Airlines have become retailers, the Wal-Marts of the skies, according to a report by the Atmosphere Research Group (ARG), commissioned by IATA. In this work released last month: The Future of Airline Distribution – A Look Ahead to 2017, highlights noted included these not so surprising observations:
• Travel is the largest e-commerce category, led by airline ticket sales. “In the US, it’s estimated that business and leisure travelers will spend $85.7 billion online for airline in 2012.”
• The typical travel shopper visits 22 websites in “multiple shopping sessions” before booking a trip but “travelers relying solely on third party websites would not receive all the information needed to make a fully informed purchase decision.”
• Passengers are more likely than the general population to own smartphones and tablet devices, with substantial growth expected due to these devices’ growing capabilities. Passengers show strong interest in using mobile devices to plan and book flights, illustrating their comfort with these devices.
• By 2017, 50% of online direct bookings will be made on mobile devices — with even more ancillary purchases made through mobile, given the devices’ portability and ease of use.
“Airlines have morphed into retailers — true merchants of the skies,” the report adds. “As merchants, airlines need systems that can help them not just distribute their flights, but merchandise their products and value across the channels that make sense — online and offline, direct and indirect — at sensible costs.
“What airlines don’t want are distribution channels that present all airlines as equally substitutable commodities. Airlines want, and expect, their distribution partners to offer passengers helpful contextual information to make well-informed purchase decisions, reducing the number of reservations made based primarily or exclusively on price.”
Customers, meanwhile, believe that, “control is as important in booking flights as in buying a cup of coffee. Passengers may accept that airlines can’t be the first to offer customization tools like buttons, sliders, and other similar controls that make flight shopping easier,” but as they see these tools deployed on other websites, “they will expect airlines to offer comparable functionality.”
According to the study, “distribution is no longer an adequate way to think about how airlines must sell their products” because it implies process – “when airline executives instead are increasingly focused on results. That’s why, by 2017, what airlines currently call ‘distribution’ will be replaced by a focus on channel-based, value-creating commerce.”