centre etc.

For airlines B2B & B2C differ in focus, processes, and customer interactions. B2B targets businesses, travel agencies, corporate travel managers & GDS. Having partnerships for bulk bookings and negotiated rates. Involves contract negotiations & tailored services. B2C focuses on individual travellers through direct sales offering a straightforward booking process and personalized experiences. B2C is designed for ease of use, featuring OTA’s. Relationship dynamics also vary B2B interactions are formal & long-term, requiring ongoing support and account management, while B2C relationships are more transactional, centered on delivering a seamless & engaging customer experience to drive satisfaction & repeat bookings.

Both B2B and B2C Distribution channels are of strategic importance in the Sales and revenue enhancement drive of an airline. In order to maximise the benefits of the two channels and achieve customer satisfaction, airlines should have well trained staff distinctly engaging the two channels. It is imperative that airlines partner with the travel agencies and bulk buyers to ensure quality customer service delivery to the end users.

Obviously direct channels are advantageous for the both the airline and the travelers, as they provide direct contact with the customers. The biggest challenge in indirect distribution (B2B) channels is the lack of direct contact with the traveler, which becomes a challenge in communication. The other challenge is related to personalized product offering. GDSs mostly rely on the legacy technology and do not have rich data connectivity with the airline systems. IATA has been trying to fix this issue by introducing New Distribution Capability (NDC) standard from quite a few time. As through NDC rich communication would be possible among the the airlines and their distribution partners.

B2B advantages include bulk bookings, stable revenue from corporate contracts, and access to extensive networks through travel agencies and GDS. Disadvantages involve complex transactions, longer sales cycles, and the need for ongoing relationship management. B2C advantages include direct customer engagement, higher control over the booking process, and opportunities for personalized marketing and loyalty programs. Disadvantages include intense competition, the need for significant investment in digital infrastructure, and reliance on individual customer acquisition and retention strategies. Balancing both channels is crucial for maximizing reach and profitability.

While direct B2C channels enable airlines to communicate directly with their end consumers and are cheaper when large volumes are sold in a specific market, B2B channels are more effective in terms of cost and market impact in markets where airlines have a relatively low market share.

By the fundamental nature of airlines, the business is in global nature and your customer can be in geographically distant locations. So airlines have to maintain both direct and indirect sales and distribution channels. In B2B space airlines depend on GDSs and OTAs, while in direct or B2C space airlines mainly sell through their websites, Apps or physical offices etc. It is usually believed that direct distribution is cost effective compared to indirect or B2B distribution. But I believe direct distribution has its own cost and due to modern social media channels reaching your audience is not economic. However still airlines need to maintain a good balance in a combination of both.

The main two KPIs to optimize the channel mix are Revenue and Cost of Sale of each channel. Direct channels typically have high fixed costs (building / localizing website and app, etc), while indirect channels have higher variable cost (i.e. GDS cost and incentive payments). Once a fair share analysis has determined what volumes and yields can be driven on specific routes or O&Ds, it is the task of the Commercial teams to pursue the most cost effective mix of B2B (traditional or digital) and B2C (mostly digital).

While the trend is certainly towards (digital) direct channels where content is distributed in a very transparent manner, airlines need to consider the geographic market in which business is sold. If the brand awareness of an airline is low, B2B distribution will be more effective. Some markets are still quite traditional when it comes to selling tickets and rely on travel agencies. OTAs and MSEs distribute very effectively but come at a high cost of sale (especially if an airline relies heavily on this channel).

B2C distribution channels such as booking on website and booking offices offer a host of ancillary features such as seat selection, cancellation, etc, which are sometimes not adequately addressed by B2B channels such as GDS and OTAs. As airlines focus more and more on driving revenue through ancillaries, it is imperative that commercial departments focus their energy into increasing the share of direct channel. Another benefit that direct channels have is that in case of customer support, the airline becomes the one point of contact. Otherwise, customer queries may get stuck between the airline and the OTA/travel agent who might not be willing to deal with the issue themselves.