Wed, Nov 10, 2004 - Page 10 News List

Price wars harming online travel sector, firm says

By Jackie Lin  /  STAFF REPORTER

Irrational price cuts should be stopped to make way for cleaner competition in the booming online travel sector, the chief of the nation's first online ticketing center, ezfly.com (易飛網), said yesterday.

"The quality of services might be affected if online travel agencies continue to engage in this kind of cut-throat competition," the company's president, Rafael Fang (方南海), said on the sidelines of a press conference in celebration of its fifth birthday.

"As the industry only has a thin profit margin, going for the lowest market prices will only bring in an increased number of consumer complaints as quality cannot be maintained," he said, adding that offering reasonably cheap prices should be the long-term way for the sector to prosper.

Sharp price cuts are usually seen in popular routes to Hong Kong, Southeast Asia and South Korea, as some companies do not hesitate to sacrifice margins to grab market share, said Jennifer Yu (尤慈霞), deputy manager of ezfly.com.

The company is the nation's third largest online travel service provider, according to ACNielsen Taiwan's latest report, issued last month.

In contrast to the company's pledge to place service quality before prices, its two major competitors -- Eztravel.com (易遊網) and Star Travel Corp (燦星旅遊網) -- both boast of offering the cheapest travel products.

"Price competition is unavoidable when an industry is in its initial stage," said Ming Chen (陳明明), deputy marketing manager of Star Travel. "Our goal now is to expand market share even though what we're doing is losing money."

Launched in April last year, Star Travel, a subsidiary of Tsann Kuen Group (燦坤實業), has risen quickly to become the nation's second largest online ticketing company.

Not denying the company's ambition to scare away competitors with its pricing tactics, Chen said the company is maintaining quality as the majority of its products are standardized merchandise, such as entrance tickets to theme parks and independent travel packages, which seldom involve quality-related issues.

Despite its bold marketing strategy, Star Travel projects to generate NT$5 billion (US$152 million) in sales this year and break even next year, Chen said.

According to statistics from the Institute for Information Industry (資策會), the value of transactions in the nation's online travel business is expected to grow from last year's NT$10.6 billion to NT$15 billion by year-end, squeezing out traditional travel agencies.

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