Airline managers might want to try an experiment: log on to their company's web site and attempt to buy a ticket. If they get lost, they can at least take comfort in the fact that they are among the majority - a survey has shown that this is the fate of 56% of passengers who try to purchase a ticket on-line.
If that statistic is not enough to make airline managers uneasy, they should also consider a statement by a researcher who compared airline web sites with those of other industry sites. Her conclusion: "Frankly, airlines score a D."
Research also shows that the people airline web sites most often fail are those who come on-line specifically to purchase a ticket. Even though the large majority of web site visitors have a particular airline choice in mind, they do not want to shop around for the cheapest deal and say they are not overly concerned about security issues such as keying in their credit card number. Their overwhelming concern, however, is not addressed. Online passengers report they are not totally assured that when they arrive at the airport, their "virtual seat" will exist as a reality.
Web loyalty
Given the apparent willingness by on-line passengers to deal directly with their carrier of choice, airlines might do well to reward their loyalty with first class web site service rather than lose them to slick Internet sites that have no interest in promoting one carrier over another, but only in finding the cheapest ticket for their customers.
The stakes are large - estimates as to how much Internet sales will be worth to the airline industry within the next two to five years vary widely, but some believe it could be as much as $20 billion, and that is based on tourist traffic alone. Something else that airlines tend to overlook - business passengers are increasingly turning to the Internet to make their travel arrangements and they are doing that more with convenience in mind rather than bargain shopping.
Just over 40% of airlines now make their tickets available for sale over their web sites. That includes all the US major carriers, while all those airlines that do not offer this facility say they intend to do so within two years. By 2002, it is predicted that 8% of Americans will have bought an airline ticket on-line. But that does not mean necessarily that airlines are making it easy for the customer. Rather, the airlines have chiefly turned to web site offerings as a way to drive down costs instead of regarding them as revenue generators in their own right.
In the USA, airlines have used the Internet both to sell surplus seats cheaply as well as to slash distribution costs. For example, America West has reduced its costs per ticket from $23 to $6. Operating costs can also benefit: FedEx, a $14 billion company, says it has cut costs by 1% by doing business on the Internet. Outside the airline industry, companies are reducing costs by as much as 6% by selling on-line.
This past year, however, has seen a sea change in the US carriers' attitude towards the Internet. First, there has been a proliferation of new services offering airline tickets, including the Priceline.com on-line auction site that allows a customer to name the maximum price he is willing to pay provided he is willing to accept whatever airline and routing is offered in return. Second, the major carriers themselves have put the Internet at the forefront of their annual fare sales. During the summer, for instance, the most heavily discounted fares were offered only via the airline web sites - something which attracted the wrath of the American Society of Travel Agents, which accused the airlines of "discriminatory behaviour" because only the "privileged few" have access to the Internet. That accusation has mostly fallen on stony ground in Washington. Third, as Sabre's Travelocity unit has merged with Preview Travel to step up the battle for the on-line market, some US airlines have moved to take matters in their own hands and pulled together to provide joint web sites.
Efficient service
Airlines still have a way to go, however, before they are providing what the on-line customer really seeks - fast, efficient and easy-to-use service that makes them feel comfortable about spending several hundred dollars on a "virtual ticket". US-based NetSmart America.com has conducted a survey about the shift in behaviour by Americans who now shop on-line. According to the NetSmart survey, US travellers are "flocking on-line in droves", with 38% of site visitors in 1999 making a flight reservation, 35% reserving a hotel room and 17% reserving a rental car. But that apparent flood on interest in on-line booking is not the whole story; NetSmart also discovered that 42% of potential customers use the Internet to find what they want, then call their travel agent to book.
Even among the customers who go directly to their preferred airline's web site and make a booking on-line - and NetSmart says that 68% of on-line shoppers have a specific airline in mind - 70% of people admit that they telephone the airline's charge-free line immediately after making the booking to be sure the transaction has been logged. "I'm not nervous about security; I worry about whether I really have a reservation," a Los Angeles businessman told a researcher.
NetSmart says it is critical, therefore, to provide an "official-looking" piece of paper - perhaps via a fax - along with an on-line reservation so that the traveller can feel reassured he has a seat and, more importantly, that he has something to wave at the airport if something goes wrong. "Ideally, that piece of paper should also have a contact name and telephone number at the airline. Airlines need to personalise their web site services more so that people still feel connected. Airlines need to make their web sites really user friendly and they need to focus on people," says NetSmart director Bernadette Tracy "Online shoppers will hand over their credit card number freely. What they want in return is to know that they have a seat, that they are going to get to their destination. It is about giving them confidence in the system."
