Epic web battles: Airlines fees vs lower fares
There have been some epic battles over the years as industries have had to reinvent themselves as a result of the internet and electronic devices.
The media is a classic one (we’re online-only at Tnooz, just in case anyone is wondering when the print version will come out) and while the music industry was turned on its head by MP3 players and file sharing (much of its illegal initially).
The battles described in a recent piece in Infoworld techie journal included items on medical support, customer service, media, and many others.
One area the article focused on was Cheaper Flights vs Hidden Cost. Oh dear.
The point is relevant in that the web eliminated barriers to airline pricing information – and it makes sense to look at the impact of the web from the consumer’s perspective.
But while the article focused on air, the same could actually be said for other products in the travel industry.
In the first phase, previously privileged information that only an airline or a travel agent could provide became publicly available.
This enabled search and shopping, but caused the demise of the legacy channel (agents who only acted as agents for airlines). The scale of data processing that the web enabled was fantastic and opened the digital world up for many new players.
In the next phase, a degree of quality was introduced – better offers, and more information. The writing was on the wall for homogenous information.
Now, most travel and travel-related experiences are now available online. The long tail arrived.
Today we see that the social element has changed how we obtain ideation and validation in our search for travel. This helps get us better results – we hope.
TripAdvisor is the primary example of how we get to find out what others feel about travel. There is also a strong sense of community and personalization. But, sadly, travel products are not keeping pace.
Furthermore the ability to de-commoditize one’s product and to allow different services to be sold either directly or indirectly has changed how travel is presented.
Dynamic packaging allows us to mix and match services in a way that previously only a travel agent used to be able to do. Suppliers learned that their products needed to fight harder for space on the virtual shelves of the web.
But the key question from the article is clear:
Did the web enable cheaper fares and did the web create airline fees? Yes to the former, no to the latter.
Cheaper fares are now easier to find, but the logic underpinning the article claims that cheaper fares are only possible through unbundling.
That is obviously an over-simplification. Product owners/sellers, particularly in air, want to obfuscate the true market price. That is the pure price argument. But there are two other factors that the article misinterprets:
1. Functionality and unbundling enable a la carte and de-commoditization.
This is decidedly a benefit to the consumer. Buying what we want and need rather than a one size fits everything powers consumer choice.
This has to be a benefit. But not purely in terms of travel. Almost every product category has undergone this process.
2. Personalization down to the consumer of one (aka ME!!!) has benefitted all of us.
True, there have been a lot of abuses and many of these remain but in general “mass personalization” has driven consumer benefits unimaginable prior to the web.
Because the infoworld article was short, it did not draw a conclusion, but it’s worthwhile to consider some.
The logical argument should be that the infrastructure of travel needs to get a whole lot better to support additional functionality and personalization at a lower cost.
Now THAT is an epic battle – and price point is just one element of that.
The world is changing and the infrastructure to support it needs to change. The focus on consumer user experience hides some of the ugly stuff behind the scenes – but that cannot last.
We (collectively) must provide more efficient processes to enable the coming wave of better services and products. Innovation will find a way. But that is not a battle – except in the execution.
Timothy O'Neil-Dunne is a contributing Node to Tnooz and managing partner at travel consultancy firm, T2Impact. He serves as the lead for the airline, aviation and airport practice. He is also a Co-founder of VaultPAD an accelerator devoted exclusively to travel and travel-related startup businesses.
Timothy was a founding management team member of the Expedia team where he headed the ground transportation and international portfolios, before founding T2Impact in 1998.
He has worked in aviation and travel distribution for more than 30 years, including time with Worldspan as head of technology where he managed international technology services from product to infrastructure.
He is also CTO and deputy CEO of Lute Technologies, a permanent advisor to the World Economic Forum and writes on the T2Impact Blog.