In principle, the airline industry and the new Internet economy should have the warmest of relationships. The air travel product could have been tailor made for e-commerce. Not only that, but air ticket distribution has been computerised for decades, bringing with it the disciplines of revenue management that the new economy only now is discovering for itself. So why then do Internet evangelists and airline executives so often seem at odds with each other? A large part of the answer may have to do with culture rather than technology. Crossing that divide - as the US majors now appear to be doing - may be where the real revolution starts.
If travel in general is a shining example of online trading, then the air ticket is its acknowledged star - witness the exponential growth of Priceline.com and its followers. And so it should be: despite the hype, there is not an unlimited number of products for which Internet selling provides such a striking advantage. The airline ticket would seem to be one. It is a highly mobile and relatively valuable commodity, with dynamic pricing, plenty of choice and which can be delivered electronically. courier flights
Then, there are the shortcomings of the existing distribution channel. By any measure, the mix of booking and computer reservation systems (CRS), travel agencies and other intermediaries represents an unwieldy and expensive relic. The Internet offers a unique chance to cut through this tangle. In the process it should also allow the airline to get a good deal closer to the customer. That has spawned the longest buzz word in airline history: "disintermediation".
So far, so good. However, as the online evangelists never tire of preaching, the Internet is not just about doing old things with new technology, it is about changing the way that you do business.
Armed with near perfect information, the e-consumer is a new breed of shopper, expecting lowest-price service at the touch of button and with a healthy disregard for conventional brand loyalty. You no longer tell the customer what is on offer - the customer tells you. While some of Silicon Valley's more visionary talk of a brave new world of Internet democracy and personal empowerment may be overdone, there is no doubt that trading on the Internet is going to be different. In short, companies need to rethink their attitude towards the customers they serve. The new technologists question whether the airline industry as a whole has made that journey.
They have a point. In the jargon of these things, the airline industry does indeed come from an "object-oriented" background. In the past, it has centred on delivering production units - ascribing passengers to available seat capacity. Now the emphasis is on flexible choices and lifetime relationships.
Advocates of the new economy look with horror at the coding systems which still dominate everywhere in the airline world. Take, for example, the average airline ticket. The fare codes alone, they argue, are horribly revealing about airline thought processes, representing a hidden internal system which leaves the customer thoroughly excluded. That is a position to which the new breed of empowered e-consumer will not happily submit. And why should such codes survive when the systems for which they were designed - not to mention the paper ticket itself - are fast disappearing? Many of the new start-up carriers have indeed dispensed with much of this convention and thrived on the results.
The more aggressive Internet advocates warn that the rest of the industry too can no longer cling to the safety of the old collective certainties. What may look like co-operation to airlines looks dangerously like collusion to these outsiders. When airlines complain that advances towards Internet protocols and e-ticketing are being slowed by the need to maintain legacy systems for interlining, the new technologists suggest that they simply abandon the interline agreements. Some of these solutions may sound simplistic to airline veterans, but they are not so far-fetched. The US majors are already well down the track to full e-ticketing and, for that matter, e-interlining. That alone would seem about to force the pace for those who have not yet made a similar move. They could risk excluding themselves from interlining in a future all e-ticket world.
The warnings are also worth bearing in mind for another reason. The consultants who tend to champion such views are not merely doing so as technologists: they also happen to be among the world's most frequent business flyers. Perhaps that is why their pleas for change can be so heartfelt. And what do they personally want from the industry? Perhaps nothing less than a more equal, open relationship with the airline and signs of cultural change running from the cabin right through to the boardroom. The online revolution may provide a rare excuse to effect that transformation too.
Source: Airline Business
