The Internet, A Creator of Electronic Markets for Airline Tickets?

Abstract

In 1987 Malone, Yates, and Benjamin proposed that the use of information technology would alter market structures, the result of which would be more use being made of electronic markets. One of the primary examples given to support this theory in the paper is the airline industry - and in particular the advent of computer-based airline reservation systems. There is a need to re-evaluate this theory in the light of the changes that have occurred in the airline industry due to the advent of the Internet. This paper investigates how the Internet has altered the business strategies of both Ryanair and Aer Lingus. In particular, it investigates, the extent to which there is a move away from electronic markets in the form of computerised reservation systems to a sole supplier booking interface via individual company web sites. On the basis of this investigation the theory proposed by Malone et al. (Malone et al. 1987) is reassessed. The influence of information technology in facilitating a move to electronic markets is not supported. In fact the opposite is found - the Internet facilitates a move back to electronic hierarchies.