Fliggy, Alibaba’s online travel agency, appears to be doubling down on flights — particularly international flights — as a key arena in which it can get a leg up on anything both Tencent-backed ventures and Ctrip can throw at them.
Presumably, Fliggy is vying for the Chinese travel market’s more profitable market segments: travel-hungry millennials and international travelers. Winning over these customer segments is assuredly more vital to any company’s bottom line than, for example, dominating domestic train ticket sales.
To that end, the company has entered into a wide variety of strategic partnerships with international airlines that maintain routes to and from China. These partnerships have mainly fallen into two categories: so-called airline flagship stores on the Fliggy platform, and the more comprehensive type that integrates frequent flyer programs and other features and benefits into the Fliggy platform.
70 Airlines Operate Flagship Stories on Fliggy
A large number of major international carriers already count among partners in the first group. Companies like Germany’s Lufthansa, Australia’s Qantas, and even SkyTeam operate flagship stores on Fliggy — and new additions are so frequent that they barely make the news anymore.
According to Fliggy Vice President Jerry Hu, more than 70 domestic and international airlines now operate flagship stores on the platform.
American Airlines Offers Special Benefits to Fliggy Users
There is also a growing number of major airlines going one step further in working with Fliggy. Earlier this year, American Airlines, for example, started offering special privileges to Fliggy’s frequent users, even offering benefits equivalent to its frequent flyer program AAdvantage’s Gold and Platinum tiers.
“This partnership changes the way loyalty programs in China interact with one another and provides more flight options for Fliggy users between these two critical business and leisure destinations,” Alison Taylor, senior vice president of Global Sales and Distribution at American Airlines said in a statement about the carrier’s Fliggy partnership in Alizila, an Alibaba-operated publication about Alibaba-wide news.
Singapore Air Combines Benefits With Fliggy
Going even further is Singapore Airlines, which is this month basically combining its frequent flyer program, KrisFlyer, with Fliggy’s membership program. Under the partnership, Fliggy’s top two membership tiers will receive KrisFlyer Silver and Gold status, and KrisFlyer members will be able to use their miles to purchase products such as hotels across Fliggy.
Shared membership benefits could prove a big draw for frequent flyers and even business travelers. It’s an ambitious way to work closely with international airlines, which in many parts of the world are trying to siphon customers away from online travel agencies and toward direct bookings.
Tencent’s Meituan Travel Battles Alibaba’s Fliggy
China’s online travel agency space has been relatively quiet for some time as Ctrip has more-or-less gobbled up the competition and emerged as the undisputed OTA leader in China. However, years of relative stability in the market may be about to come to an end as the Alibaba-Tencent rivalry is expanding into the online travel market. The rising new contenders are Alibaba’s Fliggy (formerly Taobao Travel and later Alitrip) as well as Tencent-backed Meituan-Dianping’s Meituan Travel.
The ascent of Alibaba and Tencent-backed ventures in this space could substantially change the dynamic, with both companies demonstrably unafraid to take on heavy losses in their pushes for market share at each other’s expense.
In the online travel space, this means taking on Ctrip, which is more or less a jack-of-all-trades kind of platform—offering everything from train tickets and cruises to fully-organized vacations in tropical destinations and everything in between.
So far for Fliggy, that has meant taking on a more focused approach to bite off pieces of Ctrip’s (and Ctrip’s smaller competitors’) business. It has taken on a more youthful profile in a bid for Chinese millennials and generation Z customers—in stark contrast to Ctrip’s straight-edge and almost corporate feel.
Fliggy’s inroads with airlines and millennials could present a substantial challenge for Ctrip and other OTA hopefuls in China. If Fliggy becomes the de facto flight ticket marketplace in China, that makes it easy for the platform to begin advertising other add-ons to customers as well—such as car rentals, hotels, insurance, and so on. That, more than the actual flight tickets, is a significant threat to Ctrip’s bottom line.
And if customers can be further incentivized to do the rest of their travel shopping on Fliggy with airline miles and other perks, why would they take their money elsewhere?
This story originally appeared on Jing Travel, a Skift content partner.
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