Chapter Twenty Case Study

By Elaine Nichols,2014-05-16 20:15
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Marketing SWOT Analysis. Suggestions. Questions and Answers. Appendix Marketing SWOT Analysis. 6.1 Strengths. Ansett was confident enough with the

    Electronic Commerce for Travel and Tourism Services

    - An Analytical Report of Ansett’s Ticketless Travel


    Technology has tremendously changed the status of a lot of industries, such as supermarkets,

    hotels and banks, and so on. Industry experts say that ticketless travel is the third revolution in

    airline travel after the invention of the jet and deregulation. Its rapid acceptance in the North

    American market shows a preference for this method of ticketing. Ansett Australia adopted the

    ticketless airline system in order to gain competitive advantage in the Australia domestic travel

    market in 1996. It would significantly benefit their core segment, the business traveler. From the

    introduction of the case (see Appendix), we know what the Ansett’s electronic ticketing system is,

    and we also know what the benefits are of the system and what influences have caused from

    electronic ticketing system for airline travel industry. In addition, recently from several media we

    have known that Ansett happened the worst financial crisis between July and October 2001. This

    report is to analyze Ansett’s electronic ticketing system, the crisis of Ansett is also considered on it.


    Ansett’s online home page

Marketing Mix

    Advantages and limitations of Electronic Commerce

    Advantages and limitations of online travel services

    Marketing SWOT Analysis


    Questions and Answers


    1. Introduction

    1.1 Ansett decided to buy a new electronic ticketing system. In 1996, Ansett decided to set

    up a new airline ticketing system. When considering the technology, Ansett had two options:

    They could start with a fresh sheet of paper and build their own system or they could buy a

    system available in the marketplace and customize it to their own needs. They adopted the

    latter approach.

    1.2 A special project team was set up for implementing the electronic ticketing plan. Ansett

    purchased the system in February 1996, and 39 weeks later the system was launched. This fast

    development was achieved by setting up a project team of nine full-time people made up of

    information technology and business specialists and by clear top-management direction and


    1.3 It was necessary to make some research and train staff. Six main areas were identified and

    targeted as being critical to the project’s success. Each area had to be carefully analyzed and

    coordinated and the personal trained for the implementation and rollout of the system. The

    areas involved:

    ? Information technology

    ? Reservations/retail

    ? Ticketing (retail/airports)

    ? Airport services

    ? Revenue accounting

    1.4 Ansett began to use a new system. On 11 November 1996 Ansett Australia launched a first ? Sales and marketing for the Australian airline industry, electronic ticketing to all 28 ports in the domestic market. 2. Ansett’s online home page

    2.1 Ansett’s electronic ticketing system is shown on the Internet. is

    its home page. On its home page, Ansett publishes its online airline ticket booking fare

    standards. Customers can book tickets online. We cannot find any information else about

    Ansett Australia Limited. We download some information from Ansett Australia Limited

    home page on 30 October 2001. The detailed introduction is as follows:

    2.1.1 Ansett’s airfares. Fares are listed parts as follows.

    Melbourne to Sydney to

    Sydney from $176.00 return from $176.00 return Melbourne

    Canberra from $209.00 return from $198.00 return Canberra

    Brisbane from $297.00 return from $198.00 return Brisbane

    Perth from $418.00 return from $429.00 return Perth

    Adelaide from $88.00 one-way from $176.00 one-way Adelaide

    Hobart from $88.00 one-way Hobart from $176.00 one-way Brisbane to Perth to

    Sydney from $198.00 return from $418.00 return Melbourne

    Melbourne from $297.00 return from $429.00 return Sydney

    Perth from $495.00 return from $495.00 return Brisbane

    Adelaide from $220.00 one-way Adelaide from $396.00 return Adelaide to Hobart to

    Melbourne from $88.00 one-way from $88.00 one-way Melbourne

    Sydney from $176.00 one-way from $176.00 one-way Sydney

    Brisbane from $220.00 one-way from $253.00 one-way Brisbane

    Perth from $396.00 return

    2.1.2 Ansett’s airline Schedules. Parts are as follows:

    Perth to … Number of flights Carrier Fares from Adelaide 1 return flight daily (from Nov 2) Ansett $396.00 return Albany 2 return flight daily Skywest $191.40 return Brisbane 2 return flights via Sydney Ansett $495.00 return Broome 1 flight Saturday return Sunday Skywest $632.72 return

