ICT and e-business in the tourism industry ICT adoption ... - empirica

Tourism
SN Brussels Airlines’ approach is underpinned by two key drivers of ICT investments:
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First, SN Brussels Airlines expands its ICT use due to customer expectations
regarding a self-service based model which gives travellers more convenience and
control from the booking stage to the in-flight service. Here the internet plays an
important role - purchase of air tickets constitutes 56% of European online travel
market transactions 80 . The internet also gave rise to a widespread adoption of other
passenger-liberating technologies, in particular e-ticketing, online check-in and selfservice
kiosks at the airports. Investment in automating passenger touch-points with
transformational technologies, such as e-ticketing and self-service kiosks, are playing
a part in the relentless campaign to reduce costs and narrow the gap between SN
Brussels Airlines and the fiercely competitive discount Low Cost Carriers (LCC).
Second, ICT developments like e-ticketing and own website/booking engine enable
the airline to strengthen its brand awareness, get direct access to its customers
and, consequently, reduce the dependency on Central Reservation Systems (CRS)
and Global Distribution Systems (GDS).
In the business of travel distribution GDS act as intermediaries between airlines and
travel agents. GDS have significant market power over airlines because each controls a
large proportion of travel agents in the market. On this saturated market, GDS compete
for the business of travel agents by offering increasingly high ‘cash-back’ payments.
However, these costs are effectively passed back to airlines in increased booking fees
which, according to the AEA (European Airlines Association), have been rising by around
5% annually in the last five years. As a result, for as long as the airlines are unable to exit
from the upstream GDS market, they have no choice but to pay these higher booking
fees. From the airlines’ perspective, GDS are not readily substitutable for one another, as
each GDS controls access to an important share of passengers through its member
travel agents. Consequently, most airlines would not afford to cease participating in any
of the four major GDS, i.e. Amadeus, Galileo, Worldspan and Sabre.
Thus in order to meet new requirements of travellers and reduce the dependency on
intermediaries, SN Brussels Airlines decided to invest in its own internet platform
supporting the e-ticketing system. The declining costs of modern server infrastructure and
the introduction of pricing, shopping, and booking off-the-shelf software, have allowed the
airline to shift significant buying volume to its own website, thereby avoiding CRS/GDS
distribution fees of $4 or more per flight sector.
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See http://www.crt.dk/UK/staff/chm/trends.htm
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