Few leisure agents will have paid much attention to the spat between American Airlines and global distribution system owner Travelport in the US, at least until late December when booking the US carrier via Galileo or Worldspan suddenly required a fee.
But the increasingly angry exchanges between the combatants hint at the high stakes. American accused Travelport of being “deceptive and misleading” after the latter denounced the carrier’s new booking charges as “wholly arbitrary”, and online retail travel giant Expedia described American’s behaviour as “anti-consumer”.
Agents face a charge of £4.52 per sector for booking American on Galileo and £6.24 on Worldspan, introduced on December 20. This will inevitably be passed on to clients.
Travelport is displaying the fees on its two GDSs and adding them to fares. In response, American insists it will issue automatic debit memos to agents for the charges, which it calls a booking source premium, from February.
Abta will challenge this through airline association Iata. Although agents have the option of switching sales away from American, switch-selling is less of an option for business travel agents – particularly the large travel management companies, whose association the GTMC suggested all retailers are at risk.
GTMC chief executive Anne Godfrey told Travel Weekly: “American is trying to circumvent intermediaries. It’s an attack on the current distribution model.
“It’s adding cost for the traveller. It’s bad for the management of travel and the safety of travellers if details are not on a GDS. It is making life more difficult for TMCs. It’s bad at every level.”
A senior industry source went further, saying: “The TMCs are very angry and worried every airline will follow.”
American’s Direct approach
So, how did we get here? American wants to drive retail traffic through its own electronic booking system, Direct Connect. In part, this fits the long-standing desire of airlines to push bookings direct and marks a new stage in the struggle over who pays for content on GDSs.
Traditionally, scheduled airlines paid the GDSs for access to retailers. However, the carriers have tried to cut the costs of this and have a long-term aim to make retailers or GDSs pay for access to fares.
However, there is a third and more recent driving force – the unbundling of fares and a boom in airline ancillary sales. Charges for luggage and in-flight meals are now routine in the US. Carriers want clients to book direct so they can sell more.
What it means for agents
American’s move comes at a time when most unbundled services and ancillary offers remain unavailable through GDSs and airlines are dragging their feet over providing details to GDS providers.
So the row in the US matters a great deal to UK agents – online as much as on the high street.
The two-biggest US online flight retailers currently have American off sale. American came off Orbitz, a retailer it helped found, on December 21 following an initial court ruling in a case brought by Travelport, which owns a controlling share in Orbitz. A full hearing is weeks away.
Then Expedia dropped American flights on New Year’s Day, arguing: “American is attempting to introduce a new Direct Connect model that will result in higher costs for consumers, making it difficult to compare ticket prices with other airlines.”
American insists it still hopes to reach deals with both companies. But the carrier’s director of distribution strategies Cory Garner said: “Ultimately we will see all travel agency volume going through Direct Connect.”
British Airways declined to comment on the struggle, but will be watching with interest as it prepares to cement a transatlantic partnership with American in March – one which now has anti-trust immunity, permitting the pair to co-ordinate schedules and fares.
For now, this allows UK agents to book American flights through a BA code and avoid an additional GDS fee.
But who would bank on no airline in the UK following American’s lead?