    Carnarvon 1 return flight daily Skywest $342.10 return Esperance 2 return flight daily Skywest $250.80 return Exmouth/Learmonth 5 return flights per week Skywest $409.20 return Geraldton 21 return flights per week Skywest $199.10 return Kalgoorlie 8 return flights per week Skywest $286.44 return Karratha charter services only Skywest charter Laverton 3 return flights per week Skywest $441.10 return Leinster 5 return flights per week Skywest $385.00 return Leonora 4 return flights per week Skywest $379.50 return Melbourne 2 return flights daily Ansett $418.00 return Monkey Mia 2 return flights per week Skywest $341.00 return Newman 1 return flight daily Skywest $426.80 return Port Hedland 4 return flights Monday-Friday Skywest $518.20 return Sydney 2 return flights daily Ansett $429.00 return Terms and Conditions 2.2

    ? All fares are in Australian dollars and are only available in Australia.

    ? Children under 12 years travelling without an accompanying adult may not use these


    ? Airfares are subject to availability at the time of booking. Prices include GST. Prices

    do not include other taxes, duties and any applicable surcharges.

    ? Booking a ticket online.

    2.3 Booking a ticket online

    After entering next for items, passengers will submit it and will follow the guideline to finish

    booking procedure.

    ? Domestic Travel

    ? Select departure

    ? Select Arrival

    ? Departure date (m/d/y)

    2.4 Ansett's on time performance

3. Marketing Mix

    3.1 Marketing Mix Product

    3.1.1 Commencing of Ansett electronic ticketing system. With electronic ticketing (ET)

customers no longer needs paper tickets. Customers merely book their travel and on

    arrival at an airport confirm their booking by presenting photo identification. A boarding

    pass, receipt, itinerary and terms and conditions are still issued, but the need for a paper

    ticket has been eliminated.

    3.1.2 Ansett chose the Air Canada Airline Ticketing System. A project team was brought

    together and after traveling to the United States and Europe they narrowed their choice to

    two systems: Continental’s EDS system and the United Airline/Air Canada system. The

    Air Canada version had a better fit with Ansett’s current technology and therefore became

    the preferred system. It had a number of benefits:

    ? It operated twenty-four hours a day, seven days a week.

    ? It could handle large transactions and be upgraded.

    ? It provides a link into a Global Distribution System such as Sabre or Galilee so that

    travel agents could have access to electronic ticketing. Business booked through

    travel agents accounts for over 50% of Ansett’s revenue.

    ? It was a proven system that wouldn’t expose them to any unnecessary risk.

    ? It fit their budget and time schedule. ? All 28 ports in the domestic market. 3.2 Marketing Mix Place ? No international airline is included in it.

    3.3 Marketing mix Promotion

    3.3.1 The promotion of the electronic ticket product. Communication to three segments:

    ? Internal staff. Internal staff were trained on the system and kept informed by internal

    vehicles such as Ansett’s news video, which was viewed weekly by all staff, sales

    kits and staff briefing cards.

    ? Domestic travelers. Domestic travelers learnt about ET through full-page

    advertisements placed in major newspapers, through Panorama, the in-flight

    magazine, and through brochures, posters and hanging cards in retail reservation

    offices. A separate information page on Ansett’s Internet Web page detailed the


    ? The travel industry. The travel industry was informed through press releases to

    industry journals, fax streams and a bulletin on the Global Distribution Services over

    a four-day period.

    3.3.2 For developing its new ticket strategy, Ansett developed a cheapest price strategy (this is

    one of a serial reasons for suffering on a crisis in July 2001).

    3.4 Marketing Mix Price

    ? Free service. Customers do not pay any fare except for paying airline tickets’ fare.

    ? After the worst bankrupting crisis period, from early October this year, Ansett began

    recovering business. Ansett Mark II added instant purchase return fares of $572 to

    Sydney and $550 to Melbourne. There are also 21-day, 7-day and 3-day advance

    purchase fares. The 21-day advanced purchase return fares are $418 to Melbourne,

    $429 to Sydney and $495 to Brisbane. When the airline began services to Perth the

    kick-start return fares were $401 to Melbourne, $412 to Sydney and $445 to Brisbane,

    with bookings on the Internet $5 cheaper (The West Australian, 11 October 2001)

    ? The cheapest airline fares’ supplier in Australia Now. A recently full economy return

    ? Between Ansett was dumped into bankrupting crisis, on 16 September 2001, a full fare is discounted by 74% of the most expensive fare from Perth to Sydney (= ($1632

    economy return fare which was serviced by Quantas from Perth to Sydney is $1632, - $429) /$1632 = 74%).

    compared with a $627 discounted ticket, while Perth to Melbourne is $1469,

    compared with $616 discounted. (The West Australian, 16 September 2001).

