Has American rung the death knell for the GDS?
Tuesday, 22 Dec, 2010
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American Airlines has pulled all its fares from online giant Orbitz this week in a move that could shake the very foundations of how airline tickets are sold around the world.
The airline has been embroiled in a battle with Orbitz, which it helped to create along with other airlines, after introducing a new way to sell its tickets called AA Direct Connect.
The move ended in the two travel giants battling in court but American has now won the right to use the system and no longer sell through Orbitz.
This means travel agencies and GDSs have to use an electronic pipeline tailor-made by American to handle all transactions with the airline.
Now American’s distribution costs will fall dramatically but also severely inhibit the role of the likes of Sabre, Worldspan and Galileo.
Douglas Quimby, senior director of research at research firm Phocuswright, summed up the move, saying: “It’s very clearly a shot across the bow for all global distribution systems and also online travel agencies about the future of distribution. All of the online travel agencies are watching this very, very closely, and other airlines as well."
GDSs and online travel agencies argue that the new distribution method will make it much harder for consumers to find the best price for a fare on the internet.
Director for the US-based Consumer Travel Alliance Charlie Leocha, which scrutinises the travel on behalf of the consumer, said: “At its core, this dispute has nothing to do with business agreements, legal arguments, or distribution technologies. This is simply a heavy-handed attempt by American Airlines to prevent consumers from easily searching and comparing its fares against those of other airlines.
"In short, the only ‘direct connect’ American really seems to want is a ‘direct connect’ to consumers’ wallets.”
Meanwhile Travelport, which is the major shareholder of Orbitz, has said it is disappointed with the court ruling that allows American to plough on with its plans which means it can pull its fares from Orbitz.
A statement said: “Travelport believes that AA’s plans to force a more restrictive distribution model will result in inefficiencies and added costs and will be detrimental to airline customers, travel agencies and consumers.
"The enhancement of distribution capabilities, whether optional ancillary sales, product differentiation, providing travel agency partners with access to new services or functionality, any of these things which AA is seeking to do, can all be achieved through Travelport’s GDS."
Senior vice president at Sabre Travel Network Chris Kroeger said: “We oppose American’s efforts to impose a costly and unproven system on travel agents and travellers.
“We strongly agree with the many industry and consumer groups who believe American’s actions will make it much harder and more costly for agents and consumers to easily comparison shop among airlines, which will result in increased prices for consumers.
“Sabre is part of a successful and proven system that allows travellers to efficiently and cost-effectively comparison shop across hundreds of airlines and other travel information on websites and through travel agencies.”
by Dinah Hatch
Dinah
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