E Commerce. Impact of Internet for the airline industry.

Executive Summary Aviation and air services industry is a large, competitive, and challenging industry, characterised by high capital and labour requirement, together with customer participation during transactions hence service fulfilment. Providing great reach and the potential for rich interaction, the internet is a natural medium for travel transactions. Airlines are turning to e-commerce to keep business flying, and the reason they are focusing on selling tickets through their Web sites is that it is the cheapest distribution channel. From the customers perspectives, Internet have revolutioned the way of buying flight ticket. Customers can now purchase their tickets directly from the airlines via the Internet using intermediaries†¦show more content†¦Aviation and air services require a high degree of customer participation during service fulfillment. Moreover, as consumption and decision-making are mostly decoupled, travel and tourism services can be seen as information products. Prospective customers need plenty of information to comprehend offerings, compare them and make their choices. Organizations must become more strategic if they are to survive and succeed in the current business environment (Singh, 2002). Consequently, the air travel industry is among the leading users of IT. The existing Computerized Reservation Systems / Global Distribution Systems (CRS/GDS) which provide the main links to tour operator systems and to travel agents, give a good insight into the current market situation and are the basis for the airlines yield management, i.e. capacity planning and pricing. Figure 1: Traditional industry structure in the scheduled airline market. Source: www.wi.uni-muenster.de 3.0 Porters 5 Forces analysis of air services industry competition Figure 2 - Source: http://www.marketingteacher.com - Threat of new entrants At first glance, it seems that air service industry is extremely difficult to break into. 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