This document analyzes the electronic distribution channels for airline tickets. It identifies 140 online channels for Cathay Pacific Airways, including direct, OTA, and other channels. It finds that OTA airfares vary significantly by region, with Asian OTA prices generally lowest. The analysis also indicates Cathay Pacific employs dynamic pricing strategies across channels and regions to maximize revenue, offering lower prices to local OTAs.

1. Electronic distribution channels
of airline ticket
Yun Eui Leeᵃ
Sunny Sunᵇ,
Rob Lawᵃ, and
Lina Zhongᶜ
ᵃThe Hong Kong Polytechnic University, Hong Kong
yun-eui.lee@connect.polyu.hk, rob.law@polyu.edu.hk
ᵇRitsumeikan Asia Pacific University, Japan
sunnysun@apu.ac.jp
ᶜBeijing International Studies University, China
zhonglina@bisu.edu.cn
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2. Introduction
• The expanding influence of e-commerce on the airline industry brings
both opportunities and challenges for airlines.
oIncreased sales volume
oInventory control
oReservation system
oMarketing
Opportunities
Controlling the diverse
distribution channels
Competing with OTAs over prices
Challenges
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(Demirciftci, Cobanoglu, Beldona, & Cummings, 2010)(Business Wire, 2019)

3. Introduction
• Nevertheless, differentiating between air carriers or OTAs has become
considerably difficult under such an intensely competitive online
environment.
• Thus, air carriers should examine their e-distribution channel
portfolio and find out the best practice of online pricing strategy with
the ultimate goal of revenue maximization.
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4. Research Objectives
To identify online distribution channels for airline tickets;
To compare the lowest airfares of OTAs in different regions;
To analyse the pricing strategy of air carriers; and
To find out the best-practice for airline tickets’ pricing
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5. Literature Review
E-distribution channels:
• E-distribution platforms provide significant financial contributions to
airlines (Roma, Zambuto, Perrone, & Review, 2014).
• At present, OTAs works more than intermediary job to sell inventory.
o Improve hotel rankings on OTA websites (Roma et al., 2014)
o Control the prices of travel-related products (Guo, Ling, Dong, & Liang, 2013)
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6. Literature Review
• The current operating model of OTAs has also caused some conflicts
between tourism suppliers and intermediaries.
oFierce competition because of the low entry barriers in the online
environment (Law, Chan, & Goh, 2007).
oLarge companies such as Amazon and Google bring unrelated diversification
into tourism industry.
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7. Literature Review
Online pricing strategy:
• Airlines employ multi-channel distribution to sell airline tickets to succeed in the
fierce online competition.
oChen (2006) found out that the airline ticket prices sold by official websites
and OTAs do not have much disparity.
oBuhalis and Law (2008) believed that transparent online information
eventually result in price consistency.
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8. Methodology
Case study
of CX
Identify all the
online
distribution
channels
-google search
Data
collection
-short-haul (TPE)
-long-haul (NYC)
Data analysis
-ANOVA
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Chi and Koo (2009)Keyword search

