Pegasus Travel.

com:
Fasten Your Seatbelts!
*
A SAMPLE CASE FOR
DISCUSSION AND ANALYSIS
MM720
*
Boston College Professors Michael Peters and Gregory Stoller adapted this business plan and
prepared this case as the basis for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation.
Copyright 2007, Michael Peters & Gregory Stoller. No part of this publicatio !ay be
repro"uce", store" i a retrie#al syste!, use" i a sprea"sheet, or tras!itte" i ay for! or by
ay !eas $ electroic, !echaical, photocopyig, recor"ig or other%ise $ %ithout the
per!issio of the %riters.
I. Introduction
Pegasus Travel.com
1675 Beacon Street
Brookline, MA 02446
P.. Bo! 12"4, #.S.A.
$617% Pegasus
&o'o(ners)
*ames Miller
+rancis ,ill
-iane .iu
/oriko Tanaka
Marie Bouc0et
-escri1tion o2 Business)
T0is &om1an3 (ill cater to t0e nee4 o2 1eo1le age 55 an4 over (0o (ant t0e 2le!i5ilit3
in traveling 53 grou1s or in4ivi4uall3. Services (ill inclu4e a (e5 site (0ere customers
can create t0eir o(n customi6e4 vacation 1ackage or c0oose 2rom t0e 1re'set travel
1ackages o2 t0e (eek an4 c0at (it0 1eo1le (0o are also intereste4 in traveling (it0 t0em.
&ustomers (ill also 5e a5le to locate travel 5u44ies i2 t0e3 0ave an i4ea o2 a 4estination,
5ut 4o not 0ave a large enoug0 grou1 2or traveling.
+inancing)
7nitial 2inancing re8uire4 is 92,105,1:5, an4 (ill 5e receive4 2rom venture ca1italists an4
5ank loans t0at (ill 5e 1ai4 o22 over 12 3ears. T0e investe4 mone3 2rom venture
ca1italists an4 5ank loans (ill allo( Pegasus Travel, 7nc. $;Pegasus;% to cover o22ice
s1ace, o22ice e8ui1ment an4 su11lies, a4vertising, tec0nolog3 4evelo1ment, salaries an4
(ages an4 utilities.
T0is re1ort is con2i4ential an4 is t0e 1ro1ert3 o2 t0e co'o(ners liste4 a5ove. 7t is
inten4e4 onl3 2or use 53 t0e 1erson to (0om it is transmitte4 an4 an3 re1ro4uction or
4ivulgence o2 an3 o2 its contents (it0out t0e 1rior (ritten consent o2 t0e &om1an3 is
1ro0i5ite4.
2
II. Executive Su!r"
Pegasus Travel.com $;Pegasus; or ;t0e &om1an3;% is a nic0e online o1erator
s1eciali6ing in customi6e4 an4 1ackage tours 2or t0e age grou1 o2 55 an4 over $re2erre4
to as seniors%. 7t is 5ase4 on t0e 5elie2 t0at, as an increasing num5er o2 seniors 5ecome
users o2 t0e 7nternet, com5ine4 (it0 an interest in traveling< t0e3 (ill 1rovi4e a lucrative
market 2or Pegasus. T0e &om1an3 1rovi4es t0e o1tion 2or 2le!i5ilit3 in its tours,
allo(ing t0e consumer to 4eci4e on lengt0 o2 sta3, 5u4get, 4estination an4 so 2ort0. A1art
2rom t0e customi6e4 tours, tour 1ackages (ill also 5e sol4. T0roug0 its (e5 site, seniors
are a5le to gain insig0t into tours t0e3 mig0t 5e intereste4 in as (ell as c0at (it0 ot0er
similarl3 oriente4 1eo1le. T0e com1re0ensive (e5 site 1rovi4es links to relevant sites,
2ree e'mail a44resses an4 a sense o2 communit3. Pegasus (ill align itsel2 (it0 a (ell'
kno(n travel agenc3, &arlson =agonlit Travel. 7ts re1uta5le name (ill give Pegasus>
customers assurance an4 trust. T0e &om1an3 can also take a4vantage o2 &arlson>s
e!1ertise an4 o1erations in man3 1arts o2 t0e (orl4.
Alt0oug0 t0e 5eginning o2 t0e 21
st
centur3 1rove4 to one o2 t0e most 4i22icult 2or
t0e travel in4ustr3, it is 5eginning to turn t0e corner. Pegasus 5elieves t0at no( is a goo4
time to enter t0e travel in4ustr3 (it0 a uni8ue i4ea targete4 at a 1otentiall3 large an4
gro(ing segment o2 t0e travel market. &urrentl3, travel is t0e largest sector o2 e'
commerce, accounting 2or more t0an 1?" o2 total sales. @al2 o2 t0ese revenues are
generate4 2rom online travel agencies suc0 as t0e 1ro1ose4 &om1an3. T0e online travel
in4ustr3 continues to gro( an4 reac0e4 a5out 977 5illion in total sales in 2005, a
signi2icant increase 2rom t0e 92A 5illion incurre4 in 2002. Accor4ing to *u1iter Besearc0
": 1ercent o2 all travel revenue (ill 5e 5ooke4 online 53 2011. T0is gro(t0 is 1roCecte4
in s1ite o2 t0e terrorist attacks, t0e (ar in 7ra8, 0ig0 2uel costs, an4 ot0er unsta5le (orl4
events.
A1art 2rom t0e in4ustr3 itsel2, t0e target market o2 seniors is gro(ing
signi2icantl3. T0e a44ition o2 5a53 5oomers 4uring t0e 2005'2010 time 1erio4 means
t0at seniors (ill continue to 5e t0e 2astest gro(ing 4emogra10ic grou1. A recent Daiser
+amil3 +oun4ation stu43 2oun4 t0at 70 1ercent o2 t0ose 1eo1le 50 3ears an4 ol4er 0ave
actuall3 use4 t0e internet. #suall3 internet usage involves 5u3ing 1ro4ucts or services,
"
an4 getting in2ormation a5out 0ealt0 care, (eat0er, or ne(s events. +urt0ermore, seniors
0ave more 4is1osa5le income, an4 time on t0eir 0an4s, 4ue to t0e lack o2 2inancial or
em1lo3ment commitments. Seniors s1en4 most o2 t0eir recreational 5u4get on traveling
an4 (ant to e!1lore ne( o11ortunities t0at 0ave esca1e4 t0em in t0e 1ast. =it0 t0ese
4emogra10ic s0i2ts, along (it0 t0e 0ig0er usage rate 53 t0e target market, Pegasus 0as a
great o11ortunit3 to market its services.
Pegasus 1lans to attract an4 retain customers t0roug0 its a4vertising an4 services.
Banner a4s (ill 5e 1lace4 on t0e to1'ten senior an4 5a53 5oomers (e5 sites in or4er to
generate tra22ic an4 create 5ran4 a(areness. Print a4s in leisure an4 senior maga6ines
(ill su11lement online a4vertising. A 4irect mail cam1aign inclu4ing 1romotions,
4iscounts an4 u1coming tours is also 1lanne4, 2or seniors (0o 0ave 5ecome mem5ers o2
t0e (e5 site communit3.
7n or4er to start'u1 t0e 5usiness, t0e &om1an3 2oresees t0at it (ill re8uire 92.1
million in venture ca1ital. T0e 0ig0 start'u1 costs are attri5uta5le to t0e aggressive
marketing t0e &om1an3 (ill un4ertake. T0e main s0are0ol4ers o2 t0e grou1 (ill not 5e
4ra(ing an3 salar3, 5ut salar3 e!1ense (ill come 2rom t0e customer service
re1resentatives 0ire4. Since t0e &om1an3 (ill act as an outsource agent to &arlson an4
receive a commission in return, t0e &om1an3 e!1ects to 5reak even in 2our 3ears. As
more e!1ertise is gaine4 2rom &arlson an4 t0e &om1an3>s o1erations e!1an4, t0e nee4
2or outsourcing (ill 5e minimi6e4.
+uture 1ros1ects 2or t0e &om1an3 are ver3 attractive es1eciall3 no( t0at t0e
travel in4ustr3 0as sta5ili6e4 a2ter a 4i22icult 1erio4 resulting 2rom (orl4(i4e events.
=it0 t0e gro(t0 o2 t0e market an4 in4ustr3, Pegasus 1lans to gra4uall3 e!1an4 its
marketing e22orts into t0e ne!t largest market (it0 t0e most 1otential E Furo1e, an4 (ill
continue to o22er t0e same 8ualit3 service to t0ese ne( customers. Pegasus (ill also
continue to 1lease its customers 53 o22ering s1ecial event 1ackages, suc0 as 5irt04a3s an4
gol4en anniversaries. +urt0ermore, t0e &om1an3 (ill 5egin 1rovi4ing tours 2or t0e
4isa5le4, 5elieving t0at t0ere are ver3 2e( 1la3ers in t0e market (0ic0 target t0is
1articular segment.
T0e 4iverse service t0at Pegasus o22ers (ill attract a nic0e market. T0e gro(t0 o2
t0e online travel in4ustr3, cou1le4 (it0 t0e 1otential o2 t0e target market, 0ig0l3 increases
4
t0e &om1an3>s c0ances o2 success. B3 2ocusing on 8ualit3, service an4 value, t0e
&om1an3 (ill 5e a5le to attract an4 retain its customer 5ase. T0e &om1an3 5elieves t0at
it (ill succee4 in t0is market segment, an4 gro( su5stantiall3 as more e!1erience an4
e!1ertise is gaine4.
