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
Advantages and limitations of Electronic Commerce
Advantages and limitations of online travel services
Marketing SWOT Analysis
Questions and Answers
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
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
? Information technology
? 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. www.ansett.com.au 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 www.ansett.com.au 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
? 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,
5. Advantages and limitations of online travel services
? 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
? 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
? 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.
? 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.)
? 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.
? 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
? 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.
? 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
? 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”.