Business travelers want mobile, Expedia picks up Mobiata

I guess Expedia is watching the market. The online travel agency just snapped up mobile travel application developer Mobiata. Mobiata’s claim to fame is FlightTrack, and the other apps in its portfolio include TripDeck, HotelPal, FlightBoard and FareCompare. For Expedia, it was a no-brainer, as 4 percent of its traffic is coming from devices, a number the company would like to kick a bit higher, according to TechCrunch.

Beyond the fact that it gets more reach and better footing in the mobile space, Expedia’s Mobiata acquisition is interesting in light of a recent Deloitte survey. Business travelers are increasingly turning to their smartphones to research and book travel. The global professional services firm reported that 63 percent of business travelers earning more than $150,000 a year have web-enabled smartphones. Twenty-six percent of survey respondents, Deloitte said, have even downloaded hotel apps to these devices.

Given this trend in business travel, an important market for the travel industry, Expedia’s pickup makes good sense. The big question: who’s next?

[photo by Ed Yourdon via Flickr]

The Internet – an airline’s best friend, and their biggest enemy

Not much has had a bigger impact on what happens behind the scenes at airlines than the Internet. Just 15 years ago, a flight involved a trip to a travel agent, a call to the airline or one of their now extinct City Ticketing Offices (CTO).

In this article, I’ll take a brief look at how the Internet has helped, and harmed the airlines.

The Internet as their best friend forever

Remotely accessible booking systems had been around for years before the Internet took over – and many of the old online services had some way to sell tickets through their application.

Business travelers and aviation freaks often had access to dial-up booking systems. Those systems were pretty horrible to use, required a complex array of text commands, and were nowhere near as friendly as the current web based booking engines. That said – for geeks, they were awfully cool to use, and booking tickets using them was much more fun than it is nowadays (anyone remember War Games?).

Once airlines learned how to embrace the Internet, they embarked on a one way trip towards getting rid of expensive legacy systems, some of which had been in use since the early 70’s.

The Internet is a one way ride to making a ton of money

Many of the things we used to take for granted are gone – and the Internet is to blame for that. Remember printed ticket stock? Those red carbon prints are gone from most US airlines (they are still used for specialized tickets and many foreign airlines still issue them).

Checking in at the airport used to involve a smile and someone handing you a boarding pass. Nowadays you check in the night before, and print your boarding pass at home. Major airports used to have 30 or 40 staffed desks, now they can handle all their passengers with just 4 or 5 people.

So, it is needless to say that airlines LOVE the Internet. They don’t need thousands of ticket agents, expensive real estate for ticketing offices, and in most cases, the first time you actually deal with an airline employee is when you step up to the gate.

From Internet savings to Internet earnings

Once airlines mastered the art of saving themselves a ton of money, they started to use the Internet to make money. Online check-in has become so popular, that people who don’t use it are being penalized. If you want to get in touch with an old fashioned phone agent to book your ticket, you’ll be charged a fee. United Airlines wants $25 per ticket booked using their phone agents.

The future of the Internet for airlines is simple – everything you want to do, will be done through their online tools. When upstart airline Skybus started flying in 2007, they did not even invest in phone lines – complaints, questions and other queries had to be emailed to them. Of course, they may have been a little ahead of the curve, because they were bankrupt in just 11 months.

The Internet as the enemy

With the proliferation of social networks, the Internet is slowly coming back to bite the airlines in the behind.

Information spreads faster than ever, and news (good and bad) can quickly go “viral”. One example of how the Internet actually hurts their bottom line, is when someone discovers a fare mistake.

Fat finger deals

Even though airlines use more technology than ever behind the scenes, a lot of the processes are still supported by real people. And anywhere people are involved, someone is eventually going to screw up (badly).

Airlines work with thousands of airfares – every single city pair has a long list of fare codes, specific dates for those fares and hundreds of other pieces of data. A “fat finger deal” happens when someone sitting behind a computer mistypes – instead of expecting customers to pay $500 for a flight, they’ll load it for $50, or $5. In other cases, an airline may forget to charge additional fees.

Recently, a large airline loaded 100’s of fares to Europe, but forgot to include the fuel surcharge. In the past, it would take quite some time for travelers to discover this, and even if they did, it would probably only make it to a couple of their friends through email.

Nowadays when something like this happens, someone discovers it right away, and in a matter of minutes the news is being shared with millions of people.

When you can fly to Europe for just $250 all in, news travels very fast. Services like the popular Farecompare can find out of the ordinary airfares within minutes, and share them as soon as they discover them.

In the past an airline may have been able to fix its mistake before more than one or two hundred people took advantage of it – nowadays the damages could be in the millions before they even notice something is wrong.

Any PR is good PR no longer applies

The old mantra “any PR is good PR” no longer applies to the Internet. When United Airlines broke the guitar of one of their customers, the guy vowed revenge.

That revenge resulted in a song about how useless United Airlines is, and has been watched by over 4 Million people.

I’ve seen some “specialists” claim that this didn’t really hurt United Airlines, and it is indeed debatable whether a popular Youtube clip can hurt them, but like with many viral clips, this one made the crossover to old school media. I’m pretty sure that is when the United executives started to notice they really screwed up.

Newspapers, TV stations and magazines all devoted some of their coverage to an airline throwing a guitar, breaking it, and being too incompetent to pay for its mistake.

A quick web search shows that almost every TV news station in the country covered this – and there is no denying that this severely hurt the brand name (if it could be damaged any more).

In the past, a seasoned journalist would contact their favorite PR rep at the airline, and ask for an “official statement”. Nowadays, the news is considered old by the time the old school press covers it.

Airlines invested in employees to be hip and interesting on Facebook and Twitter, but now those people suddenly have to learn damage control as people start Tweeting about how horrible the airline is. When one of the trending topics on a social network is “United Sucks”, even the best PR flack won’t be able to put a positive spin on that.