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Cathay Pacific, United States travel portal Travelocity and 16 major airline partners will officially launch Zuji.com.hk tomorrow, two months after introducing the Singapore and Australia sites.

However, rival Priceline, which runs an Asian online travel bidding service, said Zuji's business strategy would not threaten its prospects.

The new travel site, which uses technology from Travelocity, aims to put searches for travel fares and car rentals in the hands of the leisure traveller.

'We see a huge market in Asia and an even larger domestic market in China,' said Tim Fitzsimmons, general manager of e-business for Cathay Pacific and acting chief executive of Zuji.

Travel market research firm PhocusWright said that 5 to 6 per cent, or US$8.4 billion, of all travel in Asia-Pacific would be booked online by 2004.

So far this year, US$3 billion of travel services in Asia were sold online.

The Singapore-based Zuji has been compared with Orbitz in the US, which is also backed by airlines and is seen to have an advantage over other travel portals because of its airline investors.

However, Mr Fitzsimmons said Zuji was set up as an independent entity and its airline backers would not favour the site by giving it better fares than other travel agencies whether online or offline.

The role of the Internet in reducing distribution costs and cutting off travel agents attracted Zuji's airline backers.

'Once you hit break-even, the cost of selling that extra ticket is nearly zero,' he said.

According to a JP Morgan e-travel report, the cost of distributing one ticket is US$3 through a traditional travel agent compared with 60 US cents on the Internet.

Mr Fitzsimmons said the company expected to reach profitability in 2007 to 2008, with plans to launch Zuji in mainland China in 2004.

More than two years in the making, the Zuji Hong Kong site quietly went live on October 31 and started taking bookings and transactions. The Singapore and Australia Zuji sites were launched in September.

However, the Zuji site does not yet serve up a satisfactory user experience because it lists all flights going to a destination instead of listing only available flights. Hence, searches on the Zuji site during the peak holiday period would probably end in frustration because flights listed were often unavailable.

Mr Fitzsimmons said in three months, the site would resolve this problem and list only available flights.

After a poor start, the online travel industry in Asia looks set to take off with the entrance of successful US players Priceline, Travelocity and Expedia.

James Vaile, vice-president of Expedia Asia-Pacific based in Sydney, said the company planned to have operations in Hong Kong, Australia and Singapore by the end of the first quarter next year. However, Mr Vaile indicated it would be a while before Expedia rolled out a customised Asian site.

Zuji's immediate competitor in Asia for online travel dollars is Hutchison-Priceline's priceline.

com.hk, which uses a different booking method. Priceline has a unique name-your-own-price model which lets users name the price they are willing to pay for air fares, hotels or holiday deals. Priceline claimed such a model allowed for a 20 to 30 per cent discount off the true ticket or hotel price, although users had reported varied experiences.

While Priceline users will not know which airline or hotel they will get until their bid has been accepted, Zuji's model is transparent.

Users of Zuji.com can search for and book air fares or hotel rates online and the results are displayed according to price.

Mr Fitzsimmons said: 'They are very different markets. Zuji provides choice and makes those choices transparent to the user, while Priceline is a niche for people who would like to buy like that.'

Alfredo Gangotena, chief executive of Hutchison-Priceline said, 'We welcome other online entrants. The entry of more players in the market reflects the potential and growth of online travel, which is positive to both us and the travel industry.'

Travel sites are working with major portals such as Yahoo! and MSN to reach out to their most likely customers - Internet-savvy users.

Priceline.com has teamed up with Microsoft's MSN, while Zuji.com's services are available on regional sites of Yahoo!

Fare Competition

Zuji sees huge Asian market, particularly in China

Users of Zuji.com can search for and book cheap air fares or hotel rates online

Researchers expect that by 2004, 5 to 6 per cent or US$8.4 billion, of all travel in Asia-Pacific will be done online

This year to date, US$3 billion of travel services in Asia were made online

Portal expects to reach profitability in 2007 to 2008



Zuji launch to rival Priceline