Not long ago, prognosticators told the travel industry how the Internet was going to change the world, especially our world of travel distribution. And, as we all know, their forecasts were right. Those wise folks delved even further, explaining how the Internet would help solve the airlines financial woes by serving as a new distribution method that would allow the carriers to substantially reduce their distribution costs. The Internet did help accomplish lowering the carrier’s distribution costs, but it also brought unforeseen dramatic effects on the traditional airline model, much to the disappointment of its shareholders.

Let’s take a moment to reflect on The Net now that it’s ten or so years later:

The airline’s financial woes worsened as almost every major carrier has seen the inside of the bankruptcy court. According to many analysts, the Internet pricing strategy of the airlines actually destroyed their ability to fully manage their yields like they used to.

Consumers have been conditioned to "not believe" the first price they see. They "know" there is a better deal somewhere or they think there is, and will search for quite some time until they find it or are satisfied with what they’ve found.

Consumers have access to much more information than ever before and are much more savvy purchasers.

Admittedly, consumers do not view hotel rooms the same way as an airline seat. The airline seat is clearly viewed as a commodity. They’re all the same, while their hotel decision is more value driven. They put more emphasis on location, brand, amenities, activities and convenience when selecting their lodging. Now this stands to reason, as this decision will affect their personal comfort, and variety of choices helps bring product differentiation to light.

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