The Right Wing: A-P Carriers' Web Sites Deliver

Asia Pacific airlines and North American carriers think differently about the Web when it comes to online sales and overall CRM, according to "Asia Pacific Airlines Are Bullish About the Web," a new Forrester report. The firm surveyed executives at six leading Asia Pacific carriers, which represent roughly $28 billion in 2004 passenger revenues, to gauge their expectations. The execs expect roughly 16 percent of their revenue to come from Web sites in 2005, and expect that amount to rise to 42 percent by 2010. Third-party sites lead online sales among Asia Pacific airlines, and likely will continue to do so for the next five years--about 60 percent compared to 50 percent in the United States, according to Henry Harteveldt, vice president of travel research for Forrester and author of the report. Four of the six airlines surveyed said they would increase the number of Web agencies that sell their tickets in 2006. "The dynamics of the U.S. market is very different from the market in Asia," Harteveldt says. "It's clear that the region's travel agency community is strong--a strength that airlines bestow on agencies by giving them net fares priced below carriers' retail rates. In the U.S. we haven't had that. What you see is what you get in terms of transparency and consistency of price." The Association of Asia Pacific Airlines estimates its members will generate $65 billion in revenues in 2005, with the Web producing $10.2 billion, or 15.7 percent, of that. "Asian airlines are certainly doing a very solid job bringing sales to the Internet thus far," Harteveldt says. "What's really impressive is some airlines are generating a substantial amount of revenue online ahead of the curve. It will be very interesting to wait and see how Asia Pacific carriers enhance their Web sites and whether they surpass their own predictions." Their sites already are fairly robust, Harteveldt says, but there is room to improve how the airlines manage their sites, especially as they relate to their overall business. For example, all six offer both paper and electronic tickets, with 85 percent being electronic. However, only two of them allow passengers who buy online to pick up a paper ticket at a city or airport ticket office. Credit card acceptance is universal, but Harteveldt expects more payment options, like debit cards and online bank transfers, to emerge in 2006. "In Asia, credit cards don't have the same level of penetration as they do here," he says. "They've been accepted, but they're recognizing not everyone who flies owns a credit card, and they need to make the Web site more accessible to shift sales." Asia Pacific and North American airlines can each learn something from one another. For Asia, "Nobody should be allowed to underprice the airline. [Its] Web site should be the de facto best source for the best fares," Harteveldt says. Additionally, they shouldn't charge service fees for booking complicated fares over the phone. "If people are about to put down several thousand dollars, the magnitude of the fare should allow this airline to sell those fares without a service fee and the service should be the point of differentiation." When it comes to overall customer service, however, Harteveldt says, "Asia Pacific airlines take customer service seriously--even an award for the best aircraft boarding procedure is highly prized. One of the first things you come across [in their reports] is the awards they won and the sense of pride they and their employees have in their products and the innovative ways to service their customers. In the U.S. you hear cost-cutting, cost-cutting, cost-cutting, mixed in with whining about fuel costs, high employee pensions, and too many taxes by Washington, D.C. They're just not doing very intelligent things. "It's no surprise that [Asia Pacific] airline managers want their Web sites to function within their CRM strategies, as well as help shed light on customer insight. Ideally, CRM can help an airline track customer behavior across channels and points of sale, support profitability analysis, and increase revenue by learning more about the customer's broader preferences." Related articles: Airlines Are Crashing on Service Online Travel Reservations Are Missing the Boat