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TravelSky’s performance offers a view of China’s slowing air travel market

09/03/2019| 11:08:34 AM|

Overall, both domestic and foreign air travel growth benefited the company. During the first half of the year, the tech vendor boosted its revenue by 9.2% to $538 million (RMB 3.84 billion).

TravelSky, a monopoly on aviation-related software services in China, announced its financial data for the first half of the year. Passenger volume only went up 7.8%, compared with volume rising 11.4% in the first half of 2018. Despite the slowdown, the country remained the fastest-growing region in the world for aviation, according to TravelSky.

International outbound travel remained a bright spot. In the first half of this year, foreign airlines produced 9.6% year-on-year growth in passengers traveling internationally on their planes, the company said.

The growth reflected foreign airlines increasing their long-haul routes in and out of the country. But TravelSky also helped to drive the growth by offering rising incentives to travel agencies to direct passengers to these carriers.

TravelSky’s commission and promotion expenses to agencies rose 60% in the first half of the year. Executives attributed the jump primarily to their effort to drive bookings on foreign airlines, they said during an earnings call.

Overall, both domestic and foreign air travel growth benefited the company. During the first half of the year, the tech vendor boosted its revenue by 9.2% to $538 million (RMB 3.84 billion), the company said.

But rising costs, such as marketing and promotion incentives, salaries, and a move to a new data center in Beijing, pressured the company. TravelSky’s profit after taxation grew only 4% year-over-year to $199 million (RMB 1.422 billion).

In the first half of the year, aviation information technology services such as airport passenger passing and airline inventory control systems accounted for 57.9% of the group’s total revenue. Other services, such as fare distribution, billings, and other payment settlement services for domestic airlines, and cloud-based storage services made up the rest.

TravelSky had no short- or long-term debt this year, and it kept a large pile of cash on hand. Compare that to Amadeus, the company’s Madrid-based rival, whose debt equaled approximately 71 percent of the $5.2 billion in revenue it generated in the year ending June 30.

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TAGS: TravelSky | GDS | Amadeus
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