Author: Shunyu, Observer of Technology, Management and Industrial Economics, CSAA Member (1996) / IEEE-CS Member / CCF Member
The domestic civil aviation industry lacks the choice between different airports in the same city, and lacks the choice of different aircraft models on the same route. Therefore, the domestic air ticket market is obviously a single commodity market. Regarding the conditions of a single commodity market, the cobweb model proposed by the famous British mathematical economist Allen is very helpful for studying the progress of air ticket e-commerce. The cobweb model suggests that when the supply elasticity is greater than the demand elasticity, the cobweb formed by the supply curve and the demand curve shows a trend of outward expansion and divergence. If the air ticket sales of airlines and air ticket agents are considered as an industry, its supply elasticity is clearly greater than the demand elasticity; therefore, it applies to the cobweb model, and the market equilibrium under the cobweb is unstable. In fact, when airlines and air ticket agents consistently choose to carry out online booking and purchasing e-commerce activities on the Taobao website, a new market grows like a cobweb with divergent and expansive growth.
So I think, since Alibaba has pioneered a new paradigm of global e-commerce, Taobao, which is well-versed in the Ali concept, will also cultivate a new local economic model in the e-commerce environment of the retail industry. And this model is precisely what the new market opened up by the e-commerce of the air ticket industry will prove to the traditional air ticket industry.
—— Douglas Allen
Column: "Contemporary Managers", "China Culture Daily", "Internet World"
Allen said when talking about the multiplier principle commonly used in economics that a fairly good mathematical model can be obtained after the multiplier and acceleration factor are coordinated. Regardless of the Harrod-Domar growth model, the Phillips model, or the Samuelson-Hicks model, none of them are sufficient to describe the growth of e-commerce under the Internet economy. We can consider the behavior of airlines and air ticket agents setting up online stores on Taobao as an investment behavior; although it does not require much cost, its multiplier effect is quite significant. Moreover, e-commerce itself is an acceleration factor under globalization and the Internet environment.
The year 2009 is approaching, what events can invigorate us under the pessimistic pressure of the financial crisis? Fuel price drop? Not enough; car price discount? Also not enough; however, amidst the bustling atmosphere of Christmas, New Year's Day, and Spring Festival holidays drawing closer, we inadvertently discovered a refreshing change. According to internet data, on the day of the fuel tax drop on the 25th, the number of air tickets traded on Taobao, a typical platform of e-commerce, reached more than 9,000. Moreover, Hainan Airlines, as a new force in the aviation industry, actively cooperated with this trend; the sales volume of Hainan Airlines' flagship store on Taobao was even several times higher than traditional agents. A new growing market is forming: the e-commerce of the air ticket industry.
When the supply elasticity is greater than the demand elasticity, the cobweb formed by the supply curve and the demand curve shows a trend of outward expansion and divergence.
Special Contributing Writer: "New Finance", "China Computer Newspaper", "Computer World", "Telecommunications Industry Newspaper"
The Formation of the Market: The Taobao Model and Significance in the E-commerce Process of Air Tickets
President of Technology at Experience City (MirrorCity.net), Partner and Technical Director at Meixin (Merrinfo.com)
Markets have strong substitutability. What determines their substitutability is transaction efficiency, transaction cost, and the experience during the transaction process. For the air ticket industry, the e-commerce agglomeration market formed through Taobao has very low transaction costs, high selectivity and efficiency, and the integrity issue can be effectively avoided through Taobao's third-party payment, thus posing a strong threat to traditional call centers and showing a substitution trend. The scale of the air ticket e-commerce market based on Taobao has reached 9,000 tickets/day (peak during holidays). In a short period, it has become the second-largest air ticket retail platform, with astonishing growth potential. Therefore, after the successful experience of Hainan Airlines, other domestic airlines such as Eastern Airlines and Shenzhen Airlines have also begun to seek breakthroughs in this area.