Airline Changes

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ONLINE TICKETING IN THE AIRLINE INDUSTRY: THE GLOBAL IMPACT Chiang-Nan Chao, St. John’s University, Jamaica, NY, USA Robert J. Mockler, St. John’s University, Jamaica, NY, USA Dorothy G. Dologite, Baruch College, New York, NY, USA

ABSTRACT As consumers move away from the traditional approach of buying airline tickets in the past years, airlines are benefiting from cost reduction due to the rapid increase in paperless e-ticket sales and restrictive use of traditional travel agencies. However, when purchasing airline tickets across national borders, traditional travel agencies still play a role, even many US- and European-based airlines have reduced their ticket sales commissions to the travel agencies. This study suggests that in order for airlines to stay competitive in the industry, in addition to offering better airfare, many international airlines in developing countries must follow their US and European competitors to aggressively deploy online ticketing strategies. Keywords: E-commerce; E-tailing; Airline Industry; Multinational Management, Travel Industry 1. INTRODUCTION Although setbacks in the airline industry discouraged consumers to travel, the total number of travelers continues to grow at a slow but a steady rate. The occurrence of the terrorist attack in New York City on September 11, 2001 has caused many consumers to loose confidence in the safety of air travel. Travelers have now started to use alternative modes of transportation to reach there destinations. In the hope of attracting more travelers, many major airlines are offering generous discounts, better service, and more flight options, while security at the airports has been tightening in recent years. The traditional relationships between travel agencies and consumers are being redefined by the technological transformation to the digital economy. User acceptance is the key to a quick and successful implementation of an online industry’s strategy, especially in the ticketing area. By keeping the reservation system simple, secure, and user-friendly, it will eventually lead to a successful implementation. Many recent studies have shown that when airlines around the world offer online reservations they also offer a wide range of services to go with it. In today’s volatile market, airlines have to do everything possible to stay competitive. They have been focusing on providing efficient reservation, ticketing, and airport check-ins, while many services have been cut, i.e. ticket office in most of the US cities, outsource reservation overseas, and charging fees for tickets purchased using airline reservation operators, in-flight alcoholic beverages, and meals on many domestic flights. To understand what will be happening in the airline industry in the years to come, this study investigates, from the passengers’ viewpoint, which online services the airline companies and travel industry need to provide to their customers, with an exploration of some aspects of the airlines in less developed countries, i.e. India and China. 2. REVIEW OF LITERATURE In today’s digital economy, online e-tickets in the airlines industry have emerged as a leading choice when shopping for flights. The migration to e-ticketing, which could save millions of dollars for airline industry, has been underway for more than 10 years. The benefit of e-ticketing is that you can walk into any travel agent (either online or offline) in the world and buy a ticket on any airline to anywhere in the world (Williams 2006). Many airlines in the developed countries have already achieved high percentage of e-ticketing, while the adoption of e-ticketing is not paralleled in many less developed countries. In the U.S., 96% of tickets sold by the airlines are e-tickets purchased online, while in India, only a small fraction of the total e-tickets are sold online. China is ahead of India, but e-tickets sold online are far behind that in the U.S. and other developed countries (Peterson 2007). Since the...
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