Online distribution of airline tickets: Should airlines adopt a single or a multi-channel approach? |
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Authors: | Bonwoo Koo Benny Mantin Peter O'Connor |
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Institution: | 1. Department of Management Sciences, University of Waterloo, 200 University Ave. West, Waterloo, Ontario N2L3G1, Canada;2. Department of Information Systems and Decision Sciences, ESSEC Business School, Avenue Bernard Hirsch, BP 50105, 95021 Cergy Pontoise Cedex, France |
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Abstract: | In today's digital world, airlines typically distribute tickets both via their own websites and through online travel agency (OTA) platforms such as Expedia and Travelocity. Although associated with higher distribution costs, selling tickets through the platforms offers airlines exposure to a broader consumer base, and potentially higher sales than selling tickets solely through their own websites. While most airlines have adopted a multi-channel approach by selling tickets through OTA platforms and their websites, some (e.g., Southwest Airlines, easyJet and Ryanair) sell only via the latter. Is one approach better than the other, and if so, under what circumstances? This study analyzes factors that affect an airline's distribution strategy by developing a decision support model. We find that airlines are less likely to use OTA platforms if they have a large loyal consumer base or if the OTA platform is highly competitive. |
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Keywords: | Distribution strategy Online travel agency Consumer loyalty Market competition |
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