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
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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.


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
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Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.