Benefits Of Controlling Airline Ticket Distribution

The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B.

It began participating in online sales at the Basic Booking Request level, a level specifically designed for its own needs in 1995, largely to make life easier for travel agents in its home market of Dallas (Bremner, C. & Fiona, J., 2008). This method of distributing their “goods” has benefitted Southwest Airlines immensely. Lower ticket costs, higher sales volume and cutting out the middle man, offering a pseudo bulk break method for the airline shopper. Southwest could improve on this media through progressive marketing campaigns targeting the areas of air travelers they currently do not. The elderly, young college students and those with children; these untapped areas hold a great possibility for revenue if Southwest is willing to target and market to them.

Airlines are now able to expand their outreach directly to consumers through e-commerce. For example, airlines like Qantas are able to introduce ticketless travel through the use of technology (Thompson and Gamble, 2012).

Small business customers and leisure travelers were the ones benefited the most from American’s new fare structure. Previously, small business customers who does not have the power and volume to negotiate with airline companies for discounted deals had to pay higher rates for first-class or coach tickets. American’s new cost structure reduced the full coach fares which allowed small business customers to purchase flight tickets at cheaper prices more conveniently. Leisure travelers, unlike business travelers, have more flexibility in terms of travel dates, thus allowing them to take advantage of the advance-purchase discounts and Saturday-night stay discounts under the new fare system.

1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011).

The Department of Transportations had plans to terminate its regulations governing the market of electronic distribution of tickets and flight information to travel agents. There were economic

The airline industry did not require a distribution strategy initially because passengers could purchase flight tickets directly from the airline’s desk. McDonald

carrier; the worst all-around carrier charges for every ancillary product. Established under Airline Segmentation, Spirit targets price sensitive, business-class, middle-class, students and solo travelers within psychographics (Zigu, 2017). Consequently, this paper will discuss the carrier; ticket distribution channels, pricing strategy, and product promotion.

Of the total travel market only 1% was generated from the online travel market, and consumers still depended on customer call centers to confirm payment status. To counteract the risks it is important that Lucky Air create an effective business-consumer-business model that will do the obvious and draw consumers to their site and make an online purchase of airfare. To draw in consumers Lucky Air will need to focus on Web 2.0, which is the unique feature or features of e-commerce and the Internet coming together as applications and social media technologies. Web 2.0 will allow for a better online experience with inter-human connections, consumer interacted blogs and the staff to constantly monitor the site to provide consumer feedback. Web 2.0 is crucial to providing customer relationship management. Promoting reviews from consumers in regards to destinations and airline experience are important so the consumer can feel they are important enough to expose the truth from other consumers even negative remarks. But the single most important part of focusing on e-commerce is the ability to provide a online experience and advanced technology that enables customer self-service without the need for multiple customer call centers. Customers should be able to pay for fares, cancel fares, use a safe payment method that can verify a credit card, check on the status of flights and use rewards programs

The Airline industry has experienced continual problems with rising costs with both fuel and maintenance which has caused them to increase their fees to the consumers to pay for those rising costs. This paper will help explain what an airline such as Delta does to help alleviate such costs without forcing its consumers to flip the bill through high fees that consist of tickets, baggage fees and food. The costs of doing business in aviation today have spiraled out of control making it very expensive for both airlines and the

Customers are part of the process and taking their roles willingly. For distribution of tickets, initially commission was given to travel agents but later Southwest implemented a “ticketless” (paperless) travel program and later the development of Southwest.com as a means of using the internet to sell travel directly to customers. Southwest was a true pioneer in utilizing the internet, first establishing a website in 1995. This lowered distribution cost.

There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.

Upon review on a profile of a successful company we see Southwest Airlines as a prime example. Their ability to recognize weakness in their management system and adjust strategies has allowed them to emerge as a leader in the US airline industry. Southwest is the largest US low fare carrier with low fare rates, no additional fees and excellent customer service. Southwest Airlines currently has one of the most innovative management practices in the US to date. A review of the critical elements of Southwest Airlines proves to be effective and innovative.

Fast, user-friendly online reservation system by facilitating e-ticketing and reducing staffing requirements at telephone reservation centers and airport counters. (Kuzmicki, 2009)

The success of budget airlines forced traditional operators to lower their prices by adapting internet sales and yield management techniques. However they still struggle to compete with low prices offered by the LCCs. Further reductions in traditional airline ticket prices are expected.