While air fares seem to get cheaper and cheaper, and more people than ever are going online, the Internet seems to offer carriers an ideal way of cutting costs and opening a new distribution channel.
Travel is expected to be the biggest selling product on the Internet within the next five to 10 years, with airline tickets expected to account for up to 60 per cent of travel purchases.
Major carriers are beginning to realise that many people will no longer want to queue for hours, dig through brochures, or wait on hold, when they can access the information, book, and pay from their home or office almost instantly.
The successful move by Ryanair to create a full online booking facility, has raised questions as to why Aer Lingus has not been more pro-active in developing the e-commerce side of its business.
A spokesman for Aer Lingus said that the company was now working with PricewaterhouseCoopers on developing a new e-commerce strategy aimed at making a very significant step forward.
It is believed that Aer Lingus recognises it has fallen well behind in the area of e-commerce and the Internet over the last few years.
The situation is even more surprising given that it was one of the world's first airlines to establish an Internet presence. The Aer Lingus spokesman said the strategy was being worked out over the next few weeks and would hopefully result in the airline making a quantum leap forward in the online arena.
The Aer Lingus strategy, which is expected to be put into action in the second half of this year, will focus on developing customer relations management on the Internet.
The new online service will probably be linked to the OneWorld Alliance of which British Airways is a member. BA announced a major e-business programme last week which will include a neutral Web portal for all European airlines.
However, this is thought to be opposed by other European carriers, like Lufthansa, which is itself trying to secure a dominant position in the online marketplace.
Aer Lingus said when it goes online the company would not be competing in the same segment of the market as Ryanair, and so was not losing ground to that airline in the meantime.
Ryanair.com on the other hand has encountered huge online demand with its site selling around £5 million worth of flights last week and logging an average of 35,000 bookings a week.
Ryanair head of communications, Ms Ethel Power, said the company aimed to get 30 per cent of its sales online by the end of the year. Online sales are running at around £1 million a week since its launch.
The figures compare favourably to established sites such as Travelocity, Lastminute.com and e-bookings although this demand may decrease somewhat as the size of initial promotions begin to decrease. Ms Power claimed that of these sites, Travelocity had the highest numbers of weekly bookings at 20,000, 15,000 below Ryanair, while Lastminute.com only sold £2.5 million worth of tickets last year.
She said although low fares would determine how successful the site would be, the savings generated by cutting spending on distribution would enable the company to offer even cheaper flights.
Ms Power believed online booking and service would not replace either travel agents or direct telephone booking, but that the Internet would make it more difficult for the middleman.
"They will have to make themselves indispensable by offering different services and organising unusual holidays," she said. "Travel agents will have to remarket themselves and refocus on offering new experiences not short inter-city flights."
Ryanair claims that because Aer Lingus has not entered the online market yet, this has given it (Ryanair) a further opportunity to eat into its market share.
The Ryanair site will carry links to Ryanair partners such as Hertz within the next few weeks and plans to offer a range of lowcost products and services in the near future.
One industry analyst said that when airlines went online it offered the carriers the opportunity to reduce distribution costs significantly and in some cases boost the profitability of companies by up to 100 per cent.
The elimination of various reservation and agency charges, which make up around 10 per cent of ticket prices could bring prices down by as much as one third, but the Internet will be far more beneficial to low-fare airlines than traditional carriers.
However, travel agents do not seem bothered by these developments. The chief executive of the Irish Travel Agents Association, Mr Brendan Moran, said online reservations were just a new form of distribution which needed to be adapted to.
Online bookings would most likely eat into the sales of airlines' own reservation systems, he said, rather than affecting the business of travel agents.
Adaptation was necessary, but the position of travel agents as the best independent sources of travel information would preserve their position in the market, Mr Moran said.
The travel agency industry is growing by 17 per cent a year in the Republic and offering additional value-added packages to customers was one way forward for agents, he said. Bord Failte is expanding its online facilities with the launch of a new corporate site in March and the creation of a strategic alliance with Golfing Partnership Ireland.
Linked to the Gulliver information and reservation system, which tourist offices currently use to check availability and make reservations, tourists will also be able to check availability and pay in advance for golf outings.
The tourist authority already offers the facility to book accommodation ahead online and plans to launch foreign-language information sites in several European countries.
With distribution cost savings of between 20 and 50 per cent, many of Europe's more established airlines, which have been struggling to perform, are looking to the Internet to turn things around.
Regardless of whether the Internet will have a bigger impact than the industrial revolution, as some are predicting, the traditional travel industry will have to be quick to adapt to the new conditions.
