Airline Market Trends

Strategic Implications

The Internet has empowered online travelers to have broader control over vacation planning, airline market trends, and use technology to assist them throughout the purchase process. This has given rise to meta-search tools, online communities and other Web site features that simulate the experience and knowledge of industry veterans at the point of sale. New and existing Web-enabled customer support services will be imperative in order to broaden and redefine the value of the Internet beyond low pricing and word-of-mouth referrals.

While U.S. adults are spending more time online (often at the expense of other media and purchase channels), use of the Internet channel is not exclusive. The same is true in travel. Suppliers’ increasing penetration of the online lei­sure market is the direct result of better inventory management across both of their channels of distribution. This high­lights the importance of offering and using both online and offline channels for customer service and support such as airline market trends, partic­ularly as online buyers begin to segment their channels of purchase by the type of travel component purchased.

Airline Market Trends

Now thoroughly integrated in our lives as: 1) a source for information; 2) a means of communication; 3) a place to transact, and 4) a venue for entertain­ment, the Internet functions as a portal for living. To truly capitalize on the revenue opportunity and value of the Internet for travel, market participants will need to view it in terms of these four functions for travel in the future.

As the demographic profile of Internet users more closely parallels that of the U.S. population, it is imperative to view the Internet as another channel of travel distribution, rather than as a separate and distinct market. This means adapting and targeting content, promo­tions and Web sites to meet the needs of niche segments of the population such as the graying baby boomers who are approaching their highest level of net worth, and members of key ethnic groups (e.g., Hispanics, Asian-Americans) who are gaining affluence.

While the Internet continues to attract new buyers, the bulk of online travel purchases stem from the habitual use of current online travel purchasers. This underscores the importance of customer retention, repeat purchasing and brand affinity to online profitability over the next few years. Strategically, this means cross-selling other travel components to Web site customers, as well as upselling online air buyers, for example, travel and non-travel opportunities. As a result, the market will see introductions of target-specific loyalty programs not only by suppliers but also intermediaries (e.g., Expedia and Travelocity and airline market trends).