III. Indu#tr" Out$oo%& Forec!#t ' (rend#
T0e travel an4 tourism in4ustr3 is a lea4er in F'commerce. Accor4ing to
+orrester Besearc0, travel an4 tourism (ill account 2or a5out 1?" o2 all 5usiness'to'
consumer on'line sales in 2005. -uring t0e t0ree 3ears 1rior to A?11, on'line sales o2
travel s0o(e4 large gains, suc0 as t0e more t0an 200 1ercent increase o2 9".1 5illion to
9: 5illion 5et(een 1AAA an4 2000. -uring t0e 4o(nturn 2rom 2001 t0roug0 200" t0e
travel an4 tourism in4ustr3 su22ere4 2rom airlines seeking 5ankru1tc3 1rotection,
signi2icant 4ecreases in tourism recei1ts, as (ell as a signi2icant 4ro1 in t0e num5er o2
visitors to t0e #.S. $reac0e4 a lo( o2 40 million visitors in 200" 5ut 0as recovere4 to 4A
million in 2005%. -uring t0is time (it0 0eig0tene4 concerns over terrorism activities
man3 consumers (ere 4e2erring or canceling an3 international travel. -omestic leisure
travel (as t0e least a22ecte4 53 t0e events o2 2001' 200". T0e travel in4ustr3 5egan to
s0o( some recover3 in 2004 (it0 t0e num5er o2 4e1artures 2rom t0e #.S. reac0ing 1re
A?11 levels an4 #.S. consumer e!1en4itures 2or all travel services increasing 53 a5out
9120 5illion over t0e 2001 level o2 94:4 5illion. 7nternational tourism e!1en4itures 53
#.S. travelers in 2005 2inall3 sur1asse4 t0e 5oom 3ears o2 1AAA to 2000 an4 are e!1ecte4
to gro( anot0er 925 5illion to 9A7 5illion 53 t0e 3ear 2010.
Accor4ing to *u1iter Besearc0 t0e online travel in4ustr3 in 2005 5ooke4 a5out
977 5illion in travel (0ic0 re1resente4 a5out 2A 1ercent o2 all travel revenue. 7n
a44ition, total travel s1en4ing is 2orecast to gro( a5out 5 1ercent annuall3, increasing
2rom 96:5 5illion in 2005 to a5out 9A00 5illion 53 2010. -omestic travel s1en4ing is
2orecast to gro( a5out 5 1ercent 1er 3ear to reac0 96A: 5illion in 2010. S1en4ing 53
international visitors 4ro11e4 signi2icantl3 a2ter A?11 5ut 0as slo(l3 re5oun4e4 an4 is
e!1ecte4 to gro( 2rom 9160 5illion in 2006 to 9210 5illion 53 2010. T0is re1resents an
average gro(t0 rate o2 a5out 5.2 1ercent annuall3 5et(een 2006 an4 2010. T0e im1ortant
2actors 0ere are t0at (it0 t0e use o2 online 5ooking increasing as a 1ercentage o2 total
5
travel $sur1assing 1re A?11 levels% t0ere is a signi2icant o11ortunit3 2or Pegasus in t0is
market.
T0e 1rimar3 trans1ortation sectors in t0e travel an4 tourism in4ustr3 are airlines,
rental cars, rail(a3s, an4 cruise lines. Accor4ing to t0e +e4eral Aviation A4ministration,
#.S. Airline &om1anies 0ave curtaile4 an4 consoli4ate4 man3 costl3 routes in res1onse
to lo(er customer 4eman4 an4 0ig0er 2uel costs. +or t0e 1ast "'4 3ears t0e airline
in4ustr3 0as cut ca1acit3 as a reme43 2or t0e 0ig0er costs an4 lo(er usage rates. *P
Morgan re1orte4 t0at t0e 4omestic airline in4ustr3 (ill re4uce ca1acit3 on 4omestic
travel 53 a5out t(o 1ercent in 2007. As 4eman4 strengt0ens t0ere (ill 0o(ever 5e more
com1etition 2or convenient travel times an4 8uicker routes to 4estinations. T0e goo4
ne(s 2rom all o2 t0is is t0at t0e airlines 0ave im1rove4 on time service 4uring t0e
ca1acit3 cut5acks, re4ucing 4ela3s an4 relieving congestion in t0e s3stem.
Alt0oug0 Amtrak, t0e government su5si4i6e4 rail(a3 s3stem 0as 0a4 2inancial
1ro5lems an4 is nee4ing a signi2icant in2usion o2 ca1ital 2rom &ongress to continue its
service, t0e Acela 0ig0 s1ee4 service 5et(een Boston, Ge( /ork, an4 =as0ington -.&.
0as continue4 to 0ave 0ig0 ri4er s0i1. T0ere is some 2eeling in &ongress t0at a
1rivati6ation an4 1er0a1s 5reak u1 o2 t0is s3stem (oul4 result in signi2icant
im1rovements in ri4er s0i1 as evi4ence4 53 t0e Britis0 Bail S3stem (0ic0 (as 1rivati6e4
a5out 2ive 3ears ago, resulting in ne( recor4s 2or ri4er s0i1 an4 is no( t0e 2astest
gro(ing rail(a3 s3stem in Furo1e.
T0e cruise in4ustr3 0as 5een t0roug0 maCor consoli4ations in t0e 1ast 2e( 3ears.
Basicall3, t0ere are no( t0ree maCor 1la3ers in t0is market< &arnival &or1oration, Bo3al
&ari55ean 7nternational, an4 Gor(egian &ruise .ines. 7n 2006 a num5er o2 ne( s0i1s
(ere 4elivere4 to t0ese com1anies t0at increase4 t0e 5ert0 ca1acit3 53 17,000 re8uiring
a5out A00,000 ne( 1assengers 1er 3ear.
Fven (it0 all t0ese travel an4 in4ustr3 c0anges 0ealt03 gro(t0 is 1roCecte4 2or
international an4 4omestic travel. Total s1en4ing 2or travel an4 tourism in t0e #nite4
States (ill gro( at least 5 1ercent annuall3, reac0ing a recor4 9A00 5illion in 2010.
,ro(t0 (ill start slo(l3, 5ut e!1ecte4 recoveries in Furo1e an4 Asia (ill s1ur t0e
#nite4 States into returning to 1re A?11 visitation levels o2 50,000 visitors 4uring 2007.
6
Becei1ts are 1roCecte4 to reac0 a5out 911" 5illion 53 2010. ver t0e ne!t 2our 3ears,
arrivals 2rom eac0 (orl4 region are 1roCecte4 to increase 1ro1ortionatel3.
A signi2icant tren4 t0at Pegasus seeks to e!1loit is t0e antici1ate4 gro(t0 o2 t0e
Furo1ean market on t0e 7nternet. 7n general, =estern Furo1eans s1en4 more on travel
t0an ot0er (orl4 regions, generating 91:0 5illion in sales revenue on trans1ortation
services in 2005. 7n 2006 t0is same region generate4 91A 5illion in online travel
5ookings. +urt0ermore, it is antici1ate4 t0at online travel (ill continue to gro( in
1o1ularit3 in all o2 Furo1e 4uring t0e ne!t 2ive 3ears. T0e &om1an3 1lans to take
a4vantage o2 t0ese tren4s 53 e!1an4ing into Furo1ean markets in t0e 2oreseea5le 2uture.
+orecast 2or Pegasus
Accor4ing to recent anal3sis re1orts 1u5lis0e4 53 t0e G#A, 2uture revenues in t0e
e'commerce travel in4ustr3 are e!1ecte4 to increase su5stantiall3. Pegasus can e!1ect to
take a4vantage o2 t0e o11ortunities 1rovi4e4 53 t0is gro(ing segment. T0e si6e o2 t0e
overall market assures t0at t0e &om1an3 can e!1ect to make a goo4 return on its
investment. As state4 earlier, *u1iter &ommunications re1orte4 t0at t0e online travel
in4ustr3 in 2005 3iel4e4 977 5illion in sales. 72 total travel s1en4ing reac0es 2orecasts o2
9A00 5illion 53 2010, an4 i2 t0e online sales re1resents "0 1ercent o2 t0is total, Pegasus
(oul4 onl3 nee4 to reac0 a ver3 small 1ercentage o2 t0ese users to meet its sales goals.
+or e!am1le, i2 Pegasus can success2ull3 reac0 even .001 1ercent o2 t0is market, t0e
&om1an3 coul4 e!1ect to 0ave 9" million (ort0 o2 sales 53 2010.
Market Segmentation
T0e Travel an4 .eisure 7n4ustr3 can 5e 5roken 4o(n into t0ree maCor segments)
1rice, age an4 1ur1ose 2or travel. Pegasus 5elieves t0at an in'4e1t0 kno(le4ge o2 t0ese
market sectors (ill 0el1 t0e &om1an3 to 2ocus its marketing e22orts.
Price is one o2 t0e more im1ortant 2actors in 4etermining market segmentation, as
it in2luences a consumer>s travel c0oices. &ustomers 0ave come to 4eman4 (0at t0e3
1a3 2or. 72 a customer o1ts 2or an e!1ensive tour, 0e?s0e (ill e!1ect 5etter 0otels,
su1erior customer service etc. @o(ever, a 5u4get traveler (ill c0oose t0e lo(est 1ossi5le
7
1rice an4 2orgo t0e e!tra 2rills. 7t is im1ortant to note t0at t0e maCorit3 o2 customers look
2or value, (0ic0 is a ke3 com1onent o2 PegasusH mission.
A secon4 2actor (0ic0 in2luences market segmentation is t0e age o2 t0e customer.
T0e age range o2 t0e travel in4ustr3 is large, ranging 2rom college stu4ents to retirees, an4
4i22erent marketing strategies (ill attract a variet3 o2 1atrons. +or e!am1le, a tour agenc3
targeting college stu4ents mig0t a4vertise lo( 1rice4 tours at locations suc0 as &ancun
an4 *amaica 2or s1ring 5reak. n t0e ot0er 0an4, 5usiness oriente4 agencies mig0t reac0
t0eir customers 53 t0e 8ualit3 o2 accommo4ation an4 services 1rovi4e4.
