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Global%20 E Commerce%20 A%20 Marketing%20 Challenge


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Global%20 E Commerce%20 A%20 Marketing%20 Challenge

  1. 1. EYE FOR TRAVEL CONFERENCE SHANGHAI 2005 Global E-Commerce A Marketing Challenge August 16 2005 Work Hard. Fly Right. SM
  2. 2. Executive Summary Continental is the 6th largest airline in terms of ASMs/ASKs. We fly to 5 continents • and have four hubs globally. From our international gateways in Newark, Houston, and Guam we fly to 278 cities worldwide; 24 being in the Asia-Pacific region. • Continental. COM has grown significantly in the last 3 years to become a major revenue channel for our business primarily driven by the US domestic market. • Internationally, growing Continental. COM as our global network expands is fast becoming a challenge. • We have to act locally, think globally, minimize costs as well as increase sales. • As fuels costs soar, finding cheaper cost effective channels to sell our tickets become paramount in our goals. • China is a phenomenal market place to be in for the long term. • E-commerce is a prerequisite we must ensure we do right the first time. 2
  3. 3. Global Shifts in Distribution Channels GDS sales have declined significantly since 2003 and the emergence of LCCs 80% 70% 70% 60% 60% % Total Revenue 50% 40% 30% 20% 17% 20% 13% 10% 10% 5% 5% 0% Agencies Airline sites Internet Other Q1 2003 Q1 2005 3 Source: Revenue Datamart 2003/2005 (005 ticket stock only)
  4. 4. Focused on Low Cost Distribution Channels Distribution Channel Shift 5% First Quarter 2005 3.3 Year-Over-Year basis point Change 0% (0.5) (1.6) (3.0) (5)% Traditional CO Direct CO.COM Agency Reservations Connect One Way Average Cost/Ticket by Distribution Channel* $12 $10 $5 $3 *Excludes commissions and pay for performance incentives The business traveler’s remote control. Manage all your travel at 4
  5. 5. Online Growth Challenges For most airlines there are hindrances to international online growth: 1. Corporate Travel bookings are still embedded in legacy systems 2. Total travel package suppliers are largely embedded in legacy systems 3. Large market segments are obtained via third party intermediaries 4. Most marketing models are based on homogenous psychographics 5. Website traffic driven by primary originating hub/focus cities 6. Internet agency models driven by significant acquisition costs, maintaining pricing parity as well as total package revenues. 7. Interline E-tickets and sales still pose a significant challenge 5
  6. 6. Building the Global Site - Challenges Given all the industry legacy issues, we also face significant challenges acting locally and thinking globally. 1. Constantly redefining our global site for better functionality 2. Simple web based consumer payment systems 3. Tax policy regarding different POS 4. Broadband internet penetration rates 5. Consumer adoption rates for looking and booking 6. Outsourcing vs. organic growth 7. Most importantly, consumer acquisition and retention in non-hub markets 6