Airlines join forces on new Web site
14 January 2000 -- Nearly two dozen airlines have signed up to offer tickets, including discounted Internet-only special fares, on a Web site being created by UAL Corp.'s United Airlines, Delta Air Lines, Northwest Airlines and Continental Airlines.
Boston Consulting Group, which is developing the site, is expected to announce the roster of new airlines today. "The consumer proposition of going to one place and finding not only the standard fares but the Internet-only fares of the six largest domestic airlines and 21 other airlines is unique," said Ben Burnett, a vice president of Boston Consulting.
Air Canada, Air New Zealand, Alitalia, All Nippon Airways, KLM Royal Dutch Airlines, Singapore Airlines and Varig have come aboard, as has American Airlines and US Airways and six smaller U.S. carriers, including American Trans Air, Hawaiian Airlines and Midwest Express Airlines.
Led by United and Delta, the site was announced in November as a competitive answer to Travelocity.com, Expedia Inc. (Nasdaq: EXPE) and other Web sites that appeal to independent-minded travelers. The four founding airlines plan to invest a total of more than $100 million in the site, which will be managed independently of the four to help ensure neutrality and avoid antitrust concerns. Boston Consulting, which is acting as temporary launch manager, said it is recruiting a management team.
The addition of American, the nation's second-largest carrier, is noteworthy because it comes at a time when its parent, AMR, of Fort Worth, Texas, is in the process of spinning off Sabre Holdings Corp. (NYSE: TSG), operator of Travelocity. Independence from Sabre gives American more latitude in the Internet arena.
The new site is expected to start up during the second quarter. Burnett said Boston Consulting "fully expects" to announce more airlines, hotels, car-rental agencies and tour companies as associates in the future. "It would support our business model if they supplied special Internet-only capacity," he said.
Special Internet discounts
Travelers looking for special Internet fares usually must maneuver between the various individual airline sites to catch the discounts, although a few sites do pull together selected Internet fares by using "screen-scraping" technology to surf the airlines' own sites. By having 27 carriers make available comprehensive seat inventories at fares as low as or lower than those available from any other source, the new site will raise the bar for one-stop shopping, Boston Consulting said.
Airlines have invested heavily in their own and other Web sites because it is far cheaper to sell tickets online than through their own reservations centers or through travel agents. But the process is often cumbersome, which means that many more consumers "look" than actually "book" online. An analysis last year of the largest 20 U.S. travel Web sites by electronic-business consultants Quidnunc Group PLC found that none did a very good job of offering a user-friendly, hassle-free experience to leisure travelers.
Despite those obstacles and some shoppers' fears of transmitting their credit-card numbers online, U.S. consumers spent US$7 billion last year on travel on the Internet, up from US$2.6 billion in 1998, according to e-travel research firm PhoCusWright Inc. It expects that figure to top US$20 billion in 2001. Figures for Asia are not readily available.