Booking flights on Airbnb: an innovative addition to its network
http://qz.com/741498/lufthansa-is-selling-seats-on-flights-through-airbnb/
It is pretty surprising that one day you book your flight ticket not on the airline websites but on a room-booking website. In July 2016, Lufthansa, the German airline giant, was registered as a “host” on Airbnb, offering “rooms on the sky” with $885 “per night” on the flight from New York City to Frankfurt. what is interesting here is how can the house booking business and the airline services create a new pattern of network.
First, Airbnb is itself an outstanding example of innovative network. Incubated in 2008, it has become a household website offering rental houses nearly in every countries and, of course, a huge-profit business. This is already known and studied earlier as a type of “sharing economy”, where the business provides a platform to connect owners and potential customers who are interested in renting the products (houses, cars, machines, etc.) in a price relatively lower than buying them. The accessibility of network enables both sides to enjoy this business.
The network mechanism of Airbnb has been introduced in some previous blogs. In Airbnb’s network, the website serves as a hub of information exchange (rental offers and renting wishes). Both the customers and house owners are nodes directly connected to the hub. The hub helps the customer and the owner hook up a third edge to form a triangle of connection, referring to triadic closure property. The direct contact between the owners and the tenants offers the consumer side lower prices, higher convenience and comfortableness, and the renter side lower tax rates, larger profits and sources of new customers. When consumers feel satisfied with the house and give positive credits (or reputation) to the hosts, they will form a strong tie with the owners and thus, according to Strong Triadic Closure Property, their close friends are more likely to come to the same house. And if consumers find the website of Airbnb useful, they will also invite people in their circle to use the website.
But with the participation of Lufthansa and the connection between airline tickets and housing offers, an innovative business is on its way as a brave trial. This action was said to be the result of declining revenue of the airline suffering a lot from European refugee crisis, but the highlight is the bonus this connection offers. It is expected as efficient, because the airline now joins the hosts and creates a tie (maybe strong, considering the amount of payment by Lufthansa to Airbnb) to the hub. Consumers can easily form a tie with this “host” for its reputation, the lower price here compared to the travel agencies, and the security of interaction guaranteed by Airbnb. And what’s even more advantageous for the airline is that Airbnb links the flights and the houses in consumers’ destinations so that consumers will feel more convenient to book their journey in one website, adding to their satisfaction of service process and willingness to buy tickets and rent houses and generating mutual benefits for the airline and Airbnb.
This pattern is innovative in that the airline opens a new market by integrating the whole travel booking based on currently well-developed network platform. Although some parts of this business are temporarily controversial, like tax issues, security guarantee, etc., the connection inspires different service departments to correlate to each other and form a larger network which can generate huge profits.