.astl3, t0e market can 5e segmente4 53 t0e 1ur1ose 2or travel. T0e t(o main su5'
categories are leisure an4 5usiness. Travel Agencies t0at target t0e leisure segment (oul4
incor1orate tourist attractions an4 sig0tseeing activities in t0eir tours. +urt0ermore, t0eir
aim is to allo( t0e customer to enCo3 t0eir 0oli4a3 an4 trans1ortation (it0 t0e 5usiness
traveler in min4.
T0e Target Market
Pegasus targets t0e senior 1o1ulation $55 3ears ol4 an4 over%. T0e &om1an3
5elieves t0at t0is is an im1ortant segment, as seniors ten4 to 0ave more mone3 an4 time,
an4 travel more 2or leisure 1ur1oses. +urt0ermore, t0e num5er o2 seniors using t0e
7nternet is e!1ecte4 to increase su5stantiall3 in t0e near 2uture. Accor4ing to 1u5lis0e4
researc0 a5out 70 1ercent o2 t0ose 1eo1le over t0e age o2 50 (ere sur2ing t0e internet in
2005. T0e actual num5er o2 seniors 0o(ever, (ill continue to gro( 2rom 2005'2010 as
t0e 5a53 5oomers move into t0is age categor3.
Accor4ing to Me4ia Metri!, ol4er users are t0e 2astest gro(ing 4emogra10ic
grou1 in t0e #S 7nternet market. T0e com5ination o2 t0e e!1losive 4ollar amount s1ent
on online travel, t0e num5er o2 seniors e!1ecte4 to take to t0e Get, an4 t0e 2act t0at ol4er
7nternet users 0ave an4 use t0e most cre4it car4s, 1resents Pegasus (it0 maCor
o11ortunities 2or gro(t0 an4 0ig0 returns.
&om1etitive Sectors
Travel in ot0er countries es1eciall3 Furo1e (0ere Pegasus 0as 2uture interests,
0as also 0a4 signi2icant gro(t0, in s1ite o2 negative economic 4evelo1ment in some
:
countries. T0e Furo1ean #nion re1orte4 t0at t0ere (as 911".6 5illion s1ent on
trans1ortation services (it0 online e!1en4itures re1resenting 912 5illion o2 t0is total.
T0e &om1an3>s com1etitors in t0e travel an4 leisure in4ustr3 can 5e 5roken 4o(n
into t0e t0ree main sectors) tra4itional travel agencies, online travel agencies, an4 airlines
$F!am1les are liste4 in F!0i5it 1%. Tra4itional travel agencies 1rovi4e 2ull service, an4
are t31icall3 kno(n as I5rick an4 mortarJ organi6ations. nline travel agencies 1rovi4e
t0eir services on t0e 7nternet, o22ering 1ricing an4 tour 5ooking o1tions. .astl3, airline
com1anies sell t0eir tickets 4irectl3 to t0e consumer, (it0 5ot0 online an4 tra4itional
5ooking services availa5le. Fac0 o2 t0ese sectors 0as various strengt0s an4 (eaknesses
$illustrate4 in F!0i5it 2% an4 is at 4i22erent stages o2 t0eir res1ective gro(t0 c3cle.
Tra4itional Travel Agencies
Tra4itional travel agencies are com1anies (0ic0 1rovi4e travel in2ormation an4
tour 5ookings to t0eir customers mostl3 t0roug0 t0e 10one, an4 2ace'to'2ace meetings.
=0ile tra4itional travel agencies 4o not o22er ;24 ! 7 access,; t0e3 are making u1 2or t0is
4isa4vantage 53 1rovi4ing t0e I1ersonal touc0J t0at t0e 7nternet 4oes not 1rovi4e.
Moreover, (0ile a consumer 0as to researc0 online 2or t0e 5est 1ossi5le 4eal, t0e
tra4itional travel agent (ill 4o ever3t0ing 2or t0e 1atron. T0e 2orecast 2or tra4itional
travel agencies is 5leak, as most anal3sts are 1re4icting t0at t0e gro(t0 in online travel
services (ill cause a 4ecline in t0e nee4 2or tra4itional agencies. @o(ever, 1artnering
(it0 online 5usinesses (ill allo( 5rick an4 mortar travel agencies to remain via5le.
Besearc0 also in4icates t0at man3 travelers revie( on line travel sites 1rior to contacting
a 5rick an4 mortar travel agent. T0is coul4 5e 4ue to t0e 2act t0at consumers, a2ter
visiting on line sites, ten4 to seek out t0e a4vice o2 a IliveJ 1erson (0o (ill 5e a5le to
o22er t0em t0e reassurance an4 e!1ertise t0at t0e3 seek. Alt0oug0 man3 in4ustr3 anal3sts
1re4ict sales gro(t0 2or travel agencies to 4ecrease 4ue to t0e a4vent o2 7nternet travel
resources, t0e tra4itional travel agenc3 0as 5een a5le to o22er 2avora5l3 1rice4 1ackage
4eals, 4evelo1e4 1artners0i1s (it0 online service 1rovi4ers, an4 (it0 (e5 relate4
a4vertising 0as maintaine4 its e!istence in t0e travel market.
A
nline Travel Agencies
nline Travel is a ra1i4l3 gro(ing segment o2 t0e travel an4 leisure in4ustr3.
T0ese agencies 1rovi4e travel 1lanning on t0e 7nternet, ena5ling t0e consumer to
com1are costs an4 services at an easier, 8uicker 1ace. +urt0ermore, most 1eo1le use t0e
7nternet as t0e essential tool 2or ac8uiring travel in2ormation. .astl3, online agencies o22er
t0e consumer t0e convenience o2 24'0our access an4 2le!i5ilit3. T0e3 1rovi4e 2ast,
interactive, an4 glo5al services. nline travel can 5e 5roken 4o(n 2urt0er into t0ree
categories) 2ull'service, name'3our'1rice, an4 um5rella agents. +ull service agents
1rovi4e t0e service o2 a tra4itional travel agent on t0e 7nternet. Game'3our'1rice agents
allo( customers to 8uote a 1rice t0e3 are (illing to 1a3, an4 (ill tr3 to locate a seller
(0o matc0es t0at 1rice. .astl3, um5rella agents 1la3 t0e 1art o2 t0e mi44leman, allo(ing
a user to customi6e 0is?0er 1re2erences, an4 t0en matc0ing t0ose 1re2erences to a suita5le
travel agent. As state4 earlier, anal3sts 1re4ict t0at online travel services (ill continue to
gro( 2rom t0e 977 5illion ac0ieve4 in revenue in 2005. Some 1roCections, t0at ma3 5e
ver3 o1timistic, suggest t0at total travel e!1en4itures 53 2010 coul4 reac0 9A00 5illion.
Some 2actors t0at contri5ute to t0e signi2icant rise in t0e online travel in4ustr3 inclu4e)
t0e gro(ing num5er o2 1eo1le 5u3ing online, t0e rise in in4ivi4ual s1en4ing on t0e
7nternet, an4 t0e gro(ing num5er o2 American travelers $as a result o2 t0e gro(t0 o2 t0e
senior segment o2 t0e #S 1o1ulation%.
Airlines
More an4 more airline com1anies are a4o1ting a com5ination o2 tra4itional an4
online travel agent services. Airlines sell t0eir tickets 4irectl3 to t0e consumer, 531assing
service 2ees t0at t0e agencies c0arge. =0ile t0e customer mig0t not 0ave as muc0
2le!i5ilit3 in c0oosing among 4i22erent 2ares, airlines re(ar4 customers 2or t0eir lo3alt3
t0roug0 1erks suc0 as 2re8uent 2l3er 1rograms.
@o(ever, 1assengers still 0ave little or no lo3alt3 to a 1articular airline, citing
1rice as t0e 1rimar3 2actor a22ecting t0eir 1urc0ase 4ecision. Airlines are concerne4 (it0
organi6ations suc0 as Priceline, Travelocity, Expedia, an4 ne(er sites suc0 as Mobissimo,
Kayak, an4 Sidestep, (0o are luring a(a3 man3 customers 2rom t0ere o(n sties. Airlines
10
0ave retaliate4 53 2orming alliances suc0 as Orbitz an4 Hotwire.com. Hotwire sells
4iscounte4 air2ares 2or ;4istresse4 seats,; seats t0at are still em1t3 at t0e last minute.
Orbitz is actuall3 o(ne4 53 a num5er o2 t0e large airlines an4 1rovi4es some com1etitive
1rotection against t0ese ot0er sites. @o(ever, it is im1ortant to recogni6e t0at t0ese online
travel services get t0eir inventories 53 1urc0asing a 5lock o2 2ares or 0otel rooms at a
re4uce4 rate 4irectl3 2rom t0e airlines or 0otels. T0e3 can t0en sell t0ese 2or (0atever
1rice t0e3 (is0 since eac0 online service 0as (orke4 out a 4eal (it0 t0e airlines or 0otels
&om1etitive A4vantage
Pegasus 4i22erentiates itsel2 2rom its com1etition t0roug0 convenience, service,
target market selection, an4 1ersonali6ation. T0e &om1an3 1lans to incor1orate a Iclick
an4 mortarJ a11roac0, com5ining t0e convenience an4 2le!i5ilit3 o2 t0e 7nternet (it0 t0e
I0uman touc0J o2 a 24'0our customer service agent. T0e &om1an3 5elieves t0at soli4
customer res1onsiveness is crucial, as its target market 4eman4s a 0ig0 level o2 service,
8ualit3 an4 value 2or mone3 s1ent. Anot0er 2actor t0at makes t0e &om1an3 uni8ue is t0e
s1eci2ic market segment t0at Pegasus is 2ocusing on. Most travel agencies 2ocus on a
5roa4 range o2 segments. A t0ir4 com1etitive a4vantage t0at t0e &om1an3 o22ers is t0e
a5ilit3 to c0oose an4 1ersonali6e a tour accor4ing to t0e customer>s 1re2erences. T0roug0
t0e com5ination o2 t0ese 2actors, t0e &om1an3 5elieves it can success2ull3 carve out a
nic0e market, an4 o1erate 1ro2ita5l3.
