Travel Reference
In-Depth Information
accommodation direct with the 'principals'. Also,
new technologies such as digital TV and call centre
operations are changing the way that holidays are
made available and sold.
'Horizontal integration' is when a company owns
or controls other businesses at the same level of
the distribution chain, e.g. the takeover of a small,
independent hotel by a major hotel group such as
Marriott Hotels & Resorts or the merger between
Thomas Cook and MyTravel tour operators in 2007.
Principals
Firms carry out integration, whether vertical or horizontal,
in order to gain an advantage over their competitors,
but it may not always be in the public interest since
it can reduce choice for customers by concentrating
ownership of travel and tourism companies in smaller
numbers of large fi rms. In such cases the Competition
Commission can be asked to investigate if the travelling
public are indeed being disadvantaged.
Hotels, Airlines, Other Transport Providers
Wholesalers
Tour Operators
Interdependencies
A good example of interdependencies in travel and
tourism is the development of 'alliances' in the airline
sector, where companies combine their operations in
certain areas but still retain their own identities. Partner
airlines share passengers on certain routes to reduce
costs and offer travellers 'interlining' across all members,
i.e. the ability to use the same ticket regardless of which
airline you are using. As an example, if you book a fl ight
with British Airways from London to Sydney, you may
well fl y on a Qantas plane, since the two companies are
partner airlines. The airlines also benefi t from 'economies
of scale' in purchasing, management information systems
and administration, i.e. they may be able to reduce their
staffi ng costs and are able to negotiate better prices with
their suppliers because they are ordering larger quantities
of supplies when compared to a single airline.
Retailers
Travel Agencies
Customers
Fig 1.12 - Traditional chain of distribution
in travel and tourism
Integration
FOCUS ON INDUSTRY
'Integration' in the travel and tourism sector occurs
when one company owns or controls more than one
part of the distribution process. For example, Thomas
Cook owns a number of tour operating brands, such
as Club 18-30, Thomas Cook Signature and Cresta.
It also has its own chain of travel agencies in the UK,
under the Thomas Cook and Going Places brands. In
addition, it has its own charter airline, Thomas Cook
Airlines. This is known as 'vertical integration' since
the company owns companies at different levels of the
distribution chain.
THE ONEWORLD ALLIANCE
Founded in 1999, this alliance has 11 member
airlines - American Airlines, British Airways, Cathay
Pacifi c, Finnair, Iberia, Japan Airlines (JAL), Lan,
Malev, Mexicana, Qantas and Royal Jordanian.
Oneworld Alliance members serve approximately
800 destinations in 150 countries, handling 340
million passengers in a typical year.
