OTA vs Airlines – Who has more power?

SWOT from OTA perspective

Helpful
To achieving its objective
Internal Strength
Origin 1. Accessibility to multiple
airlines fair
2. Stitch up end to end user
journey – Accommodations,
Vacations etc.
3. Ability to swing customer
preference by “opaque fares”
External Opportunity
Origin 1. Growing e-commerce
business space of OTA
2. Limited competition vs size of
market
Harmful
To achieving the objective
Weakness
1. Easily replicable model
2. Slow growth rate of OTI
(Exhbhit#2)
3. Heavily dependent on VC
investment
Threat
1. Airlines tying up to form their
own OTA
2. Regulatory guidelines
preventing OTA complete
control
3. Meta search engines
4. Capital inflow from foreign
players

SWOT from Airlines perspective

Helpful Harmful
To achieving its objective To achieving the objective
Internal Strength Weakness
Origin 1. Primary service provider & 1. Agency cost
ability to influence customer 2. Price war
behavior by delivery
experience
2. Multiple avenues for sale –
OTA, Self OTA, Meta Search
engines
External Opportunity Threat
Origin 1. Growing Air travel segment 1. New entrants
2. Command premium based on 2. Fate controlled by external
service delivery ecosystem partners

Summary
OTA appear to be stronger than the airlines primarily due to the following reasons:
1. Their services encompass the entire customer journey
2. Technological advances in brokering fares with airlines offer them more advantages
3. Reward programs ensures customer are hooked to OTA for repeat purchases
4. They can cater to larget market than airlines ie rail, bus, hotel, teavel insurance etc.