11
I). De#cri*tion o+ )!$ue
Pegasus is an online travel agenc3 t0at caters to t0e nee4s o2 1eo1le age4 55 an4
a5ove (0o are looking 2or 2le!i5ilit3 an4 1ersonali6e4 travel e!1eriences. Pegasus
(ill 1rovi4e an online (e5 site in (0ic0 customers can searc0 an4 5ro(se. T0ere
(ill also 5e a c0at room t0at (ill list t0e 1re'set travel'o2't0e'(eek 1ackage 2rom
Pegasus. @o(ever, t0e 1ackage (ill also 5e a4a1ta5le to a customerHs nee4s, in
terms o2 time, 4estination an4 entertainment. nce a customer logs in (it0 0is or
0er username an4 1ass(or4, a customer (ill 5e a5le to c0at (it0 ot0ers to collect
in2ormation 1rior to 5ooking.
T0e (e5 site (ill also o22er a 4iscussion 5oar4 (0ere customers can 1ost a re8uest
to 2in4 travel 5u44ies, 2or travel i4eas (0ic0 are 4i22erent 2rom t0e 1re'set 1ackage.
t0er customers (0o are intereste4 in a travel 1lan ma3 onl3 contact ot0er 1arties
t0roug0 t0e 1ermission o2 t0e 1atron (0o initiate4 t0e original itinerar3.
Because PegasusH target customers are 5a53 5oomers an4 seniors, t0e o22ice (ill
5e locate4 on 1654 Beacon Street. Pegasus 4eci4e4 to lease t0e s1ace to incur a
reasona5le rent e!1ense. T0e 1lace 0as a4e8uate s1ace 2or com1uters, 1rinters an4 also
contains a guest room (0ere customers can s0are t0eir o1inions 1ersonall3 (it0 a travel
agent. T0e location o2 t0is o22ice is 1er2ect 2or t0e 5usiness 5ecause it is in t0e 0eart o2
=as0ington S8uare in Brookline, (0ere most o2 t0e success2ul 5a53 5oomers an4 seniors
live.
T0e 5usiness (ill re8uire em1lo3ees (it0 at least a 5ac0elorHs 4egree or
e8uivalent. Personnel (oul4 also 5e re8uire4 to 0ave some e!1erience (it0 t0e travel
an4 tourist in4ustr3, in or4er to un4erstan4 (0at customers mig0t (ant, an4 0o( to
satis23 t0eir nee4s. 7n a44ition, Pegasus ma3 nee4 (e5 4evelo1ers an4 (e5 4esigners 2or
maintaining t0e 7nternet site. T0e e8ui1ment t0at (ill 5e nee4e4 2or t0is 5usiness are
com1uters, 1rinters, 4ata5ase servers an4 a11lication servers, an4 t0e3 (ill 5e 1urc0ase4,
in or4er to avoi4 over1rice4 e8ui1ment leases.
T0e entre1reneurs o2 t0e 5usiness are (ell e4ucate4 1eo1le (it0 4i22erent
5ackgroun4s an4 e!1eriences. Steve Miller 0as (orke4 in a variet3 o2 organi6ations,
12
ranging 2rom small entre1reneurial 2irms $Mann K &o.% to large cor1orations $T0e
American Be4 &ross%. @e 0as e!1erience in customer service an4 1romotions.
+rancis ,ill is currentl3 earning 0er Bac0elorHs 4egree in +inance an4 Marketing
at Boston &ollege. T0roug0 0er course(ork an4 aca4emic e!1erience, s0e 0as ac8uire4
kno(le4ge on t0e various as1ects o2 2inance. +urt0ermore, 0er em1lo3ment in t0e largest
5ank in Singa1ore 0el1e4 0er 4evelo1 0er anal3tical skills.
-iane .iu is 0ig0l3 8uali2ie4 as a 1u5lic relations an4 in2ormation tec0nolog3
manager, 0aving (orke4 in t0e *o0n @ancock Agenc3 in Boston as a Management
7n2ormation S3stem 7ntern.
/oriko Tanaka>s resume inclu4es (orking 2or nine mont0s in &arlson =agonlit as
a travel agent. @er e!1erience o2 serving customers, arranging tri1s, making reservations,
an4 issuing tickets over t0e com1uter (ill allo( t0e &om1an3 to 5egin its o1erations
e22icientl3. S0e 0as also (orke4 2or t0ree mont0s as a registration re1resentative at
Sk3Per2ect TL in *a1an, (0ere s0e assiste4 customers (it0 registration over t0e 10one,
an4 su11orte4 t0em (it0 t0e a11liances> tec0nical 1ro5lems.
Marie Bouc0et is currentl3 ;on e!c0ange; at Boston &ollege 2rom a 5usiness
sc0ool in +rance. @er (ork e!1erience inclu4e4 a stint at &ora Su1ermarket (0ere s0e
(as in c0arge o2 sales anal3sis in t0e 2oo4 4e1artment. S0e (as also res1onsi5le 2or
su5mitting a ne( ma1 o2 t0is 4e1artment to increase sales 2igures.
). O*er!tion!$ P$!n
=0en t0e customer 0as logge4 on to t0e &om1an3>s (e5 site $see F!0i5it "%,
0e?s0e (ill 5e a5le to 5ro(se t0roug0 t0e s1ecial 1romotions, as (ell as 0ave t0e o1tion
to researc0 an4 create t0eir o(n tour 1ackage. 1tions inclu4e c0oosing t0eir 1rice,
location, s1ecial 4ietar3 re8uirements, an4 locations t0e3 (oul4 s1eci2icall3 like to visit.
nce all t0ese 2actors are in 1lace, t0e user (ill 5e aske4 to 2ill out a 2orm (0ic0 re8uires
general in2ormation. At t0is time, t0e3 are entitle4 to receive t0e &om1an3>s ne(sletter,
as (ell as 1romotions'o2't0e'mont0. T0e3 (ill also receive t0eir o(n e'mail account
(0en t0e3 0ave c0osen a username an4 1ass(or4. T0e 1rice estimate (ill 5e maile4 to
t0eir account, or a re1resentative (ill call t0em $4e1en4ing on t0eir 1re2erences%, at
(0ic0 1oint t0e3 can 4eci4e (0et0er or not to acce1t t0e tour 1ackage.
1"
A2ter acce1ting t0e 1ackage, Pegasus (ill make t0e necessar3 arrangements. T0e
2irm (ill use reservation s3stems suc0 as Sa5re an4 A1ollo 2or making air an4 0otel
reservations. T0ese com1anies o22er various 2ares (0ic0 are regularl3 u14ate4 an4
1u5lis0e4 on t0e com1uter. Beservation agencies are not a22iliate4 (it0 0otels an4
airlines, an4 merel3 1rovi4e o1tions, allo(ing travel agents to c0oose t0e 5est 2it 2or t0e
1assenger. nce a selection 0as 5een ma4e, a con2irme4 ticket (ill 5e 1rinte4 out an4
issue4. Pegasus (ill 1a3 t0e reservation agencies (eekl3 2or t0e tickets sol4. Pegasus
receives a commission 2rom t0e reservation agenc3 2or ever3 ticket 5ooke4 an4 1ai4 2or.
T0e commission (ill t0en 5e 4istri5ute4 among t0e sales re1resentatives.
A2ter t0e tour 1ackage is 2inali6e4, t0e customer (ill 5e noti2ie4 53 a res1onse o2
0is?0er c0oice. An e'mail message (ill a11ear (it0 an itinerar3 o2 t0e tri1. 72 t0e
customer is un2amiliar or uncom2orta5le (it0 email, a customer service re1resentative
(ill call an4 e!1lain t0e travel 4etails. A letter (ill also 5e sent con2irming t0eir or4er.
&0anges can 5e ma4e to t0e tour 4uring t0is 1erio4. =0en t0e customer is 0a113 (it0
t0eir travel 1lans, t0e mone3 (ill 5e trans2erre4 an4 t0e tour (ill 5e 2inali6e4. At t0is
time, t0e terms an4 con4itions o2 eac0 tour (ill 5e agree4 u1on via t0e (e5 site. T0e
agreement (ill 5e legall3 5in4ing an4 commit t0e customer to t0e 1rice o2 t0e tri1.
A small (elcome 1acket (ill 5e sent to rein2orce t0e customer>s c0oice o2 t0e
&om1an3, an4 t0e great value t0e3 (ill 5e receiving. Fmergenc3 contact num5ers (ill 5e
1rovi4e4 2or cities visite4. T0roug0 agreements (it0 tour 1rovi4ers in Furo1e, Asia,
Australia, A2rica, an4 Sout0 America, customers (ill 0ave access to an3 a44itional
assistance nee4e4. T0e3 (ill also 5e given 4etaile4 ma1s to cities an4 countr3
4estinations 5ooke4 2or travel, recommen4ations on sites to visit, an4 trans1ortation
o1tions. Louc0ers (ill 5e given 2or 4iscount restaurant visits an4 1o1ular locales. A
small 0istor3 o2 t0e countries (ill 5e inclu4e4, as (ell as in2ormation on local customs
an4 la(s. A small 2oreign language car4 containing use2ul 10rases (ill even 5e 1rovi4e4
2or customers to carr3 4uring t0is tri1.
