Are Carrier Web Sites A Good Deal?

<B>Are Carrier Web Sites A Good Deal?</B>

Carriers are planning to make their Web sites as user friendly as their ads. The goal is to encourage travelers to "stick" to the sites. Current studies show that once buyers are comfortable with a Web site, they become very brand conscious and less likely to price shop or look for comparisons. This could mean they accept higher prices, since surfing takes time, and there's no reason to leave "home."

Captive travelers have been the name of the affinity game for years. After all, carriers know that the traveler occupying the seat is the real "customer." Loyalty programs are the last bastion of defense against lost corporate business in competitive bidding for preferred volume discounts. Newly designed, attractive Web sites offer more ammunition for gaining traveler loyalty in the face of competition on price or even convenience of schedule.

It is clear why carriers are encouraging bookings through their Web sites:

<li> Avoiding commissions or overrides

<li> Developing brand loyalty

<li> Gathering information

<li> Avoiding GDS fees

<li> Taking advantage of inertia, and the tendency not to shop or compare fares once comfortable with one site

<li> Better yield over time

<li> Collectively owned and operated sites offer even more savings and one-stop shopping for multiple carriers.

Note lowering prices for business travel is not among these reasons.

These new sites also allow renegade travelers to check on the corporate travel program and the travel agency after work (or during work). "Let's police the police." An hour or more of surfing can produce the occasional lower fare, which undermines the credibility of the managed program and offers more ammunition for those who love to prove headquarters wrong again. And when done during business hours, it also undermines company productivity.

Conventional wisdom has been that cyber fares were deceptive and too restrictive, and only available for the sporadic trip. "Look beyond the first page to the rules, and beware." That, however, is no longer the case. Carriers increasingly lure passengers with fares good from Tuesday through Friday without weekend stay or other restrictions. Even a sprinkle of those fares undermines credibility in managed travel and threatens delivery of contract commitments with preferred carriers.

Some carriers now offer corporates the opportunity to book preferred deals at one site and receive credits on cyber fares at the same time. Sounds good, but there are risks:

The supplier attracts and cultivates travelers, like frequent flyer benefits, exacerbating the conflicts in loyalty created by frequent flyer programs.

Consolidated MI data disappears unless the travel agency is linked to the site, or the carrier hands off data to a third-party data consolidator, which could add time and costs to the booking process paid by the company.

There is no cross-checking of other fare bases or "reverse yield management." Noone ever knows if lower fares and/or better routings are available on competing carriers.

A major reason to run a Web site is to collect data on visitors. Extensive data on individual travelers is captured for the supplier and its marketing department, such as home address, use of cards as form of payment, buying habits, trends, preferences, destinations and more. Data on travelers finds its way to "friends" or joint venture partners of the supplier operating the site. There are no practical restrictions on the use or manipulation of data derived through the Internet.

Nothing in the Internet revolution suggests a basic paradigm shift by carriers, but only a change in distribution tactics. Having learned that travel agents don't really drive share, the assumption is that Web sites will be more direct and less costly, while "building" a closer relationship with the real customer, the traveler. Like alliances, the objective is not to assist companies manage travel expenses.

Some other issues with Web sites:

How can risks of collusion be avoided on joint pricing by competitors or sharing of sensitive information?

Who ultimately pays for the development and maintenance of the sites, or will ticket prices increase with extra fees as they did with fuel surcharges?

How will companies counteract indiscriminant reliance by travelers on multiple Web sites, potential for time loss and higher pricing?

How many direct booking relationships can time-starved managers negotiate and manage? Adding to in-house staff is usually not an option.

In addition to loss of consolidated data, the Travel Manager effectively loses control over ownership and unauthorized use of company travel data. Suppliers can learn too much too fast in the new economy.

How much time will be spent navigating different sites as opposed to booking through a single source?

The potential bias of carrier Web sites is one of the new challenges facing travel management. Efficient use of time of employees and managers is also a major issue. Don't rule out agencies and GDS providers.

Disintermediation may be an oxymoron in the new economy, which is spawning a variety of options for booking, communicating and processing travel. But will agencies forego overrides? Net deals help remove some of the conflicts, however, the future suggests more room for neutral third parties proving added value.


<I>By John H. Caldwell
Attorney, President of the Washington, D.C.-based travel management consultancy Caldwell Associates.