Air Transport World

Web of Ambivalence.(airlines on Internet-based travel services)

Airlines say they welcome Internet-based travel services but appear to have reservations as well

The rapid development and growth of third-party online travel-product suppliers present U.S. airlines with an interesting dilemma. On the one hand, they welcome the creation of another channel through which to promote and sell their product, especially one that challenges the hegemony of the brick-and-mortar travel agency-based distribution system. In particular, airlines may hope that in the future, online travel-service firms could compete with the CRS vendors and thereby weaken the power of the latter over airlines, although this certainly is not the case today. (Such services may offer proprietary "front ends" but they are linked to the existing CRSs for their schedule, fare and booking tools.)

On the other hand, airlines are devoting substantial resources to operating and enhancing their own web-sites, through which customers can make direct bookings, avoiding both the travel agent and in some cases, the CRS vendor. This effort, they hope, will result in significant cost savings one day, and they are not eager to see the potential benefits being siphoned off by third parties such as Microsoft Expedia, Preview Travel, and Internet Travel Network that sell air travel off their own websites to anyone with a computer, a credit card and access to the Internet.

This ambivalence is reflected in the approach they take to dealing with these "virtual" travel agencies. Southwest Airlines, for example, regards such firms as contrary to its "direct to the customer" philosophy and does not pay commissions for online transactions, according to Director-Marketing Automation Kevin Krone.

Continental Airlines VP-Planning Distribution Steve Cossette describes online travel services as "a very good thing for electronic commerce [and] a very good thing for electronic distribution within the airline business."

He notes that the airline has conducted joint promotions with ITN, Expedia and Travelocity to encourage visits to those sites. …

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