+ee45ack (ill 5e a ver3 im1ortant issue 2or im1roving service. +or a limite4
time, customers (ill 0ave t0e o11ortunit3 to receive a 4iscount on 2uture travel 53
1rovi4ing 1ost'tri1 anal3sis on t0e (e5 site using a sim1le 8uestionnaire. A 2ee45ack
14
c0at room (ill allo( customers to 0ear 2rom ot0ers 4uring t0e 4ecision 1rocess 5ot0 on
(0ere to go, an4 (0ere to sta3.
)I. M!r%etin, P$!n
-o!$# !nd o./ective#
Base4 on &om1an3 researc0, online travel an4 tourism (ill 5ecome t0e largest
5usiness'to'consumer 1ro4uct, an4 account 2or ": 1ercent o2 t0e overall travel market 53
2010, (it0 sales surging to a5out 9100 5illion.
Base4 on t0is 1re4icte4 online market t0e s0ort'term goal o2 t0e &om1an3 (ill 5e
to reac0 91 million in gross sales in t0e eig0t0 mont0 an4 a11ro!imatel3 91.: million 53
t0e en4 o2 t0e 2irst 3ear. T0e e22ectiveness o2 (or4 o2 mout0 1romotion (ill 5e ke3 to t0e
earl3 success o2 Pegasus. &are 1ackages an4 customer service s0oul4 en0ance t0e
customer>s attitu4e an4 motivate t0em to talk 1ositivel3 a5out t0e &om1an3 to ot0ers.
2 t0e 9100 5illion t0at consumers are e!1ecte4 to s1en4 in online travel an4
tourism, 53 2010 PegasusHs goal (ill 5e to ac0ieve a5out .00" 1ercent o2 t0at num5er 2or
its market s0are. T0is translates to a goal o2 92.A million 4omestic gross sales revenue in
t0ree 3ears. Pegasus 1re4icts to 0ave losses in t0e 2irst t0ree 3ears o2 its o1eration, 5ut
(it0 later entr3 into t0e Furo1ean market, (ill ac0ieve 1ro2its o2 a11ro!imatel3 9700,000
in 3ear 2ive. T0e &om1an3 (ill also 1lan to e!1loit t0e antici1ate4 gro(t0 o2 t0e
Furo1ean market 53 ca1turing anot0er .001 1ercent o2 market s0are, t0us reac0ing 910
million in total gross sales revenue 53 3ear 2ive.
Pegasus (ill 2ocus on t0e most lucrative segment o2 t0e 1o1ulation, (0ic0 are t0e
5a53 5oomers $55 3ears ol4 an4 over% an4 t0e senior 1o1ulation. T0e &om1an3 5elieves
t0is 1articular segment 0as more mone3 an4 time on t0eir 0an4s 4ue to t0eir retirement,
an4 ten4s to travel more o2ten 2or leisure 1ur1oses t0an ot0er segments. T0e #.S. &ensus
Bureau re1orte4 t0at seniors an4 5a53 5oomers in 2006 amounte4 to a5out 67 million
1eo1le an4 s0oul4 continue to gro( to a5out :" million in 2010. Pegasus e!1ects to 0ave
a market 1enetration o2 .015 1ercent or a5out 11,000 customers a2ter t0ree 3ears o2
o1eration, an4 (ill increase stea4il3 at a gro(t0 rate o2 5 1ercent eac0 3ear.
As mentione4 earlier in t0e marketing strateg3 an4 1romotion 1rogram section,
Pegasus (ill 1artner (it0 in2o'me4iar3 services suc0 as eHow, an4 !a"oo in its 2irst 3ear
15
o2 o1eration. =it0 t0e 0el1 o2 t0ese 1artners0i1s, t0e &om1an3 1lans to 0ave a
4istri5ution net(ork covering a11ro!imatel3 45 1ercent o2 t0e market. T0e &om1an3
also seeks to create an a(areness level in4e! o2 65 1ercent 53 t0e t0ir4 3ear o2 its
o1eration.
ne o2 t0e 5iggest 2eatures o2 t0e (e5 site (ill 5e t0e c0at room, (0ic0 (ill allo(
customers to interact (it0 ot0er travelers. n sc0e4ule4 nig0ts, Pegasus (ill invite
an3one intereste4 in a selecte4 cit3 to come toget0er to s0are e!1eriences, an4 ans(er
an3 8uestions a5out traveling to t0e area. &ustomers (anting to travel toget0er can also
organi6e tours. T0e &om1an3 (ill also 0ave a 1osting 5oar4 2or customers (0o are
looking 2or ot0ers (it0 (0om to travel. T0is (ill 0el1 ol4er citi6ens an4 0an4ica11e4
1ersons 2in4 com1ati5le travel com1anions.
PegasusH site (ill 5e launc0e4 in a 1re4icte4 time 2rame o2 one an4 0al2 3ears,
a2ter it 0as receive4 t0e su22icient amount o2 2un4s nee4e4. T0e &om1an3 (ill outsource
its (e5 site 4evelo1ment, an4 o1eration, to a more e!1erience4 an4 1ro2essional (e5
com1an3. T0e customers (ill 5e a5le to set t0e ma!imum amount o2 mone3 t0at t0e3
(is0 to s1en4 on an3 tri1, an4 Pegasus (ill tr3 to accommo4ate t0at s1eci2ie4 5u4get.
Pegasus (ill also receive a sales commission o2 :.5 1ercent on ever3 transaction
t0at is ma4e 53 eac0 o2 its agents. T0e sales 1romotion 5u4get ma3 5e 0ig0er t0an ot0er
e!isting services, 5ut Pegasus 5elieves t0is amount is necessar3 to motivate agents to
satis23 t0e customerHs nee4s. T0e &om1an3 (ill a4vertise its site 0eavil3 in t0e 2irst t0ree
3ears o2 its o1eration, (0ic0 contri5utes to t0e losses 4uring t0is time. Plans inclu4e
click'on 5anners, television a4vertising, local an4 national ne(s1a1er 5u3s, an4 travel
maga6ines. T0e antici1ate4 me4ia cam1aign (ill cost Pegasus a5out 9"50,000 in t0e 2irst
3ear. Along (it0 an aggressive selling cam1aign, t0e total cost o2 sales an4 a4vertising
(ill 5e a5out 91 million. T0e &om1an3 (ill 5e 1romoting itsel2 aggressivel3 in t0e initial
stages o2 o1eration, as 5ran4 a(areness is im1ortant in esta5lis0ing a soli4 re1utation,
es1eciall3 in t0e target market. 7t (ill 5e easier in t0e long run to 1romote t0e &om1an3Hs
name (it0out 0aving to e!tensivel3 utili6e mass me4ia, an4 e!1en4 signi2icant 4ollars on
an a4vertising 1rogram.
16
Stren,t0# !nd 1e!%ne##e#
T0e 2irm>s o22ering o2 5ot0 online an4 I2ace'to'2aceJ customer service is an
im1ortant strengt0, as it ena5les t0e &om1an3 to attract more customers, an4 to increase
market s0are among 5a53 5oomers an4 retirees. PegasusH 24'0our service is also
im1ortant in ac0ieving a com1etitive a4vantage. Targeting a s1eci2ic market is anot0er
strengt0 o2 t0e &om1an3, ena5ling it to o22er t0ose services t0at (oul4 attract more 5a53
5oomers an4 retirees. 7n a44ition, an alliance (it0 travel agencies in Furo1e (ill 5e
5ene2icial to its o1erations. +urt0ermore, 0aving em1lo3ees (0o are kno(le4gea5le
a5out t0e travel 5usiness, as (ell as in2ormation tec0nolog3, (ill 5e a4vantageous to t0e
&om1an3. 7ts (e5 site can 5e easil3 arrange4 an4 im1rove4 53 t0e kno(le4ge o2 7T in
accor4ance (it0 customers> nee4s. Since em1lo3ees are ca1a5le o2 s1eaking more t0an
one language, Pegasus ma3 service 2oreigners (0o 4esire to s1eak *a1anese, &antonese,
7n4onesian, an4 +renc0.
ne o2 t0e main (eaknesses o2 t0e &om1an3 is its lack o2 a 1artners0i1 (it0 an
airline. 7t can onl3 o22er t0e 5est 2ares t0at are 1u5lis0e4 on line. T0ose 1u5lis0e4 2ares
mig0t c0ange as t0e 4e1arture time a11roac0es. T0ere2ore, it is likel3 2or t0e 2irm to
4eman4 imme4iate 1a3ments to customers 5e2ore t0e air2are increases. Secon4l3, since
t0e 2irm antici1ates o1erating onl3 one retail location initiall3, customers (0o 1re2er
I2ace'to'2aceJ service mig0t 0ave to visit t0e o22ice 4irectl3. T0is can 5e inconvenient 2or
customers (0o live 2ar a(a3 2rom t0e Brookline, MA area.
O**ortunitie# !nd (0re!t#
As t0e market t0at Pegasus com1etes in gro(s signi2icantl3, t0e &om1an3 can
take a4vantage o2 t0e large market 1otential. A2ter esta5lis0ing a customer 5ase,
o11ortunities 2or 2urt0er e!1ansion (ill 5e consi4ere4. &urrentl3, t0e &om1an3 is
2ocusing on t0e 4omestic market, 0aving a strategic alliance (it0 ot0er travel agencies
aroun4 t0e (orl4. @o(ever, (it0 t0e gro(t0 o2 international markets, es1eciall3 Furo1e,
Pegasus (ill gra4uall3 e!1an4 into t0ose locations as (ell. As t0e &om1an3 gro(s, t0e
nee4 2or alliances (ill 4iminis0. .astl3, Pegasus (ill 5roa4en its services to inclu4e
event 1ackages suc0 as anniversaries, (e44ing vo( rene(al o11ortunities, an4 5irt04a3
1ackages to meet t0e 4eman4s o2 t0e market.
