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European Airlines Create Online Travel Portal

Nine of Europe’s leading airlines recently unveiled plans to move into the online travel market with the launch this year of a new online travel service, that sells flights and other travel products direct to the consumer.

The new travel portal, named Opodo, has been created as an independent business as a result of a joint venture among the airlines Aer Lingus, Air France, Alitalia, Austrian Airlines, British Airways, Finnair, Iberia, KLM and Lufthansa.

The nine airlines expect Opodo to become the market leader in European online travel – a market currently worth 6.1 billion euros (Forrester Research – April 2000) and estimated to grow to 40.9 billion euros by 2005 (Forrester Research – April 2000).

Opodo says it will offer consumers a range of competitively priced travel products including flights from over 480 airlines, hotel bookings from over 54,500 hotel properties, 23,500 car rental locations worldwide as well as travel insurance. The company aims to differentiate itself from other travel providers by delivering a truly personal, 24-hour service, seven days a week.

Headquartered in London, Opodo will operate independently from its airline shareholders, under the terms set out in the company’s joint venture agreement. It plans to launch initially in Germany, the UK and France, and later across Europe, between 2002 and 2003.

Opodo, derived from “opportunity to do,” is expected primarily to target leisure and unmanaged business travelers who have used the web to research travel, but may not necessarily have booked, along with seasoned online travel bookers.

They hope to do what five airlines did in the U.S. – get along well enough to run an ambitious multi-airline owned online travel agency. Although the new service is touted as the European version of Orbitz, it will have its own unique set of challenges – and opportunities – as compared to its U.S. counterpart, according to the U.S. research firm PhoCusWright.

Opodo (derived from the phrase “opportunity to do”) says that Amadeus has been chosen as the GDS behind the system.

Opodo should have an easier time breaking into the European market than Orbitz will have in the U.S. because there is less consolidation in Europe, where the top five online travel agencies represent only 59% of the online travel agency market. Comparatively, the top five online travel agencies in the U.S. represent 85% of the online travel agency market.

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The other good news is that Opodo is launching just as Europeans are getting affordable Internet access and are becoming more comfortable booking online.

But Opodo also operates in a totally different environment than Orbitz. In the U.S., leisure travelers are just learning about non-published, discount rates for the Web. The majority of air travel is still booked the traditional way – through travel agencies that offer scheduled air at published rates. In Europe, travelers are used to having access to non-published fares that are discounted from the deeply entrenched charter operators and tour operators.

Even online travel agencies in Europe offer negotiated rates. For example, only about 20% of air travel sold by ebookers.com is published fares. And ebookers.com has already jumped the hurdles of forming separate online sites in several markets with unique cultures and languages. The company operates in 11 countries: Denmark, Finland, France, Germany, Ireland, Netherlands, Norway, Spain, Sweden, Switzerland and the UK.

Opodo still has to build dedicated Web sites for each country, each to include tailored content (travel guides, local brands, customer service from travel specialists native to that country).

But the airlines will try hard as they don’t want to see a situation where two online travel agencies (Travelocity and Expedia) alone sell 30% of all online travel.

The European market may be ripe for a new online travel service with the funding and branding behind it to make it highly functional, customer-service oriented, and trustworthy. Or consumers may shrug their shoulders at an effort to give them something they really don’t need after all.

“Europe has for some time lagged behind the US for online travel bookings,” says the new head of Opodo, former Alitalia CEO, Giovanni Bisignani, “and we believe that Europe is about to witness an explosion in demand for online travel services surpassing US growth by as early as 2004.”


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