With all the hype generated by online travel agencies such as Priceline.com and Expedia.com,it might seem as if the major airlines were minor players online.
Not so. In fact, the major airlines are dominant players online, with Net ticket sales estimated at $8.7 billion last year-up by $4 billion from 1999. Airlines accounted for 58 percent of total air-travel bookings last year, up from 53 percent in 1999, according to PhoCusWright.
The carriers` revenues and market share, both online and off, are only expected to increase as the number of both air-travel buyers and Internet users continues to grow. “The longer people are online, the more Internet-savvy they become. The more Internet-savvy, the more likely they are to buy big-ticket items online-like travel,” says Lorraine Sileo, vice president of information services at PhoCusWright. eMarketer says the number of U.S. adult Internet users will increase to 118.3 million by 2003 from 75.8 million last year.
But success isn`t a given. Airlines realized that simply because more people are inclined to buy travel online, this does not mean they will buy from the airlines. So the airlines have been creating strategies to attract and retain customers, Sileo says. Specifically, the carriers have improved their sites` usability, are creating one-to-one relationships with customers, and are using multiple distribution channels to rid themselves of unwanted inventory.
The most important factor in the continued growth of airlines` Net revenues is their ability to create one-to-one relationships with flyers. Buyers say price is the most important factor when purchasing plane tickets online and that Internet travel agencies offer the best prices. However, buyers perceive the customer service of the airlines` Websites as significantly better than that of travel agencies. Because some online travel agents have diversified their offerings, the airlines by default are perceived as “specializing” in the sale of airline tickets.
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