17
Pegasus also 2aces t0reats t0at mig0t 0in4er t0e &om1an3>s gro(t0. T0e travel
in4ustr3 relies 0eavil3 on t0e 0ealt0 o2 t0e econom3. 72 t0e econom3 is 1er2orming
1oorl3, 1eo1le are less incline4 to travel. Terrorism inci4ences or t0e t0reat o2 terrorism
as (ell as t0e 1olitical an4 economic status in ot0er countries also 0as a 4irect in2luence
on travel 5e0avior an4 4ecision making.
T0e gro(t0 an4 1ro2its in t0e in4ustr3 makes it lucrative 2or ot0er 1la3ers to enter
t0e market. =0ile t0e &om1an3 4oes target a nic0e market, com1etitors mig0t 2in4 t0e
same market 5ig enoug0 to enter as (ell. @o(ever, Pegasus (ill 0ave esta5lis0e4 a
signi2icant market s0are 53 t0at time (0ic0 (oul4 create 5arriers to entr3 2or a ne(
1la3er.
Service Deve$o*ent Str!te,"
T0e service t0at Pegasus 1rovi4es is 0ig0l3 customi6e4. T0e customer 0as t0e
2le!i5ilit3 to tailor 0is?0er travel arrangements t0roug0 a convenient (e5 site. Because
t0e service targets seniors an4 5a53 5oomers, t0e 2irm (ill tr3 to meet all o2 t0eir s1eci2ic
nee4s, suc0 as 1rovi4ing a 24'0our customer service su11ort as (ell as a 1ackage
containing emergenc3 contacts an4 gui4e5ooks. An emergenc3 s0eet t0at can 2ol4 into a
(allet or 1urse (ill 1rovi4e contact num5ers 2or ever3t0ing 2rom t0e loss o2 a 1ass1ort to
a 4is1ute (it0 a 0otel. T0e 4istri5ution o2 gui4e5ooks (ill 0el1 t0e consumer get t0e
most out o2 t0eir vacation. T0e goal o2 Pegasus is to 1rovi4e value'a44e4 services, (0ic0
cater to a s1eci2ic target market (it0 a 4e2inite set o2 nee4s. T0e &om1an3>s (e5 site
(ill 1rovi4e t0e c0ance to customi6e t0e traveler>s vacation an4 allo( as muc0 2le!i5ilit3
as t0e customer 4esires.
Cu#toer Service
Pegasus (ill 1rovi4e a uni8ue Fmergenc3 &ustomer Service 0otline num5er. T0is
service (ill allo( customers to contact a Pegasus agent, s0oul4 t0ere 5e an3 8uestions
(0ic0 arise or 1ro5lems encountere4 4uring t0eir tri1. T0is emergenc3 0otline num5er
(ill re8uire Pegasus to 0ire em1lo3ees (0o are s1eci2icall3 traine4 to cater to customer
nee4s in an emergenc3 situation.
1:
T0e 0otline (ill also allo( Pegasus to 0ear a5out t0e concerns o2 its customer
5ase, (0et0er it 5e 2or t0eir u1coming tri1s or 2rom t0eir 1ast e!cursions. T0ese concerns
(ill 5e 4ocumente4 an4 4iscusse4 4uring a regular meeting so t0at management can
evaluate an4 im1rove its overall service 8ualit3.
Pricin,
T0e &om1an3 (ill 1rice t0e tour 1ackage com1etitivel3 (it0out com1romising
8ualit3. @o(ever, 4ue to seasonal 2luctuations in 1rices, certain times o2 t0e 3ear (ill 5e
more e!1ensive t0an ot0ers. T0e 1rice o2 t0e 1ackage (ill take t0ese 1rice 2luctuations
into account, as is stan4ar4 in4ustr3 1ractice. Pegasus (ill t0ere2ore 2in4 t0e 5est 1ossi5le
1ricing com5inations an4 inclu4e a 25 1ercent marku1 on t0e entire 1ackage. T0is is an
acce1ta5le an4 reasona5le marku1 2or t0is in4ustr3, an4 once again in line (it0 in4ustr3
stan4ar4s. +or e!am1le, a tri1 to Bome mig0t cost 910,000 an4 Pegasus (ill t0en c0arge
912,500 to t0e customer. =it0 t0e com5ination o2 4iscounts t0at lo(er t0e 912,500 1rice
1oint, an4 t0e &om1an3Hs 2ollo('u1 services $care 1ackage an4 tour 5ook%, a 0ig0 1rice'
value relations0i1 (ill 5e attaine4.
Di#tri.ution
T0e c0annel o2 4istri5ution 2or t0e &om1an3 5egins (0en it receives t0e airline
tickets, car rental, an4 0otel 5ookings 2rom a 2are listing service suc0 as AB& an4 TATA.
T0e con2irmation is imme4iate, an4 t0e ticket can 5e 1rinte4 out 2rom t0e com1uter
terminal. A2ter t0e relevant 4ocuments 0ave 5een o5taine4, Pegasus (ill com1ile t0e
1ackage 2or t0e customer. T0e 1ackage, (0ic0 inclu4es a gui4e5ook, contact num5ers in
t0e 2oreign countr3, as (ell as t0e ticket, 0otel 5ooking con2irmation etc., (ill 5e maile4
to t0e customer, (0o is at t0e en4 o2 t0e 4istri5ution c0annel.
Pegasus (ill 0ave man3 alliances (it0 2oreign tour o1erators) 7n Furo1e, t0e main
1artner (ill 5e @ori6on Travel in At0ens ,reece. t0ers inclu4e Lo3ages .orraine in
+rance, ,ate0ouse Travel in t0e #.D., 7magine Tours in Belgium, an4 Furo1ean Travel
7nc. ver time, ot0er alliances (ill 5e soug0t out an4 esta5lis0e4.
1A
Prootion
Pegasus (ill market to customers online t0roug0 a4vertisements on s1eci2ic sites.
7n t0e 2irst 10ase, t0e (e5 sites most use4 53 seniors (ill 5e targete4. T0is inclu4es
senior.com an4 aarp.com. T0e &om1an3 (ill nee4 to 5uil4 trust amongst seniors since
securit3 an4 t0e sa2et3 o2 in2ormation are t(o o2 t0eir 1rimar3 concerns. Associating
(it0 trust(ort03 (e5 sites (ill also en0ance t0e &om1an3Hs cre4i5ilit3.
Television (ill also 5e utili6e4. T0e Travel &0annel (ill 1rovi4e a great outlet to
reac0 t0e target market. S0o(s o2 interest to seniors (ill 5e i4enti2ie4 in or4er to 2urt0er
increase t0e &om1an3Hs 5ran4 a(areness. T0is (ill 5e t0e most e!1ensive a4vertising
me4iums, so t0e num5er o2 Pegasus ;s1ots; (ill 5e limite4, an4 2urt0er a4vertising (ill
5e 5ase4 on 1ast e22ectiveness.
T0e &om1an3 (ill s1en4 940,000 in t0e 2irst mont0 a4vertising on t0e Travel
&0annel. 910,000 (ill go into t0e travel section o2 t0e Ge( /ork Times an4 #SA To4a3,
an4 92,000 to(ar4s 5anner a4s on senior.com an4 aarp.com. Fver3 (inter Pegasus (ill
2ocus its a4vertising strateg3 on television, an4 concentrate on 1rint a4s in t0e summer.
At least 20 1ercent o2 t0e 5u4get $see 2inancial 1ages% (ill go into ne(s1a1er a4vertising
(it0 1u5lications suc0 as t0e #etroit $ree Press an4 t0e P"iladelp"ia %n&'irer.
T0e &om1an3 (ill also use ;give a(a3; 1romotions to increase a(areness. t0er
1ossi5le strategies (oul4 5e a 2ree vacation to t0e 1arents o2 a college gra4uate. T0is (ill
allo( t0e &om1an3 to reac0 a large num5er o2 target customers $at a large universit3% an4
1ossi5l3 receive 2ree 1u5licit3. T0e &om1an3 (ill also o22er 4iscounts 2or cre4it to(ar4 a
2uture tri1.
)II. Or,!ni2!tion!$ P$!n
Pegasus (ill 5e esta5lis0e4 as an S'&or1oration. T0e 1rinci1al s0are0ol4ers (ill
eac0 assume an e8ual stake in t0e 5usiness.
A2ter consi4ering t0e 1ros an4 cons o2 eac0 2orm o2 o(ners0i1, t0e &om1an3
agree4 t0at t0e S'&or1 (oul4 5e t0e most 5ene2icial structure. A signi2icant a4vantage o2
t0e S'&or1oration is t0e a5ilit3 to avoi4 4ou5le ta!ation.
20
T0e secon4 5ene2it 2rom 5eing an S'&or1oration is t0at t0e s0are0ol4ers retain t0e
limite4 lia5ilit3 1rotection o2 a &'&or1oration. S0are0ol4ers are onl3 lia5le 2or t0e
amount o2 t0eir investment.
M!n!,eent (e! 3!c%,round
James Miller President
*ames Miller (as 5orn in Me4ia, Penns3lvania, an4 gra4uate4 near t0e to1 o2 0is
class at Penncrest @ig0 Sc0ool. @e is currentl3 earning a general management 4egree in
marketing an4 0uman resources. *ames re1resente4 0is 0ig0 sc0ool at t0e Penns3lvania
+ree Fnter1rise =eek, (inning t0e ;Best Beturn on Ge( Assets; a(ar4. @e (ent on to
re1resent 0is countr3 at t0e Bos101rus 7nternational Stu4ent &ongress on
entre1reneurs0i1, an4 (alke4 a(a3 as t0e &F o2 t0e (inning &om1an3. @e 0as (orke4
in man3 4i22erent organi6ations ranging 2rom small entre1reneurial 2irms $Mann K &o.%
to large cor1orations $T0e American Be4 &ross%. @e 0as e!1erience in customer service
an4 1romotions.
