The e-customer is a fearsome animal. Thanks to the Internet, he can shop from the comfort of his own home, instantly compare services and prices, and switch brands according to that moment's best offer. He is also conditioned to expect service at the click of a mouse button. No longer passive, he has the power at his fingertips to find exactly what he is looking for at the price he is prepared to pay.
Just how ready is the airline industry for this new, empowered passenger? Delegates at Customers in an e-Society in October - an annual seminar sponsored by Unisys at St Paul de Vence, near Nice - worked hard to answer that question. But even as they debated how to maintain the fickle e-passenger's loyalty, matters were moving fast in the USA that could have serious implications for those airlines that have yet to even venture into the world of e-commerce.
By year's end, the US major airlines hope to have a new operating standard in place that would allow their electronic tickets to be as easily transferable as a paper ticket in the case of a cancellation or long delay. In addition, Northwest Airlines and Continental Airlines have considerably stepped up the e-ticket race by launching a worldwide e-ticket interline network. From mid-October, passengers purchasing e-tickets with either carrier can change their itiniaries, take a domestic or international codeshare flight with either carrier, and never have to touch a paper ticket.
While airlines insist there is no connection, this has been a second "summer of discontent" in the USA with air traffic control congestion, labour disputes and bad weather leading to unprecedented numbers of cancelled and delayed flights. One fall-out from this year's problems is that many passengers have discovered that an e-ticket may not be the easiest way to go when things go wrong. Because e-tickets often cannot be transferred from one carrier to another in the event of a cancellation or delay, some US newspapers have been advising travellers that it is better to buy paper tickets.
At a time when all US majors are trying to push their e-ticket sales as close to 100% as possible, that potential uncertainty among passengers could seriously affect their bottom lines. Consultants estimate that an e-ticket can cut distribution costs by between $2 and $34 per ticket.
Northwest Airlines' vice president of distribution and planning Al Lenza believes e-tickets were given an unfair rap this summer, pointing out that the restrictions on an e-ticket remain the same as a paper ticket unless it is a full-fare one. But an e-ticket gives the passenger flexibility that a paper ticket does not allow.
"This idea of telling people not to purchase an e-ticket is terrible advice," he says. "With an e-ticket you have the advantages of not having a ticket to lose, there is no renewal fee, and you can often use the self-service check-in counters that are becoming increasingly available at airports."
But Northwest and its codeshare partner Continental Airlines have now gone one step further to make the e-ticket even more user-friendly. By putting in place technology that allows customer to use e-tickets on either airline in a codeshare arrangement, they claim to have launched the world's largest interline e-ticket network. Even if itineraries change and a passenger switches between carriers, the ticket can remain electronic.
Interline-capable e-ticket
United Airlines points out that it was the first to offer the interline capable e-ticket when it set up such an arrangement earlier this year with Star Alliance partner Air Canada. Continental has also such a system in place with its codeshare partner, America West. But the Northwest-Continental move is far more out-reaching. Currently, Northwest sells almost 70% of its domestic flights as e-tickets, with 80% of award travel also e-ticketed. The airline hopes that the interlining facility will get them to their goal of 100%. "What was holding us back from getting to 100% was the interlining issue. That's why we have become very aggressive in expanding e-tickets to include interlining," explains Lenza.
Northwest, however, does not intend to stay only with Continental. It plans to bring TWA into the e-ticket interline system later this year, then to include United from early next year. "Our plan to is expand to all of the US majors, but we will need to work out a schedule with the other airlines," says Lenza.
E-ticketing is just one part of the e-commerce equation, of course. But there are many carriers around the world that have yet even to form an e-commerce plan - this year's Airline Business/SITA IT Survey found that a third of carriers have yet to sell a ticket on-line. For them it is only going to get harder to catch up with those carriers that are leading the way. If all the US majors do form an e-ticket interline network, for instance, what could that potentially mean to their less e-minded codeshare partners abroad?
Some airlines are also clearly concerned that in the rush to explore as many of the new electronic distribution channels as possible, certain carriers could make decisions that will ultimately affect the whole industry.
"I am afraid we may be making short-sighted decisions in the industry that will simply create the next-generation computer reservation system (CRS)," says a manager at one US carrier. "Five years from now we could find ourselves dependent on that distribution channel and from then on the price will only go higher. What we should be doing is recognising that the Internet offers us a unique opportunity to once and for all attack our expensive CRS system, We should, as an industry, be creating a non-profit company that would be an on-line arm for all the airlines."
But airlines that have an e-commerce strategy in place feel they cannot afford to stand still while their less switched on competitors work out how to get their act together. What they recognise is that e-commerce empowers the customer to become his own travel agent. He can see the many different options and fares available to him, and even name his own price for a fare on bid sites such as Priceline.com. So some airlines are looking at how they can turn the Internet tool to their advantage and somehow make their customers even more loyal.
Customer loyalty tool
As one consultant observes: "For too long now, the Internet has really been an answer looking for a question." He believes the travel industry, and the airline sector in particular, is perhaps the industry best suited to supplying the question: "Can I form a better relationship with my best customers using the Internet?"
Partners Unisys and Siebel Systems are putting together some Internet-related customer relationship management (CRM) tools which they believe can improve the airline-passenger relationship. But to get most use out of such tools, they point out, a culture change needs to be incorporated in an airline that recognises that e-commerce changes everything.
"You can no longer dictate that your customer deals with you only through certain channels," points out Siebel's director of business development, Asia Pacific, Mervyn Silverman. "E-business is about managing and synchronising every single touch point with your customer. It's about getting into your customer's mind and using these new channels to deliver service."
Silverman advises airlines not to be object orientated. "Don't build another dinosaur that is hard to change," he warns. Instead, airlines should see their services the way the customer perceives them - for example, a coach seat rather than a Q-class fare. Being less object orientated allows the airline to be more flexible and to make the instant adaptations that e-commerce allows.
Silverman also stresses that in the e-world, the airline also gains some power. It can be pro-active and much more targeted in its marketing campaigns using the databases of its frequent flier customers to create a two-way relationship. Special offer campaigns can also be targeted to particular markets and can be instantly expanded if successful or withdrawn if not.
Source: Airline Business