    4. Advantages and limitations of Electronic Commerce

    4.1 Electronic commerce (EC) is the process of buying, selling, or exchanging of products,

    services, and information, via computer networks, mostly the Internet. Electronic airline

    ticketless system is belonging to this scope.

    4.2 The major benefits of EC are as follows:

    ? Organizational (sellers). EC expands the market place with minimum capital

    outlay. More customers can be reached and there are more suppliers to buy from.

    EC decreases the cost of creating, storing, retrieving, and distributing information.

    EC allows low inventories, customized products/services, reduced cycle time,

    better customer service, and lower communication cost.

    ? Consumer. Shop from anywhere anytime. Get a large variety of products from

    many countries. Usually pay less. Can get customized products/services. Can

    search quickly for detailed information. Can get collector’s items easily and

    cheaply and interact with other shoppers. Can work and study at home.

    ? Societal. Less traffic, pollution, improved public services, improved quality of


    4.3 The major limitations of EC are as follows:

    ? The major technological limitations are: security, reliability standards and protocols

     need to be improved. Insufficient bandwidth, software development tools are still

    evolving. Software integration problems, a need for a special server, and

    incompatibility with legacy systems.

    ? The major non technological limitations are: Difficult to justify (intangible

    benefits), security enforcement is difficult, lack of trust, resistance to change, legal

    issues, not enough support services, accessibility and human relations problems,

    fear to give a credit card number over the Internet, and lack of a legal system. (Reference: Turban & Lee et al., Electronic Commerce A managerial Perspective, 2000,

    Prentice-Hall, Inc.)

    5. Advantages and limitations of online travel services

    5.1 Advantages

    ? Travel services are easy to put online. A website can provide all information related

    to travel, including timetables, fares, and what to do in specific locations. It is like a

    comprehensive travel guide. Travelers can chat and share experiences. Most

    services can be used to make reservations for airlines, hotels, land transportation,

    entertainment, etc. and to make payments.

    ? Free travel information is more attractive to consumers: Several reasons. First, the

    many visitors attract advertisers; second, visitors that come for free information

    may purchase items so a commission is generated. Third, the competitors’ offer it,

    so you have no choice; and finally, most of the information is available at the site

    for free.

    ? It is easy to earn from advertising for travel agents. Travel is such a popular

    Internet application: It provides considerable amounts of free services and saves

    time for the traveler. With hundreds of millions of travelers each year, it is easy to

    sell ads on travel sites. Vendors can pay low commission fees and the traveler can

    find even small hotels in faraway destinations. Information can be obtained fast and

    it is very accurate. With large number of buyers and sellers, the market becomes

    very efficient.

    ? It is easy to save money and time: Reduced ticket processing costs and elimination

    of intermediaries, thereby saving on commissions. Fewer errors and better ticket

    security and control. Sales information is up-to-the-minute. ? It is much cheaper to fulfill order online. The processing cost of an electronic order

    is only a few pennies, which may be only one to two percent of the offline cost.

    Also, they can sell ad space to advertisers. They may get some money from the

    trade itself (such as referral fees and differences between buy and sell prices).

    Finally, the volume per account increases.

    ? It is easy to attractive more corporate travelers. Corporate travel must be done via

    an extranet or VANS, while individuals will use the Internet. Corporations will

    allow their employees to order on the intranet, transferring the orders to the

    extranet. Corporate discounts may be larger. Corporate travelers are constrained by

    the company-vendors agreements. Individuals may be interested mostly in price,

    corporations are interested both in price and effectiveness of services. ? Online discounted tickets are better to consumers: Discounts are intended to fill up

    seats. However, travel agents may not be eager to sell them; also, the commission

    cuts into the revenue. Low fares mean larger market shares but lower profit. ? Travel intelligent agents: Agents can find, compare, and monitor prices, and push

    information to customers. Ultimately, agents will be able to make reservations and

    travel arrangements and even conduct negotiations with agents of travel service


    ? A virtual travel agency is a stronger competitor of traditional agencies: In the short

    run, the impact will be minimal. In the long run, many physical agencies will be

    eliminated. (Airline commission was cut by fifty percent in 1999 alone.) The

    remaining will provide value-added services that the Internet cannot provide.

    Agencies may merge with other agencies, who sell other products, so the business

    model may be changed.

    ? More services are served to consumers. A travelers’ community provides an

    opportunity for travelers to exchange opinions and learn from each other. It can be

    very specialized and it can be fairly broad. Traveler communities are also part of

    large diversified communities such as Geocities. The community is an ideal place

    for advertisers; it can also be used for direct sales. Members can also get together to

    pressure vendors to cut prices and/or improve services.