As 1resi4ent o2 t0e &om1an3, *ames (ill 5e res1onsi5le 2or strategic
4evelo1ment, 0iring, 2iring, maCor asset ac8uisition, an4 ca1ital e!1en4iture 4ecisions.
@is 4a3'to'4a3 activities (ill involve esta5lis0ing cor1orate 1artners0i1s, training an4
su1ervising em1lo3ees, an4 4ealing (it0 maCor customer service 1ro5lems. *ames (ill
run mont0l3 meetings (it0 t0e Boar4 an4 t0e vice 1resi4ents. @e (ill also 5e in c0arge
o2 0an4ling an3 4isagreements among t0e (ork2orce.
Francis Gill Finance and Accounting Manager
+rancis ,ill (as 5orn in S34ne3, Australia an4 is currentl3 earning 0er Bac0elorHs
4egree in +inance an4 Marketing at Boston &ollege. T0roug0 0er course(ork an4
aca4emic e!1erience, s0e 0as ac8uire4 kno(le4ge on t0e various as1ects o2 2inance.
+urt0ermore, 0er em1lo3ment in t0e largest 5ank in Singa1ore assiste4 in t0e
4evelo1ment o2 0er anal3tical skills.
#'ties
+rancis (ill 5e res1onsi5le 2or 2inance, accounting, 1a3roll, 5illing, ta!es, c0eck
signing, an4 an3 ot0er matters relate4 to sales an4 revenue 5u4gets. S0e (ill also 5e in
21
c0arge o2 t0e 2inancial statements an4 5e res1onsi5le in c0oosing an a11ro1riate
accounting 2irm.
iane !iu Public "elations#$n%ormation Tec&nolog' Manager
-iane .iu is 0ig0l3 8uali2ie4 as a 1u5lic relations an4 in2ormation tec0nolog3
manager, 0aving (orke4 in t0e *o0n @ancock Agenc3 in Boston as a Management
7n2ormation S3stem intern. &urrentl3 s0e (orks in t0e Stu4ent @el1 an4 Su11ort &enter
at Boston &ollege as a #ser Assistant. T0roug0 0er (ork e!1erience, s0e 0as ac8uire4
t0e necessar3 inter1ersonal skills nee4e4 in t0e 1u5lic relations 2iel4.
#'ties
-iane>s res1onsi5ilit3 as a 1u5lic relations manager inclu4es overseeing t0e
customer service as1ect o2 t0e &om1an3. S0e (ill 5e in c0arge o2 0an4ling customer
com1laints an4 t0e 0iring o2 customer service re1resentatives in t0e 2uture. +urt0ermore,
s0e (ill 4evelo1 t0e customer service toll'2ree 0otline t0at (ill 5e intro4uce4. @er role as
7T manager re8uires 0er to 4evelo1, maintain, an4 u14ate t0e (e5 site o2 Pegasus, an4 to
ensure t0e smoot0 running o2 (e5 o1erations.
Yori(o Tana(a Mar(eting and Sales Manager
/oriko Tanaka (ill assume t0e role o2 Marketing an4 Sales Manager. @er resume
inclu4es (orking 2or nine mont0s in &arlson =agonlit as a travel agent. @er e!1erience
o2 serving customers, arranging tri1s, making reservations, an4 issuing tickets over t0e
com1uter (ill ena5le t0e 2irm to e22icientl3 start its o1erations. +urt0ermore, s0e 0as
t0ree mont0s o2 e!1erience as a registration re1resentative at Sk3Per2ect TL in *a1an,
(0ere s0e assiste4 customers (it0 registration over t0e 10one an4 su11orte4 t0em (it0
t0e a11liances> tec0nical 1ro5lems.
#'ties
/oriko (ill 5e res1onsi5le 2or creating 1romotional activities, monitoring sales,
an4 1er2orming t0e necessar3 market researc0 to 4etermine 0o( 5est to im1rove t0e
&om1an3>s a(areness. S0e (ill also 5e res1onsi5le 2or t0e 4esign an4 4istri5ution o2 all
1romotional an4 a4vertising materials.
Marie )ouc&et Administrative Manager
Marie Bouc0et is currentl3 on e!c0ange at Boston &ollege 2rom a 5usiness sc0ool
in +rance. @er courses inclu4e 7ntro4uction to Marketing, Statistics, 7nternational
22
Marketing an4 Fntre1reneurs0i1. @er (ork e!1erience inclu4es a stint at &ora
Su1ermarket (0ere s0e (as in c0arge o2 sales anal3sis in t0e 2oo4 4e1artment. S0e also
su5mitte4 a ne( ma1 o2 t0e 4e1artment to increase sales 2igures.
#'ties
Marie (ill oversee t0e 4ail3 o1erations o2 t0e 5usiness. @er res1onsi5ilities
inclu4e t0e 0iring an4 2iring o2 em1lo3ees as (ell as training an4 su1ervision. S0e (ill
also 0an4le all 1urc0ases nee4e4 2or t0e o22ice, an4 5e res1onsi5le 2or t0e o1ening an4
closing t0e o22ice 4ail3.
Or,!ni2!tion!$ C0!rt
Boar4 o2 A4visors
A1art 2rom t0e management team, Pegasus (ill 0ave a Boar4 o2 A4visors
consisting o2 8uali2ie4 in4ivi4uals (0o (ill 1rovi4e t0eir e!1ertise to t0e &om1an3 in
2"
Boar4 o2 A4visors
+rancis ,ill
+inancial
/oriko Tanaka
Marketing Manager
*ames Miller
Presi4ent
-iane .iu
PB?7T Manager
Marie Bouc0et
-irector o2 A4min.
&ustomer Service
return 2or com1ensation o2 9"00 1er meeting, an4 an e8uit3 stake (0en t0e &om1an3
goes 1u5lic. T0e Boar4 o2 A4visors> 2unction is to serve in an a4visor3 ca1acit3 2or t0e
various 2unctions an4 activities o2 t0e &om1an3. T0e Boar4 o2 A4visors inclu4es)
Mr. @enr3 Bin E Manager o2 &arlson =agonlit Travel Agenc3 in &am5ri4ge. @is
e!1erience o2 managing a tour agenc3 as (ell as PegasusH alliance (it0 &arlson (ill
5e 5ene2icial.
Pro2essor Sannella E Pro2essor in t0e marketing 4e1artment o2 Boston &ollege. @er
e!1ertise in t0e 2iel4 o2 kno(le4ge is muc0 nee4e4 53 t0e &om1an3.
Pro2essor Mar3 &ronin E F'commerce 1ro2essor at Boston &ollege. Pegasus can use
0er a4vice to create an4 u14ate its (e5 site.
As0le3 =ark E a 1ro2essional F'commerce consultant (0o 0as 5een (orking (it0
7BM in Sout0 &arolina 2or t0ree 3ears. @er e!1erience 2rom (orking (it0 ot0er F'
commerce com1anies (ill 5ene2it Pegasus tremen4ousl3 in t0e 4evelo1ment o2 its
(e5 site.
)III. A##e##ent o+ Ri#%#
T0e 1otential success o2 Pegasus coul4 5e a22ecte4 53 an3 une!1ecte4 c0anges in
t0e econom3. F22orts (ill 5e ma4e to monitor c0anges in t0e in4ustr3 an4 econom3, an4
a4Cust o22erings accor4ingl3.
T0e government coul4 4eci4e to regulate 7nternet com1anies or on'line travel, 4ue
to concerns over securit3. 72 2rau4 gets out o2 control, or i2 airline securit3 gets
com1romise4 $terrorists using 7nternet sites to 5ook 2ake 1assengers to 0iCack 1lanes%,
ne( regulations coul4 increase costs, or 2orce serious c0anges in &om1an3 o1erations.
Trou5le in 1o1ular vacation s1orts, suc0 as t0e con2lict in 7srael, or terrorism
events in Fnglan4 or ot0er countries (ill also a22ect travel c0oices an4 1ossi5le revenues.
T0e &om1an3 must make sure to o22er 5etter 4eals to 4i22erent areas not in con2lict.
T0e 4evaluation o2 t0e 4ollar coul4 also 5e a signi2icant 1ro5lem. 72 customers
cannot get muc0 in return 2or t0eir mone3, t0e3 (ill not 5e a5le to travel a5roa4. T0is
can 5e overcome 53 o22ering more 4omestic travel, an4 to countries (0ere t0e 4ollar is
still strong. 7t is im1ortant to continue to 4iversi23 t0e 1ro4uct line an4 client 5ase $get
man3 5ranc0es t0roug0out t0e (orl4% to kee1 risk minimi6e4.
24
I4. Fin!nci!$ P$!n5
PE-ASUS (RA)EL.COM
PRO FORMA INCOME S(A(EMEN(
(6REE7YEAR SUMMARY
Ye!r 8 Ye!r 2 Ye!r 9
Sales 100M 91,765,650 2,2A5,"45 2,A:",A4A
.ess) &,S 50M 9::2,:25 1,147,67" 1,14A1,A74
,ross Pro2it 50M 9::2,:25 1,147,67" 1,14A1,A74
1erating F!1enses
Selling F!1enses 40M 9706,260 7"4,510 771,2"6
Tec0nolog3 -evelo1ment 2:M 94A4,":2 5"",A"" 555,2A0
A4vertising F!1enses 20M 9"5",1"0 45A,06A 5A6,7:A
Salaries, =ages 2AM 9512,0"A 5:4,0"A 6:0,0"A
22ice Su11lies 1M 910,000 1",0:" 16,415
Bent 1M 916,652 17,651 1:,710
#tilities 1M 95A4 6:A 776
7nsurance 1M 9:,:2: :,:2: :,:2:
-e1reciation .1AM 9","00 4,"61
Total 1erating F!1enses 11AM 92,105,1:5 2,"56,16" 2,65",752
Pro2it $loss% 5e2ore ta!es '70M $91,222,"60% $1,20:,4A1% $1,161,777%
Ta!es '1M 916,244 21,117 27,452
Get Pro2it $loss% '70M $91,2":,604% $1,22A,60:% $1,1:A,22A%
25
T0e initial investment o2 92,105,1:5 (ill 5e ac8uire4 t0roug0 venture ca1italists
an4 5ank loans, (0ic0 (ill 5e 1ai4 o22 over 12 3ears. ,iven t0e lo( ca1ital intensive
nature o2 t0e 5usiness, t0e &om1an3Hs start'u1 costs an4 (orking ca1ital are less t0an
ot0er e'commerce ventures. T0e &om1an3 is (illing to o22er a reasona5le 1ortion o2
e8uit3 to attract investors.
