AI reshapes the battle between OTAs and airlines

The future of OTAs depends on international expansion and their relationships with asset-heavy airlines that shape the market

The AI revolution is elevating manual skills while challenging traditional professions. In the travel industry, OTAs leverage technology to offer low-cost holiday packages, but airlines can undercut them with discounted packages. AI helps OTAs expand internationally, yet airlines like Ryanair and Wizz Air, controlling flight inventory, hold the power to shape growth in the European market.

Key takeaways

• Impact of AI: The rise of AI allows OTAs to expand faster, using tools like AI customer service agents and translations to break into new markets without needing to invest in airlines or bases;
• Competition between OTAs and airlines: OTAs leverage technology for low-cost packages, but airlines can undercut them by offering discounts through holiday divisions or imposing fees, making the competition complex;
• Importance of flight inventory: The key factor for success in the travel market is access to aircraft seats. Airlines like Ryanair and Wizz Air, with their extensive flight inventories, are critical players in determining the balance of power;
• Expansion dynamics: OTAs can expand more quickly across Europe, especially in Eastern Europe, but they rely on airline partners like Ryanair and Wizz Air. In contrast, airlines with their own holiday divisions, like Lufthansa, may limit OTA growth in some markets;
• Future outlook: While AI provides opportunities for rapid expansion, airlines controlling flight access remain pivotal. The future of UK OTAs hinges on how they navigate their relationships with airlines, especially Ryanair and Wizz Air.

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