    5.2 Limitations

? The limitation of online travel services: Cannot be used by people or services that

    do not have Internet access. It does not provide very specialized services and

    certain services cannot be customized.

    ((Reference: Turban & Lee et al., Electronic Commerce A managerial Perspective, 2000,

    6. Marketing SWOT Analysis Prentice-Hall, Inc.)

    6.1 Strengths

    ? Ansett was confident enough with the technology. From a business perspective

    electronic ticketing provides some key benefits to Ansett. The technology

    introduction will reinforce Ansett’s reputation as a contemporary, progressive and

    innovative airline. Ansett would have the opportunity to gain a competitive

    advantage over its competitors in the short term that might result in increased

    revenue and market share. Ansett chose a national launch approach rather than a

    limited site rollout. By the close of business, 48 hours after the launch, over 3,000

    electronic tickets had been issued.

    ? Other benefits include internal cost reductions in the distribution of paper tickets to

    customers. Paper tickets incur a number of costs including ticket production, ticket

    security, ticket accounting, ticket printing, ticket supply/stock and ticket labor.

    Ansett issued 6.5 million paper tickets in the year prior to the new system being

    introduced. So the new system allows this cost to better managed. Electronic

    ticketing enables the automatic updating of records and storage of the record for

    future reference. This reduced the likelihood of fraud, as it reduces the opportunity

    for individuals to fraudulently alter or lose tickets. Under electronic ticketing

    Ansett had custody of the ticket and was therefore able to respond to fraudulent

    ticket or credit-card use.

    6.2 Weaknesses

    ? According to its homepage, for some information that is used by third parties,

    Ansett disclaims have responsibility, this means that if Ansett has changed its

    information online, but the third parties have not been informed by Ansett, it will

    easy to mislead consumers.

    ? Use of this Site. This Site is only for the use of persons accessing the Site from

    within Australia. The products and services described in this Site are only available

    to persons accessing the Site from within Australia. That means there are a lot of

    overseas travelers who could be not serviced by Ansett. In contrast, Ansett has not

    developed the most advantage of online travel services.

    ? Ansett does not do any more warranties to the information that is published on its


    ? According to the report pulished on 21 July 2001 The West Australian, Ansett total

    value of assets frozen: $7 million, including $5.7 million in land, buildings and

    homes and $455,388 in cash. Other assets seized were shares, vehicles, boats,

    jewellery, bank accounts and household goods. Primary suspects have been served

    with freezing notices and several interested parties related to the suspects have been

    served notices.

    6.3 Opportunities

    ? Electronic ticketing system has caused some benefits to airline travel industry. Customers are the big winners of the new system as they now do not have to queue at collection points. A flexible check-in process is created and flying becomes simpler. One phone call books your seat and creates your electronic ticket. The system eliminates the need to manage a ticket from point of purchase to the end of the journey. Lost or forgotten tickets become a thing of the past. Refunds, revalidations and ticket reissues are easily achieved. Refunds, for example, can be credited to the customer’s credit card account. Travel becomes more flexible as travel plans can be altered without the reissuing of paper tickets. Security is increased as all information is held on Ansett’s computer system, and lost or stolen tickets are eliminated. Under the old system, Ansett was reissuing over 3,000 tickets a week.

    ? Ansett has the opportunity to claim ownership over the technology so that customers perceive Ansett as being the clear industry leader in the Australian marketplace.

    ? Industry acceptance of the new system has so far been positive. Byron Roberts, national president of the Federation of Travel Agents, stated in Australian Travel Report that electronic ticketing was a “reality” and “you can not object to an initiative that saves money”. Domestic travelers have shown their interests by the large number of electronic tickets issued, as paper tickets are still available if customers request them.

    ? After the worst crisis in September 2001, Ansett has got new opportunity. According to the report of The Australian Financial Review on 27-28 October 2001, two new

    investors, Solomon Lew and Lindsay Fox Lew is a Coles Myer director, executive

    chairman and the single largest shareholder of Coles Myer - have launched an opportunistic rescue bid for Ansett airlines. They plan to lease 29 aircraft in a $2.9 billion deal that will return Ansett to a slightly diminished version of its former glory. The Fox-Lew consortium has asked the Federal Government for a $350 million subsidy taken straight from the $10 passenger levy on air tickets which was originally earmarked for Ansett staff redundancies. The Victorian Government has been tapped for $150 million in cash and tax breaks.