26
PE-ASUS (RA)EL.COM
PRO FORMA INCOME S(A(EMEN( FIRS( YEAR 3Y MON(6 :;000#<
*an +e5 Mar A1r Ma3 *une *ul3 Aug Se1t ct Gov -ec
Sales 1"0 10" 1"" 140 147 15A 162 17A 1"7 156 154 166
.ess)&,S "5 22 41 61 65 :5 102 114 :2 A2 :6 A:
,ross Pro2it A5 :1 A2 7A :2 74 60 65 55 64 6: 6:
1erating F!1enses
Selling F!1enses :5 60 "2 40 60 47 "2" 40 62 :1 :2 :4
A4vertising F!1enses 62 1A 1: 41 4" 2: 24 2" 25 10 2A "1
Salaries, (ages 40 ": ": ": 41 41 41 52 40 5" 45 45
22ice Su11lies 1.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 1.4 0.7 0.7
Bent 1." 1." 1." 1." 1." 1." 1." 1." 1." 1." 1.: 1.:
#tilities 0.04 0.04 0.04 0.04 0.04 0.0A 0.0A 0.04 0.04 0.04 0.04 0.04
7nsurance 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.: 0.:
Ta!es 1.2 1.2 1." 1." 1." 1." 1.4 1.4 1.4 1.4 1.5 1.5
-e1reciation 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27
Ttl 1erating F!1enses 204 124 A5 124 126 164 11: 125 1"1 14A 161 165
Pro2it $.oss% 5e2ore ta! $10A% $4"% $"% $45% $44% $A0% $5:% $60% $76% $:5% $A"% $A7%
Ta!es 0 0 0 0 0 0 0 0 0 0 0 0
Get Pro2it$loss% $10A% $4"% $"% $45% $44% $A0% $5:% $60% $76% $:5% $A"% $A7%
PE-ASUS (RA)EL.COM
PRO FORMA CAS6FLO1 FIRS( YEAR 3Y MON(6 :;000#<
*an +e5 Mar A1r Ma3 *une *ul3 Aug Se1t ct Gov -ec
Becei1ts
Sales A1 111 124 1": 145 155 161 174 150 150 157 162
-is5ursements
&,S 2: 25 "7 57 64 :1 AA 112 :: A0 :7 A6
Selling F!1enses 42 7" 46 "6 50 54 40 "7 51 72 :2 :"
Salaries 40 ": ": ": 41 41 41 52 40 5" 45 45
A4vertising 62 1A 1: 2" 4" 41 24 2: 25 10 2A "1
22ice Su11lies 0.A6 1.1 0.7 0.7 0.7 0.7 0.7 0.7 0.7 1.1 0.A 0.7
Bent 1." 1." 1." 1." 1." 1." 1." 1." 1." 1." 1.: 1.:
#tilities 0.04 0.04 0.04 0.04 0.04 0.04 0.0A 0.04 0.04 0.04 0.04 0.04
7nsurance 0.4: 0.6 0.6: 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.: 0.:
Ta!es 0.:4 1.2 1." 1." 1." 1." 1.4 1.4 1.4 1.4 1.5 1.5
Ttl -is5ursement 175.6 15A 14" 15: 202 140 20: 2"" 20: 22A.5 24: 25A.:
&as0 +lo( ':4.6 '4:.2 '1A '20 '57 15 '47 '5A.2 '5:.1 '7A.5 'A1.04 'A7.:
Beg. Balance 0 '1A '"2." '10." 12.: 47.: 16.A :0 140 1A:." 277.: "6:.A
27
Pegasus 2orecasts its 2irst 3ear sales to 5e .02 1ercent o2 t0e 1roCecte4 9:5.5
5illion $5 1ercent gro(t0 rate 2rom 977 5illion ac0ieve4 in 2005% in online travel sales,
(it0 1roCecte4 increases o2 "0 1ercent 1er 3ear. T0e &om1an3 5u4gets 20 1ercent o2
sales 2or a4vertising, in or4er to attract travelers an4 increase market s0are. A4vertising
an4 tec0nolog3 4evelo1ment e!1enses (ill 4ecrease in 3ears 2 an4 ", in line (it0 a goal
to 5ecome 1ro2ita5le 53 t0e en4 o2 3ear 5.
T0e &om1an3 assumes t0at most sales (ill occur in Se1tem5er an4 -ecem5er, as
seniors are most 2le!i5le (it0 t0eir travel 1lans an4 t0e 5est 2ares are o22ere4 53 t0e
airlines 4uring t0ese mont0s. Because -ecem5er is a 0ig0 travel 1erio4, t0e &om1an3
0as increase4 its antici1ate4 salar3 an4 commission e!1ense 1ro1ortionatel3. Bemaining
o1erating e!1enses suc0 as o22ice, rent, utilities an4 insurance are assume4 to remain 2lat
t0roug0out t0e 3ear. Beservation com1uters an4 ticket 1rinter e!1enses are inclu4e4 in
o22ice su11lies.
2:
E46I3I( 8
M!/or P$!"er# in Co*etitive #ector#
(r!dition!$ (r!ve$ A,encie#
NGote) most o2 t0ese travel agencies 0ave alrea43 incor1orate4 t0e ;click an4 mortar; a11roac0.
&arlson =agonlit Travel
American F!1ress
=orl4 Travel
On$ine (r!ve$ A,encie#
$'ll Service
Travelocit3.com
F!1e4ia.com
r5it6.com
Da3ak.com
Mo5issimo.com
(ameyo'rprice
Priceline.com
&0ea1tickets
Air$ine Co*!nie#
#S Air(a3s
#nite4 Air(a3s
American Airlines
-elta Airlines
&ontinental Airlines
2A
E46I3I( 2
Co*etitive Sector#= Stren,t0# !nd 1e!%ne##e#
Co*etitive Sector# Stren,t0# 1e!%ne##e#
(r!dition!$ (r!ve$ A,encie# Provi4e more 1ersonali6e4 service
Seeing increase in num5er o2
re2errals 2rom online travel
agencies
Provi4e a sense o2 securit3 t0at t0e
7nternet cannot
Provi4e researc0 an4 5ooking
services 2or customers. &onsumers
1re2er to 5ook tours t0roug0
tra4itional travel agencies, an4 use
t0e 7nternet 2or researc0 onl3
Bevenue 4eclining, as more
an4 more travelers migrate
to(ar4 online services
&ommission cuts 53 airline
com1anies
&0arge 0ig0 5ooking 2ees to
1a3 over0ea4 e!1enses
-o not o22er 24 ! 7 customer
access
On$ine (r!ve$ A,encie# A5ilit3 2or traveler to c0oose
4i22erent air 2ares at re4uce4 1rices
.o( start'u1 costs
Most 2re8uentl3 use4 e'commerce
service on t0e 7nternet
22ers ot0er services suc0 as
1ersonali6e4 (eat0er re1orts, stock
8uotes an4 airline's1eci2ic ;2are
alerts;
T0ere (ere 150 million visitors to
an online travel site in 2005, a "5
1ercent increase over t0e 1revious
3ear.
2005 online travel revenues
accounte4 2or a5out 2A 1ercent o2
all B'to'& revenues
Provi4e 2le!i5ilit3 an4 convenience
o2 t0e 7nternet
.o( over0ea4 costs
Bookings o2 a5out 977 5illion in
2005 (it0 1roCecte4 gro(t0 o2 5
1ercent 1er 3ear.
.arge unta11e4 market 1otential in
Furo1e, Asia an4 .atin America
-i22icult to automate
1ersonali6ation an4 ;0uman
touc0; (it0 t0e e22icienc3 o2
t0e 7nternet
Takes consi4era5le time an4
energ3 to e22ectivel3 researc0
all t0e 5est online 2are o1tions
Be8uires consumers to 5e Get
savv3. nl3 e!1erience4
users can make t0e 7nternet
more cost e22ective t0an a
tra4itional travel agent 53
5eing a5le to locate 2avora5le
2ares
Man3 customers revie(
online 1rices an4 o1tions 5ut
t0en call a travel agent to get
I2ace'to'2aceJ service an4
ans(ers to critical travel
8uestions.
nline cre4it 2rau4 is a maCor
concern o2 7nternet users
Air$ine# 22er 5ot0 tra4itional an4 online
services
Fsta5lis0e4 5ran4 name
A5ilit3 to o22er unsol4 seats at a
ver3 lo( an4 com1etitive 1rice
-o not c0arge e!tensive service or
5ooking 2ees associate4 (it0
tra4itional Travel agents
7ncreasing use o2 e'ticketing
&ustomers 0ave little or no
lo3alt3 to a 1articular airline
MaCorit3 o2 carriers i4enti2ie4
o(n (e5 site as critical to
online 1resence.
Tr3ing to increase e ticketing
at a 0uge cost.
Still relies on t0e online
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