Airlines have been working on offering their passengers online practical tools to make their travel more convenient and hassle-free. Getting customers booking and managing their travel online has clearly advantages for travel firms too. Compared to traditional channels, online channels, in most cases, can reduce operational costs but keeping track of performance is essential.

E-commerce has become a tool for a lot of industries like airlines to shift their customers from the traditional channels to an online platform. To do that, marketers need to guarantee the right presence and usability of its online touch points. This will be central to building distribution strategies that could reflect a better cost efficiency for airlines.

EyeforTravel’s Ritesh Gupta talks to Diego Quesada, e-business director, commercial VP, Copa Airlines about the airline’s e-commerce strategy.

EFT: Given the cost pressures in the airline industry, how do you deal with ongoing shifts in the cost of distribution?

DQ: This is a constant challenge for airlines. Having guidelines to maximise the return of each new initiative or strategy, and a discipline of monitoring the cost-per-acquisition (CPA) of customers, is a way to make sure that your proportion in the cost-of-distribution is healthy.

Negotiating investments based on performance helps towards improving efficiency. In the online world, businesses were negotiating or acquiring a presence on some media by models that did not necessarily represent a direct impact on revenue generation; key performance indicators included impressions or cost-per-click. Now KPIs such as CPA allow sectors to pay media for a direct contribution in transactions and performance which is the best way to have a distribution cost control.

EFT: How have you focused on simplifying customers’ buying experience while at the same time maximising the yield per online booking?

DQ: We have different teams and projects that target each of the indicators. However, having a customer centred strategy in which you really hear and understand your passenger needs is how you should prioritise any new initiative and goal that the company wants to achieve.

EFT: What is being done to ensure customers have all the information they need to make the right choice?

DQ: At the moment we are in a process of offering the basics on our website. But at the same time we are working on making it more personal and user friendly so our customers can share and give their feedback. Definitely geo-location, social media, the mobile channel and behavioural analysis are things we look forward to leverage really soon.

Right now we have different storefronts that allow us to communicate the most relevant promotions and fares in a more personalised way to each region. These have local forms of payment to close the transactions. This is complemented with a social media and email marketing strategy. One of its objectives is to communicate our last minute deals to subscribers to our database in an effective and cost efficient way.

EFT: How are you driving incremental revenue with multiple points of merchandising integration within the sales process?

DQ: We already work with three different partners to offer products that could complement the planning experience of our customers such as car rentals, hotels and insurance. But we are conscious about the opportunity of adding value to parts of the travel experience.

EFT: How do you monitor performance of your site and also the behaviour or preferences of your online visitors?

DQ: There is a team that focuses on understanding trends and the behaviour of our online customers. It does this by looking at information from all the different data sources. This is used as the basis for our online marketing team to start new initiatives and to define the short, mid and long-term strategy.

EFT: Online-direct can prove more expensive than traditional GDS distribution. What should airlines do to protect themselves?

DQ: There are many different components in the equation of controlling the cost of the online-direct channel. One of those components would be making sure that the volume of demand that you are reaching or forecasting in this particular channel is big enough to maintain your fixed costs as a healthy proportion of the revenue (platform, infrastructure and so on). Find the technology that fits your size.

Another important component is to define models that align each region’s strategy with the limits of variable or transactional costs (CPA orientation again!). Right here having a good segmentation and qualified audience for your marketing strategies is really important.

However, count on tools that allow you to have a discipline of continuous monitoring. Tracking the impact of each initiative as well as market changes by region is the way to understand if the proportion of the distribution cost is desirable.

EFT: Lastly, how do you assess the evolution of two important distribution channels - direct channels and also social media in airline distribution?

DQ: I think that depending on the region you serve, you may expect different behaviour. There are still areas where the infrastructure requires that companies maintain a significant presence of traditional direct channels such as call centres or offices in the city. However, as these markets evolve, this will change as it has done in markets with greater Internet penetration. So the web channel will continue to grow significantly as a transactional channel and traditional channels will be used more to customer support.

I would say that social networks were the channel to bring “word of mouth” to the digital world in a more friendly way. For now, I feel they are a cost efficient communication tool that can work on very important issues such as awareness, branding and customer service. But they are also beginning to be important in the planning of customer travel through strategies that can inspire and motivate customers to take new journeys.

Right now I don’t think they represent an important share as a distribution channel for airlines but it can get there in the medium term.