© 2008 amadeus it group sa 1 internet in aviation it industry grach muradyan moscow 26 november...
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© 20
08 A
mad
eus
IT G
roup
SA
Internet in aviation IT industry
Grach Muradyan
Moscow
26 November 2008
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© 20
08 A
mad
eus
IT G
roup
SA
Current situation review
Internet penetration in airline sales
( airline own web site vs. total bookings)
Western airlines:
Southwest: 74% (2006 - 70%)
British airways: 46.9 %
airBaltic: 43%
RU / CIS airlines:
Aeroflot: 6-7%
Air Astana: 4 %
Aerosvit: 3.15%
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Current situation review
“The web Veteran” - www.southwest.com
The first LCC and to establish a home page on the Internet
101+ mln pax (74+ mln pax booked online in 2007)
2997 pax per one WN employee
527 aircraft fleet (B737s fleet only)
Number One airline web site for online revenue
70% of customers are checking-in online or at self-service kiosk
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Current situation review
Internet in the airline IT: 3 dimensions at least
Data transfer media (terminal or host to host)
Traffic cost savings, global reach, standard protocols
Services access environment
Ordering and billing online, problem loading / servicing…
Sales and Marketing environment – competition is
moving from offline to online !
Advertising, promotions…
Travel agencies vs. airlines direct sales channel
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Current situation review
Ordering services online via Amadeus Extranet
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Internet sales effectiveness
Are Internet sales so easy as seemed initially ?
Full business package should be available…
( just one missing component decreases effectiveness)
Seamless booking scenarios
Flexible Fare Quote, simple & clear FQ rules
Reliable CC payments + options (ATO/CTO ticketing)
E-ticketing on the whole airline network + interlines
Post-sell support, including online rebooking, refund, etc… / Does anybody provide this service in RU ? /
Increasing pressure on the airline call centres
DCS services online (web check-in…)
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Internet sales effectiveness
Are Internet sales so cheap as seemed initially ?
Less savings as agent commissions went down
CC transaction fees appeared instead
Additional permanent costs for
Website Servicing and support (outsourcing)
Fraud protection
Marketing (banners, advertising on the search engines)
Payment solutions integrations costs
Call centre for online booking (post sell) servicing…
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Internet sales effectiveness
Marketing on easyJet.com: banners & references
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IT G
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SA
Internet sales effectivenessCheapest fares promotion – risk of loosing revenues
( sales “black holes” vs. upsell options)
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Variety of travel services to be offered
Internet sales effectiveness
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Internet sales…site content should be clear even for “housekeepers”
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Internet sales effectiveness
Internet specifics vs. traditional distribution channels
Internet was not specifically designed for ticket sales Global coverage / unlimited access channel, but
multilingual interface needed No need for terminal distribution, but
requirement for user-friendly & intuitive interface No booking / abusing responsibility vs. agency case Risk of seats freezing (soonest payment needed) Booking cost is not fixed (vs. GDS Net Booking fees) Look to book ratio is very low (less then 2%) Competition area between airlines and TAs / portals
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Internet sales effectivenessGDS still behind…
GDS content while Internet used as an interface
Consolidating travel services (hotels, cars, etc…)
Acting as IT providers at the same time
Ensuring the sales integrity (E-ticketing)
Playing e-Commerce solutions providers role
Sabre IBE: SU, KD…
Amadeus IBE: FV, VV, KC…
Supporting Travel agencies Direct sales channel
Providing channel for higher revenue pax
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Internet sales effectiveness channels diversification history
Client
Client Client
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Internet trends
Provider – User relationship development
Stage 1: Provider gives no choice at all to User
Stage 2: Provider offers User to choose within a number of limited options
Stage 3: Provider establishes the rules, User creates the content itself
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Internet trends
Content provided by users - Wikipedia, Wictionary, etc…
A project (since 2001) to build free encyclopedias in all languages of the world
Everybody is free to contribute (neutral information) More than 10 million articles in 250 languages The largest Wikipedia - in English (2+ million articles) German, French, Polish and Japanese editions (each
containing more than 1/2 million articles) Seventeen other language editions contain 100 000+
articles More than 100 other languages contain 1000+ articles
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Internet trends Passengers to bid on airline website, similar to ebay.com?
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Internet trends Passengers to bid on airline website, similar to ebay.com?
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Internet trends
www.SkyAuction.com
Airline tickets, room nights, tours, cruises and
all-inclusive vacations
Negotiating special deals with leading airlines, hotels, resorts and cruises
Business around two simple, but powerful, ideas: Consumers should pay for their travel however much
they feel it is worth (and not a penny more)
Purchasing travel should be easy and exciting
(and not difficult and boring…) !
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Some conclusions
Internet primary benefit is not (really) cost cutting, but instead
Unlimited capacity channel (24 x 7 uninterrupted services)
Unlimited geographical coverage
Flexible content control & shortest “delivery” time
Airline online activity to follow the Internet trends
Providing the complete business package (including all post-sell services and support + upsell option!)
Becoming more interactive and flexible for choices
Allowing User / Passenger increasing influence on the content & services offered by an aniline
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Some conclusions
Internet turned out to be not so cheap channel
as it seemed initially
Internet sales require permanent efforts & investments for support & development
Internet sales could lead to revenue loosing if misused (“black hole” effect)
It’s not simply online vs. offline, but mainly direct vs. indirect sales split choice
Offline vs. online sales should be well balanced:
Every channel has it’s value vs. it’s cost
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