Despite much recent fanfare about airline participation in the online revolution, ticket-selling on the Internet is still a relatively rare phenomenon and has yet to have much positive impact on carriers' bottom lines. But its potential is undisputed and airlines uniformly consider their experience to be an invaluable education about the Internet in its nascent stages.
The two pioneers in selling tickets online were Alaska Airlines and British Midland, both of which began to proffer their wares on the World Wide Web in December 1995. Southwest followed in May of last year, American in June, Lufthansa in November, and Delta, Continental and British Airways in December.
Each carrier has differing restrictions on who is eligible to buy tickets. American, for example, will only sell seats to passengers purchasing in the United States, while at the moment BA is selling tickets online only for deeply discounted 'World Offers', and only to UK-originating passengers. Lufthansa and Southwest, on the other hand, offer their online tickets to any interested passenger.
The way in which potential passengers can search for fares online also differs by airline. Until recently Alaska only listed fares for a specific itinerary priced from the lowest to the highest, which could entail data on 36 flight combinations, a system geared to leisure travellers. According to Molly Chesire, the carrier's supervisor of distribution technologies, Alaska was set to offer flight information by schedule in March to cater for business travellers. American allows travellers to shop by price and schedule, while Delta offers both 'quick' and 'regular' travel planners. The first is for passengers who wish to buy tickets on straightforward routes with simple fares, the second is for those with more complex itineraries.
Carriers also differ in their ways of dealing with security and distribution issues for online ticket sales. American, Delta and Lufthansa require that anyone who buys a ticket on the Internet participate in their frequent flyer programme. They thereby obtain better data about online ticket purchasers. Continental requires credit card information from all ticket buyers before they can begin the purchase process. Most airlines demand either immediate payment or payment within a very short period after the reservation is made to guard against bogus reservations.
All carriers say their sites are fully encrypted, thus offering travellers a secure environment in which to submit their credit card information.
In order to exploit the Internet's ability to cut distribution costs, some airlines - including Delta, South-west, BA and Lufthansa - have been bold enough to omit agents deliberately from the online ticketing process. This development so far doesn't seem to have openly incurred the agents' wrath. Southwest hasn't alienated them, suggests Kevin Krone, senior manager of marketing automation, because of their 'realisation that people who are using the Internet probably were using the phone (to buy tickets) already. These sales are now a pretty small part of the universe. Agents don't feel a big threat that the Internet will run them out of business'. Continental, meanwhile, announced in February that it would limit the commission it pays agents for online ticket sales to 5 per cent, thus matching a similar move last year by Northwest and KLM.
Online ticketing could allow Southwest to save 'millions, if not tens of millions of dollars' in distributions costs this year, if business 'ends up as planned', predicts Krone. However Southwest's experience will not necessarily be duplicated elsewhere, since its simple point-to-point fares are much easier for travellers to book online than those of other airlines and Southwest usually has a higher percentage of travellers who book directly anyway.
One interesting twist is Lufthansa's decision to sell other airlines' fares on its web site. According to Dr Roland Conrady, general manager of multi-media, the carrier offers potential passengers who request information on a certain route a 'nearly neutral display' from Amadeus. 'It's important for the customer that we sell a whole range of products, so the customer can compare them. If the customer only sees Lufthansa on our site, then he'll have to look at other airlines' and travel agents' sites. It won't help us in the long run if we only show Lufthansa,' Conrady suggests. Lufthansa offers similarly broad information on its CD-ROM booking product, and Conrady says that 'although all airlines are bookable on the CD-ROM, 95 per cent of the bookings are on Lufthansa.'
All the airlines say online bookings still represent only a tiny percentage of their total business. For example, Desmond Butler, British Midland's information technology manager, says his carrier receives 'only a few hundred bookings a month', while John Samuel, American's director of distribution planning, says all sales of American tickets from online channels - including the airline's web site and the sites of Expedia, the Internet Travel Network and Travelocity - amount to less than 1 per cent of its total bookings. Still, 1 per cent of American's bookings is $136 million a year.
However, the potential of online ticket sales was quite evident after American triggered an industry-wide seat sale in the wake of its aborted pilots' strike in mid-February, when it announced massive discounts, both on the Internet and through regular distribution channels.
Krone says Southwest's site received 'hundreds of thousands' of hits in the following week, while Samuel says American's promotions brought 'thousands of new users every day to [its] site to access the booking tool'. By the third week of February, American had already exceeded its online sales projections for the month.
Source: Airline Business