Confidence building
Making their web site "user friendly" to potential passenger is the first big step towards confidence-building, says NetSmart. Its survey discover that only 18% of passengers are able to find the information they need to book a ticket on-line; 74% say that airline sites are "difficult to navigate"; 64% says that airline home pages are "confusing"; and - most damning of all - 54% get lost and give up. Chief gripes are that it takes too many "clicks" to move from the home page to where the passenger needs to be. NetSmart suggests that four clicks is the maximum number of steps that it should take for an on-line shopper to be at a point where he can make a transaction; Amazon.com - which has created a storm in the USA with its easy-to-use on-line shopping service offering books and many other products - believes that tolerance is now down to just two clicks.
NetSmart also suggests that airlines should unclutter their web site opening pages and get rid of the "bargain golf holiday offer to Hawaii" splash that tends to dominate the page and annoy the vast majority of on-line visitors who may never play golf or go to Hawaii. Instead, says NewSmart, there should be a few, clearly marked gateways into those services that airline passengers are most likely to seek. These initial choices might be: price quote; frequent flier miles; vacation plans; domestic trip; foreign trip; other.
Not all airlines are sitting still. American Airlines, for example, has opted not to join the joint web site launched in the USA in late 1999 and bringing together access to carriers such as Northwest and United Airlines. But American has been upgrading and improving its web site. John Samuel, vice-president of interactive marketing at American, has led the airline's efforts in interactive marketing and in its web site development. "We decided we were not going to be all things to all people on our web site, but we would instead concentrate on our AAdvantage customers, of which there are 10 million worldwide," says Samuel. "Our strategy was to create the best place for those people to do business with American. We wanted to make it as relevant as possible to the individual. That led us to place an infrastructure that enables personalisation and in which we can tailor content to the individual."
Samuel believes American has been "pretty successful" at achieving that goal within the USA. More than 30% of active US AAdvantage members have logged on the site since summer 1999, including 40% of American's top tier customers. Now, American is moving to spread that success globally, beginning with its largest international market, the UK. American's web site has been available to UK AAdvantage members since 1995, with booking facilities offered since 1996 and personalised features since June 1998. But in autumn 1999, American improved the UK web site, adding features such as ticket prices quoted in pounds rather than dollars.
Samuel says American expects to have booked on-line gross sales worth $500 million during 1999. He points out that while the percentage of ticket sales done on-line remains small, the numbers are big compared to most sales done on the Internet. It is also growing fast - 1999 was the third consecutive year that American's on-line sales have tripled. "Selling tickets on-line is one of the key things we are focused on and it's very important for this to be a convenient and preferred method of communication with our customers," says Samuel.
Samuel also points out that a programme such as AAdvantage is a "natural" for on-line development. "By its nature it is a virtual programme. You cannot touch or feel the miles," he explains. "Therefore, it is well suited to being conducted on a web site."
What the smarter airlines are realising is that without a first class web site, they are in danger of losing strategic control of their best customers. These days, if a passenger gets frustrated and tangled with his preferred airline's web site, there are many alternative on-line sites available, but few of those will have a vested interest in steering him back towards the preferred airline. Creating and maintaining a first class web site requires not just continuous innovation and creativity, it also means seeking ways to personalise a site, especially for top tier customers.
Expert help
There is expert help around. Unisys, for example, has launched a web site extension to its customer loyalty system (CLS). Unisys believes that airline web sites need to move towards what it calls "third generation" sites. CLS programme director Steve Arsenault points out: "The first generation sites were really a first step, from being unconnected to connected. They were mainly a one-way flow of generic information to the customer. Second generation sites allow transactions to be processed. For some, this means new business. For most, it is a new channel to support traditional business. Third generation sites will move an airline web site on to allow customer intimacy. That means a dialogue rather than a one way flow of information."
Airlines that develop third generation web sites will get a leap ahead of airlines that stick to their first- and second-generation sites. As one industry observer points out: "No-one is great at on-line CRM [customer relationship management], yet, so there is a great opportunity to gain a competitive advantage." Such an advantage could take an airline from beyond regarding its on-line services as merely a cost saver, or even a revenue generator and towards seeing it as a strategic asset that will help the airline keep its best customers.
Source: Airline Business
