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The Online Travel Industry (Airline Tickets) Adam Ratana Rohit Ravinath Thiti Wang-Aryattawanich Rubina Zaidi
Industry News & Projections
Travel eCommerce is expected to reach $20 billion by 2001 (source: eMarketer) 33.8 million travelers used the Internet for travel planning, up from 11.7 million in 1997 (eMarketer)
Online Airline Ticket Industry
Major Players in the Online Airline Ticket Industry Auction Services Priceline.com Expedia.com (auctions section) Travel Agency Services Expedia.com Yahoo! Travel Travelocity Direct Purchases from Airlines American Airlines, US Airways, etc…
The Basics Consumers sign up online with the service and can shop anytime, anywhere for travel services w/ a web browser Log in, select cities, dates, get price (for priceline, enter price) Pay using credit card and delivery in electronic form or paper
Reverse Auctions Enter a bid price along with destination, origin, and other flight options Once bid is submitted, if found and accepted, consumer is committed to purchase ticket Priceline and Expedia offer this type of service Sample screen in next slide
Online Travel Agencies
Once submitted origin, destination, and dates, several options are provided for purchasing tickets Offers price comparisons through different airline companies Consumer commits on his own will This service is offered by Yahoo!Travel, Travelocity, and Expedia Sample screen provided in next slide
Direct Online Purchase from Airlines
Consumer enters origin, destination, and date of travel Different flight options are displayed for that Airline Firms that offer this service include American Airlines, Southwest Airlines, US Airways, etc… Sample page provided in next slide
Who are the Customers? Anyone who travels and has access to the web
The everyday consumer Corporate accounts Small businesses
How do the firms Attract Customers?
Media Advertising (print, radio, TV – priceline) Banner Ads (Yahoo!, Travelocity, Expedia, etc) Gimmicks/Promotions (free stock- travelzoo) Affiliation Programs (American Express & Expedia) Additional frequent flyer mileage with online booking Discount coupons, Premium Goods Word of Mouth (most or all of them enjoy this)
What Value-Added do the Firms Offer?
The basic value-added for consumers is to pay the lowest price possible for tickets and save time. They can now either afford to fly instead of another means of transportation, or they can fly more often. Another basic value-added for the firms is that they can fill airline seats closer to capacity.
Additional Value Added
Price comparisons! Extreme Convenience of doing it online, 24/7 – saves time Electronic Tickets (Paperless) Incentives (i.e. US Airways gives you more frequent flier miles) Choose Seat Assignments online Additional content services (maps of local areas, hotels, restaurants) Book whole trip (flight, hotels, etc) without an intermediary
How do the Firms Retain Customers?
Like any offline service, they use frequent flier miles services (USAir E-Savers, AA NetSavers, periodic discounts, fare-trackers) You can track prices on your pager/cell phone Traditional methods such as discount coupons, complimentary upgrades Complimentary goods (small gifts at the end of the year)
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