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Kno
Topic Author
Posts: 512
Joined: Mon Aug 15, 2016 10:08 pm

Airline Partnership Management question.

Tue Mar 27, 2018 7:24 pm

Hi all!

I'm doing some research as I apply to several jobs in the airline bookings industry and an important question continues to arise that has me stumped. As a partnership manager between a bookings engine like orbitz or travelocity (just examples) in relation to airline partnerships, what would be the difference between an upfront incentive and a backend incentive? Which would be preferable when negotiating a new agreement?

Thanks for your help
 
Kno
Topic Author
Posts: 512
Joined: Mon Aug 15, 2016 10:08 pm

Re: Airline Partnership Management question.

Wed Mar 28, 2018 7:58 pm

Nobody?
 
RushmoreAir
Posts: 88
Joined: Mon Nov 14, 2011 4:29 am

Re: Airline Partnership Management question.

Wed Mar 28, 2018 8:16 pm

Not directly involved in sales, so take this with a grain of salt. But as far as I understand:

Front end incentives include traditional agency commissions etc - e.g. X% commission paid to anyone who sells a ticket.
Back end incentives are more flexible in structure and can be targeted (airline can negotiate with each agency) - e.g. the airline can require key agencies to hit volume or other targets before anything is paid out.

Airlines generally prefer back end, since they can negotiate terms in their favor and generally lower cost of sales.
Smaller agencies generally prefer front end, since it's a standard commission.
For larger agencies/OTAs, I would guess it depends on their leverage/market presence whether back end or front end makes more sense.
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