Customers who book directly with the airline are the most profitable and therefore should be the main focus of airline marketing
During a round-table discussion at a recent travel conference, airline representatives were asked how they saw Google’s steady encroachment in the travel industry affecting their business and how might they respond.
The response was consistent from brand to brand: forging a partnership with Google was inevitable, it was only a matter of when.
Each representative made it clear that a partnership with Google would yield better traffic to their site, more qualified leads, and more revenue.
When asked what Google gains from this partnership? Beyond lots and lots of money, not a single representative had a clear understanding of how Google would benefit.
Google made upwards of $12 billion last year from travel brands, but what Google truly gains by this partnership is position.
The real estate at the top of the trip planning funnel has been traditionally occupied by airlines. When a traveller is inspired to plan a trip, statistically their first purchase is a flight.
There was an eery consensus among the airlines present that Google search precedes most travellers’ paths to purchase, therefore participation in Google Flights was simply aligning themselves with the course of evolution for the industry.
When asked what assurances do airlines’ have that Google will not relegate them to a white label logistics supplier fulfilling their orders, the response was unicorns and moonbeams and Google would never do something like that.
Furthermore, that’s what a partnership agreement would prevent.
The word partner is an elusive word; we think of Butch and Sundance, Bill and Hillary, but we also think of minimum wage baristas at Starbucks. (Starbucks do not have employees, they have “partners”)
The shared risks and profits in business partnerships become tricky when there is not a shared vision.
Airlines want (and need) new custom. Google intends to own the entire infrastructure on which the travel industry is built.
Google seek to own the transition.
Google are a longstanding staple of how we engage with the world, it is hard to consider them an aggressive competitor, but it is precisely their seamless integration with how we live that makes them the greatest threat. And, more importantly, their monopoly in search.
Google assures travel brands and airlines it has no intentions of becoming an OTA, and there is good reason to believe this is true: why take on the customer support headache of becoming an OTA, while concurrently antagonising your most profitable customers?
Nonetheless, what’s to stop Google from incorporating dynamic pricing for customer acquisition? Narrowing the profit margins for OTAs, hotels and airlines depending on the profitability of the customer.
Direct booking has been the mantra of large hospitality brands over the last year. Should this not be the battlecry for airlines too?
Is not the real innovation to be found in how an airline galvanises repeat business from its large database of former customers rather than how it adds new customers?
Millennials purchase travel approximately four times a year. That means most of the time they are in a state of seeking inspiration or planning the next trip.
According to a Google/Ipsos survey, when considering a trip:
78% of leisure travellers don't know which airline they will use.
82% do not know which accommodation provider they will use.
But more importantly the survey found that 67% of leisure travellers are more likely to book with the travel brand that provides relevant information for the destinations they’re interested in.
The airline who facilitates travellers in the inspiration and planning phase will be best positioned at the booking phase.
The simple formula for direct booking is about knowing your customer, and journeying with them from inspiration, through planning and booking, and continuing to provide relevant information in-destination.
It's a simple formula with a more complex execution.