Amazon starts selling domestic air tickets in India

A Boeing 737-800 of Amazon Prime Air cargo airline on static display at the 53rd International Paris Air Show at Le Bourget Airport near Paris, France, on June 20, 2019. Going beyond operating a cargo airline, Amazon is now selling airline tickets, offering customers them an easy payment process and cash-back offers. (REUTERS/Pascal Rossignol)
Updated 20 June 2019
0

Amazon starts selling domestic air tickets in India

  • AirAsia, easyJet building digital travel businesses
  • Some airlines could partner with Amazon — executives

BENGALURU/PARIS/SINGAPORE: When Karan Mehrotra booked a flight from Delhi to Guwahati, he did not go to a travel agent or an airline website.
Instead, he turned to Amazon, the world’s biggest online retailer which now sells tickets to Indian customers and offers them an easy payment process and cash-back offers.
“It was just a lot simpler,” Mehrotra said of booking a flight through Amazon. “They are integrating most of my lifestyle needs under a single platform.”
Airlines are concerned that Amazon’s quiet launch of domestic plane ticket sales in India last month is only the start of a global trend and the beginning of a battle for control of valuable traveler data.
For years, airlines have found it difficult to compete with online travel agencies like Expedia Group Inc. and corporate travel agents that control a large number of customers, Travelport Chief Executive Gordon Wilson said.
“They have nothing left if Google is in that position, or Amazon,” he said at a CAPA Center for Aviation conference this month. “I think the airlines are being very watchful over this.”
Some carriers, like AirAsia and Easyjet are building digital travel businesses to help boost profits and keep passengers loyal beyond flying.
AirAsia’s website and app offers an all-in-one travel and lifestyle marketplace selling flights, hotels, activities and retail products. It has launched a digital wallet business called BigPay.
“The volume that we generate from our ticket sales is huge — bigger than a lot of other travel agents would sell. So we might as well do it ourselves, and probably sell a lot more,” AirAsia Executive Chairman Kamarudin Meranun told Reuters at the Paris Airshow.
Europe’s easyJet is signing direct booking contracts with hotels to give it more flexibility in pricing packaged holidays on its website. The easyJet Holidays product should be available for summer 2020 bookings by the end of the year, the airline said in a results presentation last month.
But companies like Amazon and Alphabet’s Google have the upper hand because their broader knowledge of purchasing habits might give them an edge over airlines in presenting attractive offers, travel industry executives said.

Amazon advantage
In India, Amazon has teamed up with local online travel agency Cleartrip to offer domestic airline bookings, with bigger discounts for members of its loyalty club Prime.
“They have an edge in that booking flights is, for most people, a low frequency purchase but most other products on Amazon are purchased with higher frequency,” said Seth Borko, a senior research analyst at Skift.
“So Amazon can sell discounted flights but then earn back a part of that promotion from customers that shop for other Amazon products and from their Prime membership fees.”
Amazon has dipped its toe in the travel industry before. The company launched “Amazon Destinations” in 2015 for customers to book hotel rooms in popular US getaways, like Napa Valley and the Hamptons. But it shut the service down the same year, after failing to gain traction in a crowded field of online agencies.
Four years later, Amazon is a more powerful company whose interest in bricks-and-mortar grocery, air cargo, health care and Hollywood has sent shockwaves through a growing number of markets, expanding its sources of intelligence about its users.
In India, shoppers have turned to Amazon for more purchases, including movie bookings, food orders and utility payments.
“Payment is very easy because I anyway keep my Pay account loaded,” said Atanu Khatua, a 34-year-old businessman from West Bengal who booked a flight to Delhi on Amazon.
Amazon, which has been expanding services available through “Alexa,” the digital assistant on its Amazon Echo smart speaker, has not revealed any plans to roll out its ticketing the product beyond India.
Amazon Pay Director Shariq Plasticwala declined to comment on whether it would expand in India to areas such as hotel bookings.

Think digital
Airlines, which operate in a highly regulated environment with high fixed costs, need to think more like digital retailers to maintain distribution margins, Kenya Airways CEO Sebastian Mikosz said.
“If we do not adopt an OTA (online travel agency) business model, we will become technology companies’ sub-divisions,” he said at the CAPA conference.
“If Amazon wanted to buy two or three airlines that wouldn’t be an effort for them. I think the only reason they don’t do it is because it is not practical. It is much better to have the problems outside and take the margin yourself.”
Not every airline has the cash or inclination to compete with tech giants like Amazon. But some are looking at partnerships.
“We’re working closely with the online travel agents, but we will look at the possibility also of working with Amazon,” Philippine Airlines CEO Jaime Bautista said at the Paris Airshow.
CAPA Executive Chairman Peter Harbison said ticket selling would face “dramatic changes” in the next couple years.
“The ones who are going to be successful are the ones who are actually going to partner with them, an Amazon or something like that,” he said.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 20 July 2019
0

BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.