Yes, markets may be different but the arrival of low cost airlines and better technology will force change on even the most reluctant.
When Tiger Airways launched S$1 fares for one-way travel from Singapore to three destinations in Thailand last month, its server crashed.
In less than 24 hours after it announced its record low fares to Bangkok, Phuket and Hatyai, it recorded close to five million hits on its website, tigerairways.com.
The new Singapore-based low-cost airline, which starts flying this month, sold its entire allotment of more than 3,000 tickets. And even after the fares were sold out, it continued to record heavy traffic to its website. On August 31, it said it registered 5.8 million hits between 9am and midnight.
The day after it announced the unprecedented offer – S$1 beats the lowest fare offered by Thai Air Asia on the hotly-contested Bangkok route – Tiger Airways had to apologise to frustrated consumers who complained to the local newspapers that they could not get onto the website.
Tiger Airways' offer sparked a round of blood-letting by its low-cost competitors. Thai Air Asia announced 1 baht fares between Kuala Lumpur and Bangkok. Air Asia is advertising fares as low as RM9.99 from Johor to Kuala Lumpur.
The incident, obviously designed to be a promotional stunt, proves in no uncertain terms that consumers in Asia are ready to buy travel online, provided the price triggers are right and provided travel suppliers are genuinely sincere in enabling their customers to book online.
A key obstacle to a real online travel boom in Asia is the slowness of some suppliers to offer consumers a genuine (read, user-friendly) online booking platform as well as the reluctance of certain intermediaries who fear that opening the floodgates to e-commerce might well undermine their very reason for existence.
At the recent Forsee conference in Beijing, organized by Travelsky Technology, China, and attended by representatives of the main GDSs from North Asia, it was clear that while the players realise that factors such as low-cost airlines and the changing technological landscape would surely impact on travel distribution, they also believe that their markets are sufficiently different from those in more developed countries and that thus, they will be spared the upheavals that have taken place in US and Europe.
Language, cultural and social differences were cited as the key factors as to why the same forces which have rocked the GDS world in the US or Europe would not take root in North Asia to the same extent.
Yet there was tacit recognition by them that some change was overdue to the way travel distribution was organized in markets such as China and Japan.
The evidence is all there – suppliers and consumers (not necessarily in that order) will drive the change and GDSs, like it or not, will have to adapt their models, whether they are in China, Korea or Japan, or Timbuktu.
According to Phocus Wright, the Asia/Pacific online travel market is estimated to be worth US$13.3 billion in 2004. Suppliers dominate the channel with 61 percent, followed by the online travel agency at 28 percent and the traditional travel agency at 11 percent.
Factors that would drive e-commerce are the launch of at least seven low-cost airlines in key markets such as Singapore, Malaysia, China, India and Japan as well as global GDS access to players such as Travelsky, Topas and Infini.
Changes taking place in key markets would further drive the online travel market, according to the facts that were shared by presenters at the Forsee conference.
In Australia, the two carriers dominating the domestic market are relying on online channels – Virgin Blue's online sales account for 80 percent of revenues while Qantas' online sales is reaching 25 percent of all sales.
There are now 26 to 30 million Internet users in South Korea, which has become the largest market for the Asian airline-owned portal, Zuji,com.
In China, the IAC purchase of elong is one to watch. With Internet penetration standing at 10 percent, and growing by leaps and bounds, the propensity of Chinese consumers to leapfrog those in other markets is strong.
Japan is seeing an explosion of broadband and wireless and wireless distribution through imode already accounts for 20 percent of airline domestic ticket sales.
Mytrip.com sells one million room nights a month and has a membership of 3.7 million members.
With such evidence, there can be no running away from the fact that consumers in Asia, no matter what language they speak, are hungry and ready to buy online, provided the conditions are right. Price and the Internet know no language barriers.
It's a fact that's clearly recognized by the four main GDSs in North Asia – Travelsky, Topas, Axess and Infini. The question is, what they will do about it?
To that question, there were no clear answers from the Forsee conference. |