ebookers.com has announced it will buy its former parent company Flightbookers plc.
ebookers.com was originally set up as the eCommerce arm of Flightbookers plc, a London-based consolidator travel agency that specializes in selling discounted airline tickets. In June 1999, ebookers.com was established as a separate company and an IPO followed in November 1999. Since then, the company has grown rapidly, through a dual strategy of pan-European expansion and high profile strategic alliances. Under the terms of the IPO, ebookers.com had the option to purchase the parent company at a later date.
ebookers operates in 11 markets, and the company owns the fulfillment services for each of its international sites. Until now, the UK business was the exception. This deal means that ebookers now controls the fulfillment process across all its sites. This will lead to significant cost-savings by eliminating the distribution costs associated with third party service provision. Flightbookers has long-term deals with 56 airlines to sell discounted airline tickets, so ebookers has also reduced its chances of running into supply problems. However, there is still a risk of this being upset – when airlines launch their own direct-distribution portals, they may reduce the supply of tickets available to other online discount sites.
The deal also gives ebookers.com a retail presence. Although this is not part of the group’s strategy elsewhere, it gives it the opportunity to introduce the 220,000 existing Flightbookers customers to its online services thus leading to further cost savings.
Perhaps most importantly, by controlling the entire customer service function, the company will have direct access to its customers, both at the point of purchase and for after sales support. Flightbookers’ customer services is perceived to be good – they company has a resell rate of around 45%. Existing customers know that Flightbookers will provide cheap flights and good service when they use it. As competition intensifies for online travel services, customer service is set to be a critical factor in maintaining loyalty, and ebookers would do well to maintain this reputation. The deal should allow it to further develop customer service provision and help to secure its long-term future.
