Travel is Going Upwardly Mobile. And How!

Mobile devices will play an increasingly important role in the way travel companies sell products and engage with customers. Mobile phones are not only changing how we communicate with the world but also the way we travel.

Consider these statistics:

• According to an eMarketer report¹, mobile phone penetration will increase from 61.1 percent to 69.4 percent of the global population between 2013 and 2017. The report further estimates that 110.3 million people in the US, or 52.5 percent of Internet users in the US, will book tickets online via any device at least once in 2015.

• Criteo’s Travel Flash Report² states that, in the first six months of 2014, over 40 percent of Americans booked travel reservations, (including flights, hotels and cruises) on mobile phones, up over 20 per cent for the same period the previous year.

• Juniper Research³ has forecast that 1.5 billion boarding passes will be delivered through mobile phones in 2019, against 750 million in 2015.

Airlines Soaring Higher with the Mobile Revolution

Mobile phone technology has the potential to significantly thin the layers between the traveler and the airline. According to a 2012 IATA report⁴ , direct channels like smartphones will emerge as airlines' largest commerce gateways. By 2017, says the report, 50 percentage of online direct bookings will be made on mobile devices – with even more ancillary purchases made through mobile.

As more and more travelers use their smartphones to plan and book their travel, airlines are coming up with applications to transform the consumer experience. For example, the Delta mobile app offers users the full range of transactional and information services – booking, schedules, flight status, and check-in. In addition, the airline also provides travelers access to an in-flight entertainment hub and a cool feature called 'glass bottomed jet' that brings an interactive view of terrain which the aircraft is flying over, on to a traveler's mobile phone. For airlines, the mobile revolution offers a huge opportunity to increase direct commerce. But they will have to adopt innovative strategies to push app adoption and usage. Consumers will log on
to apps that are intuitive, highly personalized, voice-enabled and, ultimately, simplify travel.

Impact on Global Distribution Systems (GDS)

The upcoming mobile revolution spells an opportunity and a challenge for GDSes. Airline ticket distribution is expected to migrate from GDSes to value creation hubs (VCHs) – aggregators
that will enable airfare and product transparency, dynamic pricing and rich merchandising and retailing. According to the IATA report, this does not mean that GDS will disappear. The report says the three major GDS operators – Amadeus, Sabre and Travelport – are most likely to take the lead in developing VCHs. These three companies already have extensive airline IT services business units, and VCHs will operate off existing airline services IT components. Is your airline prepared to adapt to changing market, technology and consumer dynamics?

1: http://www.emarketer.com/Article/Smartphone-Users-Worldwide-Will-Total-175-Billion-2014/1010536
2: http://www.criteo.com/news/press-releases/2014/12/mobile-is-the-new-black-criteo-s-state-of-mobile-commerce-report-reveals-the-purchasing-power-unleashed-by-mobile-devices/
3: http://www.juniperresearch.com/press/press-releases/1-in-3-airline-boarding-passes-issued-via-mobile
4: http://www.iata.org/whatwedo/stb/documents/future-airline-distribution-report.pdf