DALLAS The chief executives of Continental Airlines and Northwest
Airlines launched a broadside attack on the existing global
distribution systems and signaled that the airline industry would
push for technologies to directly link the airlines with corporate
customers and travel agencies.
Continental CEO Gordon Bethune, speaking along with Northwest
CEO Richard Anderson, told attendees at the National Business
Travel Association convention here last week, that the market is
not interested in paying for services, like GDS booking fees, that
“do not add value to us.”
“I have yet to find anybody that’s interested in paying that
fee,” said Bethune, whose airline participates in an international
marketing alliance with Northwest.
The airline industry in 2002 was expected to pay more than $2
billion per year in booking fees to the major travel reservation
companies, according to a study last year by Global Aviation
Associates.
However, most of those fees are paid by the major carriers such
as Continental, Northwest, Delta and American, which still sell the
vast majority of their tickets though travel agencies.
Discount airlines like Southwest and JetBlue have developed
Web-based systems that allow customers to book tickets directly
through those airline reservations systems, giving them a
significant cost advantage over the major carriers.
The major carriers have argued that to remain competitive with
the low-cost airlines, they must use the Internet to bring their
distribution costs in line. “CRS fees have the wrong sort of
incentives,” Anderson said. “The agency pushes a button and never
sees the bill and we get the bill. And that really doesn’t
work.”
Northwest executives are actively promoting a direct connection
tool for corporate travel customers, called CorpNet Direct. The
system saves Northwest money by bypassing traditional GDSs and
saves companies money by cutting out travel agency transaction
fees.
Northwest is also offering the CorpNet Direct fares through
Orbitz for Business, the online agency’s new Web-based corporate
travel site, and Worldspan’s TripManager, a self-booking tool for
corporate travelers.
Anderson and Bethune’s comments come at a time when the
Department of Transportation is considering whether to deregulate
airline participation in the four major GDS systems, which would
allow airlines to individually negotiate GDS booking fees and also
allow them to withdraw their fares from the existing systems.
Such a move threatens agency access, as the current regulations
require airlines to provide equal-fare access through the major GDS
companies, which include Worldspan, Sabre, Galileo and Apollo.
Agency executives defended the traditional GDS companies,
arguing that GDS systems still represent the most efficient way to
distribute corporate travel.
“Our position is that the GDS should be the highest value
provider of supplier content,” said Richard Spradling, chief
information officer of TQ3 Travel Solutions.
In September 2002, TQ3 was the first major corporate agency to
sign up with the American Airlines EveryFare program, which allowed
agencies to access that airline’s full array of published and
Web-only fares, in return for an agreement to absorb the carrier’s
booking fees over time.
Maritz officials said the EveryFare program has helped clients
save on unrestricted tickets, while helping reduce the number of
travelers booking outside corporate policy.
Spradling said the problem with the current GDS distribution
model is not technology. He said the airline industry is capable of
loading Web fares into the existing GDS systems if the economics
can be worked out.
