According to the data of Analysys, the transaction scale of China's online flight booking reached RMB 138.37 billion in 2017Q4 at a slower growth rate, representing 7.3% year-on-year growth. 

Analysys held that National Day and Spring Festival travel falling in the quarter prevented the transaction scale from great decline in despite of the fact that peak travel season had just passed. The growth on a year-on-year basis indicated that people were keener on online flight booking than before. At present, the market is still developing apace, but at a gradually declining growth rate. 



With more opportunities available, OTA internalization continued:Domestic and foreign airlines developed more international routes, facilitating China’s inbound and outbound travel and promoting the important channels for ticket distribution. Based on the knowledge that the Internet and consumption upgrade had enhanced the distribution capability of OTA, some international airlines, such as Hong Kong Airlines and KLM, and OTA companies innovated their cooperation pattern, in an attempt to penetrate into China’s market. This led to successive emergence of multiple approaches to cooperation like airline channels, flagship stores, and direct connection. 

In the 4thquarter, similar events continued. Lufthansa Group and Fliggy launched direct connection business and opened a flagship store on Qunar. But the cooperation between airlines and OAT is non-exclusive, which means current commitment cannot necessarily guarantee subsequent cooperation. The key factor that affects cooperation is whether the orders can meet the expectation, so traffic and transformation rate can determine the attraction and discourse power of OTA in the eyes of international airlines. 
Airlines enhanced digital marketing capability while OTA upgraded products and technology to meet the challenge: The policy of “improving direct selling, reducing agents and distributors” still had impacts on airlines and OTA, which propelled airlines to attach increasing importance to digital marketing capability. For instance, in this quarter, China Southern Airlines launched electronic invoice service for domestic air passenger transport, which improved both user experience and corporate digitalization; Hainan Airlines Group released a digitalized new tourism platform, HiApp, to promote the integration of its resources and the transition to a digitalized, mobile, and intelligent company. 

OTA further implemented the sound strategy, to enhance and integrate marketing capability by the means like technology upgrade and channel expansion. For instance, Ctrip acquired, an American social tourism website, to integrate and to consolidate local recommendation service; Qunar, Fliggy, etc. continuously expanded overseas ticket resources.  

On the other hand, Civil Aviation Administration of China will increase the subsidy for regional airlines and middle& small airports in 2018, so as to further facilitate low-cost aviation development. 



In the 4thquarter, 2017, the market shares of Ctrip, Qunar, and Fliggy totaled 74.2% in terms of online flight booking. In particular, Ctrip, Qunar, and Fliggyrecorded a transaction scale of RMB 51.94 billion (37.5%), RMB 27.43 billion (19.8%), and RMB 23.35 billion (16.9%). 

In the online ticket market, Ctrip, thanks to its built-in advantages and subsequent combination with Qunar, realized numerous traffic and multi-tier products at tired prices, expanded the coverage in both user number and groups, and increased market shares. According to the relevant data, Ctrip-related companies accounted for more than 50% market shares in online flight booking. With the help of Alibaba and Alipay, Fliggy was in hot pursuit thanks to its access and traffic. But as it is expensive and difficult to obtain traffic, offline channels will carry a ray of hope. Ctrip has initiated the layout, and Fliggy is expected to chase via the new retailing forces of Alibaba. In addition, tied sale by Ctrip has sent a warning to OTA companies, which will accelerate the standardization of OTA product sale. Meanwhile, OTA companies are about to enhance recommendations of relevant travel products to realize precise marketing based on better user experience.