Air Travel in 2022: Insights From an Expedia Group Executive

This sponsored content was created in collaboration with a Skift partner.

On the back of a surge in leisure travel, the airline industry made a convincing return in 2021. As the news of the new Omicron variant casts doubt on the speed of recovery, the sector continues its attempts to stabilize after a tumultuous 18 months. With that has come a marked shift in consumer habits, behavior, and needs — all of which spell a new marketplace dynamic for airlines and other companies in the industry as they ready themselves for the arrival of 2022.

Skift spoke to Julie Kyse, vice president, global air partnerships, Expedia Group, about the company’s latest air travel research, in collaboration with research partner, Wakefield, with a specific focus on current and future traveler buying behavior, as well as key industry predictions around flexibility, sustainability, ancillaries, and other emerging trends to help air travel businesses navigate the new road ahead.

SkiftX: Prior Expedia research has shown that customers prioritized flexibility over low pricing in 2020 and 2021, but the latest numbers show that discount pricing now wins out when it comes to decision making. Do you expect this to remain the case moving into 2022 and beyond?

Julie Kyse: Our research has shown that changing traveler behaviors have been part and parcel of the pandemic. In fact, traveler behavior often fluctuates depending on the latest impacts of the pandemic and can often be a snapshot of the state of the world at a given moment.

That said, nearly half (41 percent) of respondents to recent Expedia Group research still view a discounted fare as the most influential factor in decisions around booking flights — and the average cost to fly roundtrip within the U.S. in 2021 is nearly 20 percent less than the pre-pandemic averages of 2018 and 2019, according to ARC flight data from 2021).

The price gap between premium and economy is closing as well. In 2021, the premium economy average ticket prices were 288 percent more than economy tickets. Comparatively, in 2020, they were 365 percent more expensive, and pre-pandemic, in 2019, 430 percent more expensive than economy. We don’t expect the discounted premium pricing trend to last forever, so travelers should take advantage of this while they can.

SkiftX: As recovery sets in further, is there likely to be more customer focus on sustainability and demand for eco-friendly choices? If so, will customers be willing to pay more for such options? How will Expedia help its airline partners here?

Kyse: Sustainable travel continues to be an opportunity in the industry and for travelers, with many sensitive to the impact travel can have on local environments, economies, and the individuals that call these destinations home. Our new data shows that 67 percent of air travelers are willing to pay additional fees to make their trip more sustainable, so we know it’s an important and growing factor in travel booking decisions.

SkiftX: How will Expedia help its airline partners here?

Kyse: At Expedia Group, we are committed to giving travelers clear information on sustainable travel options and working with our partners across the travel industry to promote sustainability in the areas where it will really make a difference. To help our airline partners highlight these options for travelers, we provide them the opportunity to show their sustainability efforts on our sites so travelers can make informed choices when considering green travel initiatives. Adding in filters and easier ways for travelers to understand carbon footprint impacts of their trips is a focus area of ours for next year too.

Beyond that, Expedia Group joined forces with UNESCO and the Tourism Authority of Thailand (TAT) to launch the first chapter of the UNESCO Sustainable Travel Pledge which aims to create a travel ecosystem which supports sustainable tourism. Since then, the UNESCO Pledge has expanded to include commitments from 4,200 hotels, fostering unique connections across the travel industry to create a travel ecosystem which supports sustainable tourism.

SkiftX: What’s working in terms of airline ancillaries, e-commerce, and upselling? What challenges still need to be overcome?

Kyse: Ancillaries have been an important focus for airlines during the pandemic and will continue to be a key revenue driver throughout the current recovery period in the face of such adverse and unpredictable demand. To provide partners the best chance of upselling, Expedia Group creates a seamless customer journey that matches travelers with fare products that best meet their needs for their trip. So depending on what value a particular traveler places on certain elements of an airline’s offering (e.g. price, fare class, direct routes etc), it could result in them paying slightly more to get more value from their trip. To address that, as an example, we brought fare selection onto flight search results so customers can easily compare options and select the fare that is best suited to them.

SkiftX: Now that air travel has started to recover, do you expect the industry to refocus on NDC?

