E-ticketing is a paperless process where bookings and payment are made on-line or by phone. No ticket is issued, and the customer can just pick up his or her boarding pass at the airport.

While most direct e-ticket sales are currently made by telephone, many airlines want to push the process on-line. The first step is creating local Web sites across the region.

When Northwest extended its e-ticketing services from the United States to Asia in 1998, its first stop was in Japan. Since the Japanese site was unrolled, the number of on-line sales has jumped six-fold. (That said, e-ticketing over the Net still represents less than 1 percent of Northwest's overall sales in Japan.) The airline plans to expand its on-line ticketing sites, which are located in each Asian country it serves except Malaysia.

United Airlines, meanwhile, introduced a Hong Kong version of its global Web site, www.ual.com in June; other local United sites across the region were already up and running.

There is a Catch-22. Several Asian governments, including Hong Hong and Singapore, have ruled that airlines can only sell published "rack rates," which are much higher than discount fares sold by travel agents. (Currently fares offered on-line by airlines can be as much as 30 percent higher than fares offered by travel agents.) Although airlines don't want to alienate travel agents who bring in 80 percent of their business, they must also respond to clients who want to buy cheap tickets on-line. "Many customers certainly prefer to book directly," says Nicholas Ferri, general sales manager (Hong Kong) for United.

To appease tech-savvy travellers, United applied for and received permission from the Hong Kong and Singapore governments to publish rates that match those offered by local travel agents. Now travellers wanting to fly United from Hong Kong or Singapore to the US can get a "competitive rate" when they book on-line. Northwest says it's asking the governments for similar concessions.

Despite such headway, on-line sites created by the airlines aren't going to be havens for discount shoppers. "We don't see the Web as a bargain-basement place," says Perry Cantarutti, director of marketing and distribution planning for Northwest.

So why would consumers go to a specific airline site, rather than shop on a regular travel site or visit an off-line office? The airline's strategy is to reward loyal on-line customers by designing special deals that may appeal to them based on their consumer profile. Call it a targeted marketing and incentive plan. "If you have an affinity to our airline, we'll know about you and sell you fares at reasonable rates in a convenient way," says Cantarutti.

FIRST-MOVER ADVANTAGE
While American airlines are busy making their sites more convenient and easy, Malaysia Airlines and Thai Airways International are barely through the Internet gateway. Malaysia Airlines' site offers only information on flight schedules, and Thai Airways requires customers who book through the Internet to go to a Thai Airways office 72 hours before departure to pay, rather than taking credit-card details over the Net.

When Timothy Ross, an airline analyst at Hong Kong brokerage firm Warburg Dillon Read, contacted Thai Airways to inquire about their B2B strategy, he received a nice letter in reply. It said "they'd love to help me," says Ross, "but could I first explain what B2B is."

American airlines have a "first-mover advantage," Ross says. They have plenty of experience with domestic on-line bookings in the US, and they've already invested in the technology. The goal is to transfer the technology to Asia and to overcome restrictions that limit airlines' ability to provide competitive rates on-line.