Airlines, Qunar lock horns over ticket sales
Print Edition
Nine Chinese airlines have ended their partnership with China’s second largest online travel agency Qunar Cayman Islands Ltd last week following complaints over ticketing and refund issues.
Sichuan Airlines, Tianjin Airlines and Xiangpeng Air joined the nation’s big four carriers and shut down their sites on Qunar.com last week. The website was popular among travelers for offering discounted flight tickets.
Shares of the NASDAQ-listed Qunar plunged more than 16 percent last Monday to US$43.96 after the announcement of the withdrawals. The collapse came amid a wider fall in the Chinese stock markets.
The airlines said there were passengers’ complaints about extra charges, refunds and ticketing issues as the reasons for ending the cooperation.
“Passengers complained that Qunar.com arbitrarily raises the price of air tickets, alters the terms and conditions of ticket use, adds fees for ticket changes and refunds but fails to notify them about flight changes,” Air China, the nation’s flagship carrier, said in a statement.
China Southern Airlines, Asia’s largest carrier in terms of fleet, said: “In order to protect passengers’ interests and improve market order, China Southern Airlines is suspending its association with Qunar and announcing the closure of its flagship store on the platform.”
Smaller carriers like Tianjin Airlines and Lucky Air also said they had received complaints from passengers about Qunar charging them for returned tickets.
However, Qunar claimed that a disagreement over ticket ranking on its website between the airlines was the real reason for the dispute.
“China Southern and Hainan Airlines insisted that we change the order of ticket display on our website from the order by price to a chronological order. However, we think that displaying tickets by prices was more suited to the booking search habits of users,” it said.
“Consumers can still buy the carriers’ air tickets from Qunar during the suspension period,” it said.
Though the sales portals of the carriers have been shut down, customers can still buy their flight tickets from the agents selling on Qunar.com.
Cooperation with travel agencies has become a two-edged sword for airlines. The carriers need travel agencies to help sell large numbers of tickets, while they also have to pay high agency fees as well as handle customers’ complaints against the agencies.
Meanwhile, the national state-owned asset watchdog issued a request last year for domestic airlines to increase their direct sales by half from the current 20 percent. That way the airlines can save a total of 1 billion yuan (US$152 million) as fees for the agents, said Liu Simin, vice president of the China Society for Future Tourism Studies.
‘Pangolin’ project
The airlines invest a lot to promote their own sales on their official websites as well as mobile phone applications, while Qunar.com, which can pick up the cheapest ticket from agents for consumers, becomes a major threat to their direct sales strategy, Liu said.
“The sanction is a warning to the agents that the carriers have largely begun to sell tickets on their own,” Liu said.
An industry insider told Shanghai Daily that an innovative campaign named “Pangolin” launched by Qunar.com last November was the other reason for the dispute.
Under the “Pangolin” project, consumers can issue their “ideal” ticket price on certain flight routes for agents to compete for the price. Qunar.com coordinates and picks up the lowest ticket price.
“The project overturns the industry convention that the airlines decide the ticket price,” said the source, who preferred anonymity because of his ties with Qunar.com. “It also largely squeezes the profits of airlines.”
The Pangolin project was popular among the price-sensitive Chinese consumers. The website’s ticket sale jumped by 25 percent only a month after it was launched. About 30 percent of Qunar’s tickets were sold through Pangolin, including 70 percent of international flight tickets, according to Qunar.com.
The airlines then asked the website to change the ticket ranking to chronological order from the price order. Qunar.com refused, eventually leading to fallout among them.
“The end of partnership is more of a symbolic action since customers can still buy the tickets on the website,” the source said. “But the joint announcement will surely affect the sales.”
Qunar has been in the news before too over other issues.
It announced a shake-up of its top management team on Monday following its merger with China’s top online tourism platform Ctrip. Its former CEO Zhuang Chenchao and CTO David Wu both resigned on Monday.
Ctrip acquired shares of Qunar from China’s biggest search engine Baidu two months ago to become its biggest non-controlling shareholder.
In December, the Shanghai Consumer Rights Protection Commission warned several online agencies, including Qunar, that were found offering non-existent discounts, charging high service fees as well as denying refunds on flight cancellation.
According to a press officer with Spring Airlines, one of its passenger surnamed Wang bought a ticket on Qunar.com for a flight from Shanghai to Guilin in south China’s Guangxi Zhuang Autonomous Region. He paid 971 yuan for his seat when the price on the airline’s official website was just 470 yuan, the press officer said.
Also, the discounted tickets cannot be refunded or changes made to the flights.
Qunar said it will investigate all the agents selling tickets on the website over the refund policy.
“Qunar.com will cooperate with the China Air Transport Association to regulate the ticket selling,” it said in a statement that was seen as a “concession” to get back into the goods books of the airlines.
Flight ticket sales are the fastest growing business for Qunar. Its revenues from airlines-related business reached 596.6 million yuan on the third quarter of 2015, a 91 percent on-year growth.
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