9. Methodology
• Use Cathay Pacific Airways (CX) as a case study
Cathay Pacific Airways (CX):
oAsia Pacific is one of the rapidly growing region for e-commerce.
oFive-star airline in the list of “The World’s Top 10 Airlines of 2018”.
oLeading Asian airlines which provide flights over 90 destinations in 35
countries/regions.
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10. Findings
• Profiles of the e-distribution channels
Regions Short-haul route Long-haul route
Asia 31 32
Europe 44 44
North America 51 52
Others
(Oceania, Middle East, Africa)
12 11
Direct online channel 2 1
Total 140 140
Table 1. Number of online airline ticket distribution channels of CX
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11. Findings
• Comparison of lowest airfares on OTAs in different regions
Region(i) Region(j) Mean Difference (i-j) Sig.
Asia
(USD $500.22)
North America -93.55 .000*
Europe -83.40 .000*
Others -137.48 .000*
North America
(USD $593.77)
Asia 93.55 .000*
Europe 10.15 .478
Others -43.93 .000*
Europe
(USD $583.62)
Asia 83.40 .000*
North America -10.15 .478
Others -54.08 .000*
Others
(USD $637.70)
Asia 137.48 .000*
North America 43.93 .000*
Europe 54.08 .000*
Table 2. ANOVA tests of lowest airfares for short-haul flight among different regions
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12. Findings
• Comparison of lowest airfares on OTAs in different regions
Region(i) Region(j) Mean Difference (i-j) Sig.
Asia
(USD$ 3012.99)
North America -425.05 .000*
Europe -318.98 .000*
Others -620.22 .000*
North America
(USD$ 3438.04)
Asia 425.05 .000*
Europe 106.07 .043*
Others -195.17 .000*
Europe
(USD$ 3331.97)
Asia 318.98 .000*
North America -106.07 .043*
Others -301.24 .000*
Others
(USD$ 3633.21)
Asia 620.22 .000*
North America 195.17 .000*
Europe 301.24 .000*
Table 3. ANOVA tests of lowest airfares for long-haul flight among different regions
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13. Findings
• Analysis of online pricing practice of CX
1. Comparisons of airfares of OTAs and that charged by the official
website of CX
2. Comparisons of airfares by different regional OTAs
3. Assessment of price discrimination on code-share flights
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14. Findings
• Some OTAs continue selling low-price airline tickets compared with
those sold by the official website of CX.
• CX is likely to employ different online pricing strategies across
different channels, thereby providing cheap airline tickets to a limited
number of regional travel agencies within the Asia-Pacific region.
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15. Implications
• Theoretical implications
oCX adopted dynamic pricing strategy to effectively control its inventory.
oCX collaborated with different e-distribution channels as an expansion to
target different segments.
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16. Implication
• Practical implications
oCollaborate with regional OTAs for new flight routes
oCollaborate with selective ‘quality OTAs’
oMonitor online distribution channels’ pricing
o‘Best Rate Guarantee’ on the official website
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17. Conclusion
• Ticket price disparity remains across online distribution channels.
• CX Airways offered the cheapest ticket price to local OTAs.
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18. Limitation and future research
• It might be possible to disregard some OTAs.
• Only the lowest prices were retrieved without considering other
factors.
• Future studies are suggested to extend the tracking period and cover
more flight routes to investigate e-distribution channels of airline
tickets.
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19. References
• Buhalis, D., & Law, R. (2008). Progress in information technology and tourism management: 20 years on and 10 years after the Internet—
The state of eTourism research. Tourism Management, 29(4), 609-623.
• Business Wire. (2019). Travel Agency Air Ticket Sales Soar 7.1 Percent in 2018. Retrieved May 2, 2019, from
https://www.businesswire.com/news/home/20190117005400/en/Travel-Agency-Air-Ticket-Sales-Soar-7.1.
• Chen, J. (2006). Differences in average prices on the internet: Evidence from the online market for air travel. Economic Inquiry, 44(4), 656-
670.
• Chi, J., & Koo, W. W. (2009). Carriers’ pricing behaviors in the United States airline industry. Transportation Research Part E: Logistics and
Transportation Review, 45(5), 710-724.
• Demirciftci, T., Cobanoglu, C., Beldona, S., & Cummings, P. R. (2010). Room rate parity analysis across different hotel distribution channels in
the US. Journal of Hospitality Marketing & Management, 19(4), 295-308.
• Guo, X., Ling, L., Dong, Y., & Liang, L. (2013). Cooperation contract in tourism supply chains: The optimal pricing strategy of hotels for
cooperative third party strategic websites. Annals of Tourism Research, 41, 20-41.
• Law, R., Chan, I., & Goh, C. (2007). Where to find the lowest hotel room rates on the internet? The case of Hong Kong. International Journal
of Contemporary Hospitality Management, 19(6), 495-506.
• Roma, P., Zambuto, F., Perrone, G. (2014). Price dispersion, competition, and the role of online travel agents: Evidence from business routes
in the Italian airline market. Transportation Research Part E: Logistics and Transportation Review, 69, 146-159.
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20. 20
THANK YOU VERY MUCH!
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21. Keywords
• ‘Lowest airfare’, ‘air ticket’, ‘airfare’, ‘airline ticket’, ‘Hong Kong to city
name flights’, ‘cheap tickets to city name’, ‘Cathay Pacific city name’,
‘Cathay Pacific cheap fares’, ‘city name flight tickets’, ‘flights from
Hong Kong to city name’ and ‘online travel agency’ were used to
search for all channels that CX adopted for its e-distribution of airline
tickets.
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22. Unrelated diversification
• Amazon Destination
• FlightSearch
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