By eweek  |  Posted 2001-03-26 Print this article Print

.com Overhaul"> AA.com Overhaul

Last year, American paid some $1.3 billion in commissions to travel agents and online travel sites like Expedia and Travelocity. Thats a lot of money, particularly when you consider that Americans net profit last year was $804 million on revenue of $19.7 billion.

With those numbers, its easy to see why American, and every other carrier, is trying to sell more tickets directly to the public. In addition to reduced commission costs, an effective Web presence can reduce the amount of labor an airline needs to staff a telephone call center. "Any money they save by selling tickets on their own Web site goes straight to the bottom line," Forresters Harteveldt said. The analyst pointed to recent projections by his firm that said the total value of Internet travel bookings this year would top $24 billion, a figure expected to double by 2004.

But American has lagged its competitors on the Web. AA.coms functionality is limited when compared to other airline sites. For instance, travelers cannot book hotel and car-rental reservations on the site. And the site is often slower than those run by Americans competitors.

Consumers are noticing. Last fall, a survey by Gomez found that Continental, Delta and Northwest had the three best sites in the industry, based on usability and customer service. American came in seventh, one spot behind rival United. In February, Forrester released its ranking of airline Web sites. It gave the top spot to Alaska Airlines. American placed fifth.

The travails of AA.com are clearly galling to Samuel, who played a key role in getting American to put up its Web site in 1995. "We have had our share of problems; I wont deny that. On the other hand, we have an extremely high penetration rate with our AAdvantage program. And thats our target customer — where the money is," he said. "And our customer-satisfaction surveys show a high level of satisfaction with the site even in its current form."

A key problem with the site, Samuel said, has been the BroadVision software it uses. American will be replacing the system with software from Art Technology Group. Its Dynamo software can be programmed with standard Java tools. The key factor, Samuel said, was "how much more open the ATG architecture is. The Java programming capability has almost no restrictions."

Samuel expects the new AA.com to go live sometime this fall. In the meantime, Americans other technology initiatives will continue.

Analysts believe technology in general and the Internet in particular can provide big payoffs for airlines that can use them to increase productivity and lower costs. But lowering costs is expensive. American and its competitors will likely spend billions of dollars in coming years on Net-based technologies. Economist Swierenga predicted the airlines tech spending will continue for "as long as Moores law stays in effect."

Nason and Samuel agreed with Swierengas prediction and they made it clear that Americans checkbook will be open for many years to come. "We are spending a lot of money to be the best in almost everything," Nason said. "We dont want to be just one of the airlines thats playing leapfrog with each other." When it comes to technology, he said, "we really do want to be clearly ahead."


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