Two US airlines - Northwest Airlines and Continental Airlines - have brought fresh attention on the Internet as an inexpensive marketing tool by establishing two-tier pricing structures for their heavily discounted Internet air fares.
Northwest has been giving travellers a $20 discount if they buy special fares - posted on Wednesdays for travel the next weekend - directly from the carrier's Web site, instead of calling Northwest.
According to Al Lenza, Northwest's vice-president, distribution planning, when the airline first began selling its special Internet fares on line, only 20% of purchasers bought them from the World Wide Web, while 80% booked by calling Northwest.
The numbers are exactly reversed today, he says. "It's pretty clear the Internet channel is the lowest-cost channel for us. It's pretty easy to book and buy the product." The $20 discount, he adds, "...reflects the fact that the customer does the work himself at a lower cost to us. He should get a price break".
Lenza says it is possible this differential might eventually be unnecessary, if the percentage of travellers buying on-line increases further.
Continental has adopted the same two-tier pricing structure for its special Internet fares, also giving travellers a $20 discount if they buy their seats on-line. Steve Cossette, Continental's vice-president of distribution planning, says that the carrier had taken this step because it wants to "learn about a new medium".
"The Internet promises that it can help us do business easier, faster and at a lower cost, and we're sharing our savings with the customer. We're trying to motivate product trial," he adds.
David Kirby, editor of the newsletter Interactive Travel Report, predicts that all airlines will eventually adopt a two-tier pricing structure for their discounted Internet fares, as another step in their "effort to drive consumers from travel agents, telephones and on-line agents to their Web sites."
Meanwhile, Frederick Reid, executive vice-president and chief marketing officer at Delta Air Lines, has taken the unusual step of publicly admitting that his carrier is co-operating with Priceline, the on-line marketing service that allows travellers to bid for tickets. Previously, no airline had confirmed it was working with Priceline.
Reid says Delta had been working with Priceline for several months, even though Delta's revenues were above plan in the first quarter and were "meeting plan" in the second quarter.
Source: Airline Business
