Airlines fasten their seatbelts for take-off in mobile ticketing

PUBLISHED : Wednesday, 09 February, 2011, 12:00am
UPDATED : Wednesday, 09 February, 2011, 12:00am

Mainland airlines are jostling for a bigger share of the growing mobile ticketing market as they attempt to cut commission paid to travel agents.

Air China and Spring Airlines have geared up marketing campaigns to lure more passengers into buying air tickets directly from their websites via their mobile phones.

Mainland airlines are struggling to increase the percentage of direct sales of tickets to cut commission expenses, which range between 3 and 5 per cent of the ticket price.

Air China saw its percentage of direct sales top 10 per cent for the first time last year.

That compares to around 40 per cent on average among global airlines. Mobile ticketing is seen as a new way for mainland airlines to attract more sales and cut costs.

Spring Airlines, which obtains 80 per cent of sales directly, including from online ticketing and mobile ticketing, is a rarity on the mainland.

If the percentage of direct sales rises 10 percentage points, mainland carriers are expected to be able to save at least 600 million yuan (HK$710 million).

That is based on approximately 200 billion yuan of sales per year and a 3 per cent commission fee.

The growth of 3G handset users on the mainland is the catalyst for the upsurge in mobile ticketing.

The number of 3G phone users increased to 25 million in June last year from 18 million in March, according to the Ministry of Industry and Information Technology.

Mobile ticketing would cut costs and also provide airlines with an additional marketing channel, said Spring Airlines' executive office director Zhang Wuan.

The Shanghai-based budget airline was planning to roll out an application for iPhone users for its mobile ticketing service, said Zhang.

The carrier has already teamed up with Unicom to launch mobile ticketing applicable to most of the 3G handsets on mainland.

The carrier expects that its percentage of mobile tickets will increase to 10 per cent this year, from 5 per cent at the end of last year, Zhang said.

With mobile ticketing 'we can also alert our passengers to promotions through short message services (SMS),' he added.

A report by iResearch Consulting Group, a Shanghai-based consultant on internet and wireless services, revealed the volume of mobile payments would surge to 100 billion yuan next year from 2.4 billion yuan in 2009.

Although the research did not provide a breakdown on mobile ticketing, it underscores the potential of the mobile phone as a payment platform.

Air China, the largest mainland carrier by earnings, has offered 100 yuan of mobile phone fees for every 1,000-yuan transaction through its mobile ticketing service through to next month.

It launched the service in August, alongside its mobile check-in and seat selection services.

Reaching for the sky

Spring Airlines already sells this percentage of its tickets directly, both online and through mobile ticketing: 80%