The Online Travel Industry Airline Tickets

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The Online Travel Industry (Airline Tickets)
Adam Ratana Rohit Ravinath Thiti
Wang-Aryattawanich Rubina Zaidi
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Industry News Projections

• Travel eCommerce is expected to reach 20 billion
  by 2001 (source eMarketer)
• 33.8 million travelers used the Internet for
  travel planning, up from 11.7 million in 1997
  (eMarketer)

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Major Players in the Online Airline Ticket
Industry
Auction Services

• Priceline.com
• Expedia.com (auctions section)

Travel Agency Services

• Expedia.com
• Yahoo! Travel
• Travelocity

Direct Purchases from Airlines

• American Airlines, US Airways, etc

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The Basics

• Consumers sign up online with the service and
  can shop anytime, anywhere for travel services w/
  a web browser
• Log in, select cities, dates, get price (for
  priceline, enter price)
• Pay using credit card and delivery in electronic
  form or paper

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Reverse Auctions

• Enter a bid price along with destination, origin,
  and other flight options
• Once bid is submitted, if found and accepted,
  consumer is committed to purchase ticket
• Priceline and Expedia offer this type of service
• Sample screen in next slide

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Online Travel Agencies

• Once submitted origin, destination, and dates,
  several options are provided for purchasing
  tickets
• Offers price comparisons through different
  airline companies
• Consumer commits on his own will
• This service is offered by Yahoo!Travel,
  Travelocity, and Expedia
• Sample screen provided in next slide

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Direct Online Purchase from Airlines

• Consumer enters origin, destination, and date of
  travel
• Different flight options are displayed for that
  Airline
• Firms that offer this service include American
  Airlines, Southwest Airlines, US Airways, etc
• Sample page provided in next slide

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Who are the Customers?

• Anyone who travels and has access to the web
• The everyday consumer
• Corporate accounts
• Small businesses

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How do the firms Attract Customers?

• Media Advertising (print, radio, TV priceline)
• Banner Ads (Yahoo!, Travelocity, Expedia, etc)
• Gimmicks/Promotions (free stock- travelzoo)
• Affiliation Programs (American Express
  Expedia)
• Additional frequent flyer mileage with online
  booking
• Discount coupons, Premium Goods
• Word of Mouth (most or all of them enjoy this)

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What Value-Added do the Firms Offer?
The basic value-added for consumers is to pay the
lowest price possible for tickets and save time.
They can now either afford to fly instead of
another means of transportation, or they can fly
more often. Another basic value-added for the
firms is that they can fill airline seats closer
to capacity.
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Additional Value Added

• Price comparisons!
• Extreme Convenience of doing it online, 24/7
  saves time
• Electronic Tickets (Paperless)
• Incentives (i.e. US Airways gives you more
  frequent flier miles)
• Choose Seat Assignments online
• Additional content services (maps of local
  areas, hotels, restaurants)
• Book whole trip (flight, hotels, etc) without an
  intermediary

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How do the Firms Retain Customers?

• Like any offline service, they use frequent
  flier miles
• Email services (USAir E-Savers, AA NetSavers,
  periodic discounts, fare-trackers)
• You can track prices on your pager/cell phone
• www.tiss.com
• Traditional methods such as discount coupons,
  complimentary upgrades
• Complimentary goods (small gifts at the end of
  the year)