Digital Airlines: Online traffic predicts 75% of passenger volume

From fashion to aviation, brands are longing to increase their direct to consumer (D2C) sales. Back in 2012, airlines paid more in fees to the global distribution systems (GDS) than the total profit in their industry – and the IATA predicted that the future of airline distribution is increasing direct sales, through the carrier’s own booking site. With Lufthansa introducing a surcharge for GDS bookings, airlines are undoubtedly serious about driving consumers to buy directly from them.

But how far has the industry come along? Do eyeballs on the carrier’s web site translate to people in the plane? And what are the secrets of the most successful digital airlines?

To find this out, we have created a dataset of 40 leading airlines – including the top 10 in the world and most European LCCs – and collected their online traffic data from SimilarWeb. We then run this data through a linear regression model to get some insight on the industry trends.

We could hardly imagine what we would learn from this model:

Online visits predict ticket sales

When more travelers are exposed to an airline brand through the booking site, we would expect ticket sales to increase. But the relationship is incredibly strong:

  • Online traffic explains 75% of the variation in passenger numbers
    Across the aviation industry, web site traffic is very strongly correlated with the number of people in planes – this is true regardless of the distribution strategy and business model of the airline. In a sense, all airlines are now highly coupled to the digital channel.

  • A one-percent increase in online passenger volume is tied to a one percent increase in web visitors
    This is what economists call a unit elasticity: passengers and online visits grow together proportionally.

Does this mean that more web visits cause more ticket sales, or that more passengers cause more web visits (e.g. because they create traffic by using online check-in?). Probably both factors play a role, and we cannot separate these effects given the data we have. The close traffic-passengers correlation is plain to see on a plot of the data:

Digital airlines - how online traffic and passengers in the air go hand in hand

In the plot, we have highlighted the most successful airlines (top 10%) in terms of online engagements. Visually, these airlines are the farthest above the regression line – which represents the industry average online/passengers relation. Given their size, they are doing incredibly well for online traffic. What are their success strategies?

Digital Airlines With Leading Online Engagement

Some airlines stand out for the attention they receive online – after controlling for airline size, these companies get an unusually large number of visitors on the web.

Let’s take a first look at the “top 10%”:

  • Virgin America 384%
    Virgin America took a unique project approach – putting usability and simplicity at the core – when it launched its new responsive website last year. These efforts are rewarded with the top spot for digital engagement.
  • Wizzair 308%
    In second place, Wizzair has not only record 2014 financial results, they also draw the online crowd. It has one of the fastest web sites in our sample.
  • Volotea 156%
    A flexponsive client, Volotea is a rapidly growing LCC, whose outstanding visual design attracts more than double the industry average visitors.
  • Air Baltic 107%
    The Riga-based hybrid carrier was early to develop its social media savvy and secures the 4th spot for airline digital engagement

Understanding the digital success of airlines

Throughout the airline industry, bookings and web visits are tightly connected. And it is clear from the airlines with the highest engagement that many factors play a role in online success. As Virgin America shows, Sabre-based systems can deliver industry-leading user experiences. Yet it is notable that the “stars” of our investigation are relatively small airlines – often based on the Navitaire platform.

For the industry as a whole, nearly universal Internet adoption among consumers of course pushes this trend. But airlines have also introduced some negative incentives to secure more direct online bookings – from introducing “web-only” fares to making it more cumbersome to book through a call center.

We look forward to continuing our investigation, where we will turn our attention to mobile strategy, usability and dive into the paid strategies of airlines.

Many thanks to Henry Hartleveld of Atmosphere Research for reading and commenting on a draft of this post.

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