Distribution Strategies

Travel Distribution Russia SpecialOnline sales in the Russian travel industry, according to EyeforTravel Research, mainly emerged few years ago. For its part, an airline like Lufthansa says its e-commerce business has been developing a bit quicker than the market in general.

Published: 19 Aug 2008

Travel Distribution Russia Special

Online sales in the Russian travel industry, according to EyeforTravel Research, mainly emerged few years ago. For its part, an airline like Lufthansa says its e-commerce business has been developing a bit quicker than the market in general.

In 2004, Lufthansa started to use a local online booking engine. The bookings were queued to local Lufthansa offices and the customer had to come there for payment. In 2005, a local decision to accept credit cards for payment (by phone and online) was taken and Lufthansa improved upon its online booking engine. Late next year, the airline chose to re-design www.lufthansa.com, which according to the airline resulted in a big improvement in the online booking process.

Reflecting on the same, Lufthansa German Airlines' Director Marketing & Pricing - Russian Federation and C.I.S., René Koinzack told EyeforTravel.com's Ritesh Gupta: "Of course, online booking cannot widespread within the country just from the efforts of foreign airlines unless the local airline industry supports the whole innovation process."

Koinzack, who is scheduled to speak during EyeforTravel's inaugural Online Travel Market Russia 2008 conference on 24-25 September 2008 (to take place during the Leisure Exhibition at Crocus Expo in Moscow), said that two years ago, the Russian Railways company, the largest transport company of Russia, introduced online booking services.

"That also helped to promote online travel-related services because people started getting used to buy different tickets on the web. We believe Russian customers will appreciate such an easy and useful way for travel planning. Online booking's share will reach 15 percent and even more (by 2012). As of the 1st of June 2008, IATA-member airlines, including Russian carriers, actively implemented electronic ticket technology. It will give a big boost to online travel," added Koinzack.

In an interview with EyeforTravel.com, Koinzack spoke about evolution and trends in the marketplace. Excerpts:

Ritesh Gupta: What according to you are major challenges when it comes to travel-related e-commerce in Russia?

René Koinzack: A significant number of passengers use offline travel agencies offering an all-inclusive package of the further trip. Furthermore, spending money on travel is not the same as to buy a book or a CD, which are in the top of online goods sold via the web. Airlines are trying to push their online services quite well, but it will take some more time for people to do online purchasing with their credit cards.

In addition, some people in Russia, even in Moscow, still don't have any bankcard to pay online; some airports don't accept e-tickets so far owing to limited infrastructure.

Ritesh Gupta: How do you assess the current technical infrastructures, broadband access and secure payment systems in Russia? What do you think needs to be done for pushing online travel market?

René Koinzack: For further growth of the online travel industry in Russia, it is very important to develop Internet-infrastructure and affordable Internet usage fees.

As far as secure connection is concerned, most companies use modern security technologies for data protection of their clients. To ensure the highest possible security for the transmission of Lufthansa customer data between your web browser and our Internet system, Lufthansa uses the Secure Socket Layer (SSL) encrypting technology. SSL enables an encrypted communication respectively transfer of documents via the Internet between web browser and web server.

We haven't faced any criminal accident related to payment systems.

To make online offers more attractive and push channel shift, travel-related companies, e.g. airlines, offer special discount, set lower prices on the tickets bought online. Sometimes they are very attractive like Lufthansa's the latest online special offer – from Moscow to Milan, Barcelona, etc for 4 995 RUB (exl. taxes and fees).

The current trend is to offer clients a service package, for example not only ticket, but also the possibility to book a hotel and rent-a-car etc. As far as the airlines are concerned, such additional services like online check-in with seat selection, as well as various ways to get your boarding pass – online with home print out, at the Quick Check-in machine at the airport or mobile boarding pass on your mobile phone, where the bar-code will be simply scanned at the gate, make the journey more convenient and save passenger time at the airport. All these services are available on www.lufthansa.com.

Ritesh Gupta: The number of Russian sites offering a full range of travel and tourist options to visitors is rising quickly. It is estimated that the value of the online travel agent (OTA) market in Russia is currently around 0.5 percent, and is forecasted to grow to 18 percent by 2012. What role do you foresee OTAs playing in near future in your distribution?

René Koinzack: We do not underestimate this market segment, and we are open for cooperation in the frame of fair competition. In Western countries, OTAs became important market players long ago.

Ritesh Gupta: As travel opportunities become more varied and complex, it is increasingly difficult for the end customer to make a confident selection and manage a bewildering mix of travel suppliers. Do you think GDSs in this region are working on keeping travel content on a single point of sale? (что это означает?) According to you how are GDSs approaching in this region?

René Koinzack: Currently, in the Russian market there are three big players: Amadeus, Galileo and Sabre. Lufthansa uses Amadeus. Airlines and travel agencies using these GDSs have access to general related content like country or climate information, which can be accessed irrespectively of point of sale. In Russia, like in every country, GDSs have their sales representatives to sell their product.

Online Travel Market Russia 2008 Conference

Lufthansa's René Koinzack is scheduled to speak during EyeforTravel's inaugural Online Travel Market Russia 2008 conference on 24-25 September 2008 (to take place during the Leisure Exhibition at Crocus Expo in Moscow).

For more information, contact: Tim Gunstone - +44 (0)207 3757557/ tim@eyefortravel.com

In order to know more about EyeforTravel Research's Travel Distribution in Russia report, please contact:

Amy Scarth
Tel: +44 (0)207 3757545
Email amy@eyefortravel.com