Kyse: We are supportive of methods that empower our partners across the airline industry to maximize their offerings, and we are also committed to helping the industry standardize the capabilities and methods that NDC promotes. We’re uniquely positioned to support different types of distribution needs across our airline and GDS partners, and ultimately, we want to display the best rates, content, and customer service for travelers that visit our sites.

SkiftX: What do airlines need to know about destination priorities among consumers as we transition into 2022?

Kyse: Our newest data shows that 35 percent of respondents are at least somewhat likely to fly to an international destination in the next six months. As a side, airplanes are the second-most preferred way to travel, with more than half of respondents (55 percent) planning to travel by plane for vacation or business trips over the next 12 months.

What’s more, our advertising brand, Expedia Group Media Solutions, proactively supports destination decision-making by working closely with airline partners to identify and execute effective marketing strategies that drive business results. From display advertising solutions, flight sponsored listings, and co-op campaigns to bespoke creative campaigns, we offer unique audience targeting to help airline advertisers reach and convert travelers throughout their booking journey.

SkiftX: How is data playing a role in how Expedia interacts and supports its airline partners, and how is this likely to manifest further over the coming years?

Kyse: Data is at the heart of our company and is also a critical piece of our offering to airline partners. It’s instrumental in helping us understand the market, demand patterns, and pricing patterns. The insights and data trends we offer airline partners help them strategize and work out the optimum way to market flight options to their customers. The pandemic highlighted gaps and problems that we need to work on as an industry. For example, we need better standardization across the entire air ecosystem — having more consistent data in backend systems and common, industry-wide nomenclature can help resolve some of those issues and facilitate a more seamless experience for both airlines and travelers.

SkiftX: What do you believe is Expedia’s role in helping restore consumer trust in the airline industry?

Kyse: Trust is earned in part by having a clear communication path with the airline partner , which has not always been easy with such widespread staffing issues caused by the pandemic. It’s an industry-wide problem and one that we’ve worked hard to address through our technology platform. We strive to clearly communicate policies and restrictions to travelers to provide full transparency and help them make better informed decisions. We also offer the ability for travelers to make changes en masse, such as cancellations and booking updates.

Restoring consumer trust is an ongoing process, and to help us improve customer service, we’ve hired 2000 customer service representatives to add to our 6,000 total across 30 countries. As a result, in July this year, we were able to handle 80 percent of flight cancellation requests through our websites, up from 10 percent at the start of the pandemic.

SkiftX: How important is yield when it comes to supporting your partners? How is Expedia tending to this?

Kyse: Yield is one of the top priorities for airlines at the moment — put simply, the better the yield, the better their returns. We power airlines’ own sites with our cross-sell solutions, allowing them to grow their ancillary revenue and maximize their yield via ancillary sales.

In addition, cross-sell technology facilitates a full-service booking experience for travelers so they can book additional travel components on an airline’s site directly, such as a car or hotel, from Expedia Group’s extensive global travel supply. It offers a better customer experience and drives incremental revenue to the airline.

One U.S. airline signed up in May 2020 to help boost its offering to customers after the initial wave of the pandemic hit and is benefiting from our solution. The airline saw the number of travelers adding a specially discounted hotel to their flight increase by almost 40 percent in the four weeks after the cross-sell capability had gone live.

SkiftX: What are some other major air travel trends that you see emerging throughout 2022 and beyond?

Kyse: The pandemic isn’t over, and new variants such as Omicron are a stark reminder of that. Demand will remain volatile — however, I anticipate domestic trends will remain fairly strong, particularly for the U.S.

As such, the use of loyalty points may be a big trend next year. According to our recent data, just over half (52 percent) of air travelers said they saved loyalty points during the pandemic that could be used for travel, compared with 39 percent overall. Additionally, a similar amount (54 percent) of air travelers said they plan on paying for part or all of a trip with those loyalty points in 2022, compared to 40 percent of travelers overall.

Industry partnerships and standardization will also be prominent, and technology innovation will make headlines in 2022. We’ll particularly see this around solutions that continually add value to partners, as well as address the evolving distribution landscape, such as B2B solutions, smart ways to display fares to enable better customer experiences, and innovative ways to harness loyal customers.

This content was created collaboratively by Expedia Group and Skift’s branded content studio, SkiftX.