Internet Travel News Interview; David Scowsill, CEO, Opodo
Opodo, the online travel company created by nine of Europe’s leading airlines (Aer Lingus, Air France, Alitalia, Austrian Airlines, British Airways, Finnair, Iberia, KLM and Lufthansa) has seen an impressive growth rate since it was launched in 2001 and was most recently recognised for its use of digital media, when it picked up the “Revolution Award”, alongside an award for best brand building by an online business.
This week Internet Travel News speaks to David Scowsill, who was appointed CEO of Opodo in September 2002.Q. Can you tell me something of yourself and what drew you into the travel industry?
Studying languages at University and taking vacation jobs with tour operators and cruise companies gave me an interest in travel. My introduction to airlines was with British Airways, who taught me to read meteorological charts and calculate fuel for long haul aircraft using a circular sliderule. From this operational initiation into the travel world, I have worked in various sales, marketing and general management roles with BA, American Airlines, Hilton, Orange and now, Opodo.
Having worked in large established corporations that have been household brands for many years, I am really enjoying taking a young organisation through the changes required to turn it into a larger, profitable company.
Q. Is booking online as easy as it should be?
We’ve gone to great lengths to ensure that our website is designed for quick and easy use by customers. It is one of our key differentiators, as our sites in Germany, UK and France are simple and uncluttered. We are committed to ongoing investment in our technology platforms, to ensure that booking travel online is an enjoyable and efficient experience.
Q. What is the most important factor for the consumer when booking online?
Transparency. The Internet has educated consumers that good prices and great value-added deals are available to everyone, and this transparency is driving the growth of online travel purchasing.
Q. How do you ensure that you make the service available to consumers everywhere and all the time?
Opodo operates in the three largest markets in Europe - Germany, UK and France. Site functionality and ease of use are key for our customers, and we support our sites with great service in the call centres on a 24/7 basis. Telephone support becomes the factor that really distinguishes a site in the minds of a consumer, when they need some extra help.
Q. Has the increased implementation of Wi-Fi assisted your business in recent months?
Having worked with Orange, I understand the power of wire free communications technology. My laptop and personal organizer keep me in touch all the time, because I am hooked up to the Internet through GPRS. I have no need for a wired office to be able to communicate, and the increasing use of Broadband at home makes it easier to be productive there as well.
I believe that there will be a dramatic increase in the deployment and adoption of wireless technology (WI-FI) in hotels, airports and down railway lines. Customers will be able to make bookings on the move, change travel plans, search for content, easily and quickly.
It is currently only ‘early adopters’ that are really making use of this capability in Europe, hence the numbers of bookers via this route is still small.
Q. Will you move into the video mobile arena or other distribution channels?
Video streaming to mobile devices is still in its infancy, but will provide great opportunities in future to sell locations for travel. Communications to mobile devices via e-mail and text are really useful for confirmations and flight time changes, but booking/ transacting on mobile devices will remain a painful process for sometime compared with using a laptop or desktop. We will look at all mobile distribution opportunities, when they move out of the ‘early adopter’ test phase.
Q. Have you witnessed an increase in online bookings so far this year (as your Travel Index study predicted)?
2002 was the worst year that the worldwide travel industry has ever experienced. Opodo predicted that there would be a surge of bookings posts the Iraq conflict, and that overall 2003 should be a better year. We have experienced a very healthy growth in sales. This is driven partly by the rebound effect after the war and SARS, but principally because of the migration of consumers away from high street retailers onto the Internet.
Q. Are you optimistic for the rest of the year 2003?
The online travel market has proved to be more resilient than other sectors of the industry, continuing to grow despite the current economic and political climate. I am optimistic that this growth will continue throughout the rest of 2003.
Q. Do you foresee Europe catching up with the US in online travel purchasing?
Europe will never completely catch up with the USA, as the travel transactions are relatively simple there, compared with some of the complexity of selling and packaging here. Currently in Europe, the amount of total travel booked online is less than 3%, but this is changing rapidly as we start to climb the same curve as the US. Some analysts are forecasting that the online travel market in UK, France and Germany may grow to 19% by 2005.
Q. What factors do you think have contributed to the rise of online bookings in recent years?
Airlines, hotels and car rental companies are using the Internet to reduce the cost of distribution and to get their product fast to market.
The single biggest factor in the UK has been the success of Easyjet and Ryanair in educating the consumer to purchase travel online. Supported by large marketing budgets, they have converted the CD/book purchasing families into searching for travel online. As a relatively new-entrant, Opodo has further stimulated the market and educated consumers that there is a wide choice of travel opportunities available via the Internet.
Q. Do you believe low cost carriers have helped to drive prices down and online bookings up? Can you elaborate on the situation?
The UK is now Europe’s centre of low-cost flying, growing 35% to nearly 10 million trips in 2002. The low-cost carriers have demonstrated that they can combine high growth and low fares with strong profitability, whilst at the same time further expanding the market.
Scheduled carriers finally reacted last year by changing their pricing structures to compete with Easyjet and Ryanair, whilst pushing their own website sales with low-fare advertising campaigns. This reaction has further stimulated the consumer shift into online travel purchasing.
Typically consumers will search three places before making a flight choice - scheduled carrier site, low-cost for particular destinations and Opodo for a full range of services.
Q. Do you expect that we will see the expansion of charter flights on travel sites in the near future?
Business and leisure consumers want the choice of charters/scheduled and ‘low-cost’ carriers on the same displays. First step will be to introduce charter flights alongside scheduled services.
The interesting question is whether the low-cost carriers will ever participate in the GDS - probably on a different pricing structure - so that travel agents can genuinely show all options on one availability screen.
Q. To what extent do European commission guidelines serve as a restriction for Opodo?
There are no restrictions on Opodo. The airline shareholders have very clear rules on dealing with Opodo on a strict arms-length basis, in the same way that they deal commercially with other online agencies.
Q. How much controversy have you witnessed surrounding opinions that airlines should make all fares available to travel agents on an equal basis?
There is huge debate in the US about this issue, which was sparked by Orbitz directly connecting to airline inventory and getting access to web-based fares that were not available elsewhere via the GDS. This was another initiative to reduce the costs of distribution by the major carriers in the US. It does appear to have resulted in some GDS price reductions for longer-term deals, which include full access to web-based fares. This debate is coming to Europe now.
Q. Are there any technological developments underway that you can comment on?
Over the next 6 months we will be working with our key suppliers on a number of major technological enhancements. Product development will be a key area of continued investment.
Q. What does the future hold for Internet travel?
Europe will follow trends set by the USA. Scheduled airlines will move to around 50% of their inventory being sold through online channels over the next two years, as they continue to drive down their costs of distribution. Hotel and car rental sectors will continue down the same path, but at a slower rate, and there will be huge growth in the area of dynamic packaging. The lines between traditional tour operators and online travel companies will blur, as the consumer moves steadily towards wanting to self-package and book travel over the Internet. Online agencies will grow and consolidate, with the survivors taking large market share from high street travel agencies.