subject: Trend Of Disintermediation: Is The Influence Of Online Travel Agencies On The Wane? [print this page] When the airlines used to sell only the flights tickets, the travel agencies held their relevance since these combined all the travel products such as hotels and holiday packages to give the customers end-to-end solutions. When the internet was not around, the geo-spatial spread to the airlines was provided by the travel agents located in different parts of the country.
Internet changed the game altogether. The travel agencies as well as the airlines and other travel products owners, through their websites, were now in a position to encourage direct booking of their products from the customers from any place on this earth, provided they had access to and the ability to operate booking transactions on the internet. Internet has set in the trend of disintermediation whereby the travel product owners are reaching out to the customers, encouraging them to make the bookings online directly with them. Does that mean that the online travel agencies will not be able to sell the cheap air tickets or hotels rooms to customers in the long run? Is their influence on the wane and will it put question mark on their future? Is it that the customers will begin to flock to airline websites, and not the agencies, for booking their domestic or international flights?
The answer will depend on the volume of sales that are being generated online and offline by the airlines industry and their plans of expansion. Though the internet has made considerable penetration in the Indian market, it is also true that this has largely remained confined to cities and major towns only. There is still big market where the latent market potential for air travel remains untapped. But, it is not financially viable for the airlines to set up online stores at these lower-order cities. Therefore, that room will remain opened for the travel agencies to capitalize upon. This will put the major travel agencies on forefront at the cost of the smaller ones. Even in the major cities and towns, the cheap air tickets will continue to be on offer by the agencies as well since the competition among the airlines would mean that airlines would find agencies more relevant for filling in their seats. Howsoever the airlines might be good at yield management, the prospect of vacant seats will continue to haunt them and this will continue to make the travel agencies relevant for them.
Further, let us also not discount the perception of the customers towards the agencies. The agencies with a good brand name and huge customer base are likely to remain favorites with the loyal customer base. Working on reduced commissions and margins, the agencies can play on volumes and part with some of their commissions to give the customers better rates than the agencies. However, the price-war is not likely to be initiated by the airlines with the agencies since the agencies can simply shift to other airlines.
Thus, there is not likely to be any major shift in the way business happens in the long run, though shrinkage in markets for online travel agencies could happen in short-term and this effect will be felt more by the smaller agencies. So, you can still continue to get cheap air tickets on your international flights with the agencies as they retain hold over the markets.
by: Naveen
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