European Airlines Form Net Travel Agency

Mirroring the efforts of several major North American airlines, British Airways announced Thursday that it will join forces with Air France, Lufthansa and eight other European airlines to launch an online travel agency.

The group, which includes Alitalia, KLM, Iberia, SAS, Aer Lingus, Austrian Airlines Group, British Midland and Finnair, expects the effort to “attract a significant proportion of total online travel sales in Europe within the next two years.”

Following a Trend

Airlines and other players in the travel industry have been making a concerted effort to reclaim customers from Internet travel sites. Just this week, three of the largest European hotel chains announced a joint venture that will provide online bookings and reservations directly to their customers, as well as a business-to-business (B2B) purchasing platform.

The trend toward forming travel alliances helps individual companies overcome one of the largest hurdles in attracting online travel customers — lack of choice.

“All our research shows that customers want to be able to compare and buy offers from a wide range of airlines by visiting just one site,” said British Airways CEO Rod Eddington.

British Airways hopes to boost its online sales from just 1 percent of total tickets to more than 50 percent within the next three years, Eddington added.

Flocking Together

A major travel alliance was formed in North America in January when 27 airlines, including the five largest North American carriers — American Airlines, United Airlines, Northwest Airlines, Continental Airlines, and Delta Air Lines — formed a travel Web site to offer discounted fares and ticketing directly to travelers.

Two European airlines — KLM and Alitalia — have announced they would join both Internet efforts.

Known among its participants as “T2,” widely rumored to stand for “Travelocity Terminator,” the site has already been the subject of an American Society of Travel Agents (ASTA) complaint to the U.S. Department of Justice. ASTA charges that the new site represents unfair competition for both online and offline travel agencies.

Burgeoning Sector

British Airways said it hopes to launch the site before the end of the year and will be rolling out partners who will offer car rentals, hotel rooms and other travel services through the site.

Time may be of the essence, as the amount of online travel buying is growing rapidly. According to Forrester Research, $64 billion (US$) in travel will be booked on the Internet by 2004.

Using Web To Cut Costs

British Airways has been actively pursuing ways to cut costs of late. Last month, the airline joined with five others to form an Internet marketplace linking carriers worldwide with distributors of goods and services. The marketplace is expected to handle as much as $32 billion per year in fuel, food and other supplies for the airlines.

The airline has also announced it will link with a media company and a technology firm to set up a lifestyle portal offering customers leisure information over the Web.