    6.4 Threats

    ? In contrast, it also caused some followers from its competitors, it seems from the experience of overseas carriers that ET will become the industry standard, so Ansett’s competitors are expected to adopt similar technology. Australian Travel Reporter, October 1996, mentioned that Quantas plans to launch their own version in April 1997. Now we know that most Australian airlines and travel industry agencies have their own website and electronic ticketing systems, it includes of Quantas.

    ? For winning market share, Ansett has been developing a cheapest ticket policy in Australia. According to The West Australian on 11 October 2001, Ansett’s biggest

    competitor Quantas felt that it was under intense pressure of Ansett who cannot win right now. However a survey has proved that travel budgets could be cut by about 20%.

    ? Under Australian airline industry deregulation, due to lacking of stronger

    management, Ansett was hit by an escape crisis in last September 2001. Even though

    Ansett has begun its business again since last October, it has not walked out from the

    crisis yet. How Ansett will out of its crisis, it is still a problem. 7. Supplementary

    For winning consumers and getting good financial status, Ansett has to consider how to

    improve its online services and attract consumer. Several advices are as follows:

    ? Adding more free information onto the website.

    ? Adding chat room, intelligent agents, search engine onto online.

    ? Supplying more convenient online environment to attract passengers.

    ? Supplying more international services.

    ? Planning virtual passenger travel club.

    ? Encouraging passengers to add their confidence in Ansett.

    ? Improving its management.

    ? Setting up alliance with competitors.

    ? Keeping good financial record.

    8. Questions and Answers

    1. What could have delayed the introduction of Ansett’s electronic ticketing system?


    According to the case’s introduction, Ansett purchased the system in February 1996, and 39

    weeks later the system was launched. The reasons for delaying to introduce its electronic

    ticketing system are probably as follows:

    ? After purchasing, the project team had to test the system. This step was expected to

    know whether the system was suitable for Ansett’s original idea and whether it was

    compatible to old ticket system.

    ? After testing, the project team had to develop the new system secondly. This step

    was to make the new system to suitable with Ansett’s business actually.

    ? Making new strategy, writing and printing new documents.

    ? Designing a domestic electronic ticketing network system.

    ? Purchasing, setting up and testing all of the needed machines, these included in

    computer servers, communication routers and switches, ISDN lines.

    ? Testing computer operating and application software systems.

    ? Setting up databases and testing them.

    ? Solving all of the technical problems, which included fulfillment order online,

    clearing bank and agents, firewall and so on.

    ? Training staff.

    ? Advertising online and offline.

    ? Managing to test and operate the new system finally before using it by passengers.

2. How could Ansett’s competitors win back customers without introducing similar



    According to the reports of many Australian media, Ansett was attacked by a worst crisis in

    December 2001, it was shown that even though Ansett was firstly introduced a electronic

ticketing system, it was still suffered in the Australian airline marketplaces. Online ticketing

    system is just one of many methods of attracting consumers, it is also just a new channel of

    booking ticket in respect to compare with offline ticketing system. If Ansett’s competitors did

    some good strategies to contract consumers, they could win back customers without

    introducing similar technology. There are some probable strategies as follows:

    ? They had very good reputation that better than Ansett.

    ? They used to have good relationship with consumers.

    ? They had a number of loyal consumers.

    ? They had good services’ quality.

    ? They had more attractive to international passengers.

    ? Their travel agents had good relationship in Australian travel industry.

    ? They had very good financial status.

    ? They had stronger competitive on pricing than Ansett.

    ? They had good components lines of traveling.

    ? Ansett happened bankrupt crisis.

3. Discuss the importance of pre-testing a service before it is launched.


    It is very important to pretest a new service system before it is launched. Several reasons are

    as follows:

    ? No one new service system is totally suitable to a corporate, there are some

    problems that have existed in the new system and it would lead to failure of

    developing new system. Pre-testing will help us to avoid these problems.

    ? Nobody has entire hold the operation skills before it is launched for a new system.

    Pre-testing is a processing that the project team add confidence in it and the staff

    are trained to the new system.

    ? For correcting some problems and managing to write final document of developing

    and training, it is very necessary to take a pre-test.

    ? Pre-testing is a correct procedure that can avoid some leaders’ impatient behavior,

    and make sure when the best time to launch the new system is.

    ? If the pre-testing is successful, after that, the next steps will be successful mostly.

    ? It will avoid to make “consumer gap” when marketers develop a promotion


4. What actions can Ansett now take to ensure that their service advantage continues?


    It is the same as “suggestions”.

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