Online partnership strategies : the example of Southwest Airlines.

Biased search engines: Travelocity.com's answer.

With 30% of its passenger revenues presently generated through its web site, Southwest definitely belongs to the few airline companies that made a successful entry on the Internet.

An aggressive Internet pricing policy coupled together with a desire to establish customer loyalty on its website can explain such good results.

This is how, through the Rapid Reward program (and this offer will last till June 30, 2001), members who book their travel through Southwest.com receive double credit in Southwest's frequent Flyer program: they receive a free roundtrip ticket for every four roundtrips purchased.

Such incentive seems to be working since Southwest has just enlarged its offer to car rental through its three partners: Rent a car, Hertz or Budget.

From now on and up till June 30, 2000, every customer who reserves a car through Southwest.com (in addition to a plane ticket, of course) doubles the usual credit offer and gets one full credit versus a half credit per qualified rental.

In plain language, it means that it does not take more than three roundtrips and four rental cars bought on Southwest.com to get a free roundtrip ticket on Southwest Airlines.

This is a very strong incentive and Southwest does not hesitate to use the Internet as its master trump, prompting its customers to book online a complementary product that goes together with its main line of business.

One has to know that the cost of this car incentive is halved between the car rental partner and Southwest, with is far from being a neutral argument for the airline company.

This is an interesting attitude since Southwest has not only added a product to satisfy its customers but has created a new product "plane ticket + rental car", with its own Internet pricing.

It goes without saying that the aim is to create a dynamic customisation of customers who are used to renting a car when flying.

As far as offline marketing is concerned, Southwest did not invent a thing except for the fact that the pricing/customisation Internet strategy it adopted could well customize a new category of customers in relation to its web site.

This is an interesting pricing policy that could well be adopted by other "producers" involved in the leisure or business tourism.

Consumers got a little confused last September when the Consumer Report Travel Letter was released. It claimed that the results obtained through search engines on eTourism sites were biased.

Not only did the press largely comment on these news but so did Orbitz whose only online function for the time being consists in criticizing every existing site even though it has not yet managed to create its own… I'm still waiting to see whether his president Jeff Katz's media words will be true to the services Orbitz should be able to offer, sooner or later…

Many sites were questioned in this Consumer Report: Travelocity.com, Expedia.com, Cheaptickets.com and Lowestfare.com.

Being the leading eTourism site, Travelocity had to answer these allegations. It commissioned a biased audit from Ernst & Young in order to do so.

Some ill-intentioned gossips will claim that whatever the answers, Travelocity will still be the one that commissioned and paid for the report.

All those who had something to gain by running Travelocity down as well as the biggest eTourism sites will be highly disappointed by the results. The Ernst & Young report just announced that Travelocity flight search engine was not biased and did not alter the search results provided to consumers.

To be more precise, search results obtained on Travelocity are systematically identical to the ones provided by the CRS Sabre, Travelocity head office, as they appear on the CRS screens of travel agents.

Let's remember that what the Consumer Report mainly criticized was the fact that the order of display treated flight lowest prices unfairly.

This audit also presented another interesting element, considering the way some big general-interest portals act: the fact that an airline company displays an ad banner on one of Travelocity pages does not modify search results display either, since they remain identical to the ones displayed by the CRS.

It goes without saying that this audit only concerns Travelocity and none of the other eTourism sites that were questioned.

And yet, I always thought all the fuss that was made around eTourism sites to that matter was somehow questionable, which explains why I never mentioned it.

The launching of Hotwire.com as well as the announced launching of Orbitz.com well prove that we still have a great deal to expect from airline companies in the eTourism sector and that more and more competitors no longer hesitate to use disparagement as commercial weapon.

As far as I am concerned, I think that we are now past the disparagement stage on the Internet.

Consumers need to invest a great deal of time and move around a lot if they want to compare prices in the brick and mortar world but the Internet allows them to find out at once whether a site is competitive or not in terms of price, in just one click.

Consumer associations should not worry, Bargain Hunting consumers are now mature enough to find out which are the best prices without any help.

As for the others, the different price comparison sites that appeared in the last few months should set the tone as far as price truth is concerned.

We should also ask the sworn enemies of truth to stop being hypocrite.

Everyone well knows that some prices can be low and hardly above cost price in a supermarket, when other prices are much above its competitors since this trader also needs to live somehow.

And yet every supermarket has mastered the way to best display its products: the positioning of its gondola head, the height of its shelves, and some of these supermarkets have even created a gentle slope in some parts of the shop in order to help trolleys to go to some specific areas more easily.

Given that, why should cyber-retailers be deprived of using the same tricks on the virtual level? Why shouldn't they build pages aimed at creating a certain reading trajectory for the consumer's eye in order to lead him to click on a pre-defined zone?

This is why it is a proof of complete ignorance in terms of economic rules and market needs to condemn eTourism sites and accuse them of deceiving consumers when most of them are still greatly in deficit.

Source : Travelocity