During the Innovation in Airline Distribution 2012 conference I had the pleasure of listening to a couple of lawyers talk about the ongoing litigation between the airlines and the GDSs, and I didn’t even have to pay for it. It was great, and it actually led to a bona fide epiphany. Here’s how it went down:

One of the attorneys was making a general reference to the competiveness of the GDS industry and commented that “the GDSs do compete very aggressively against one another by spending millions on agency incentives.” An innocuous and no doubt accurate statement, right? The GDSs spend millions of dollars (of the billions of dollars they collect in distribution fees from the airlines each year) to allegedly compete against each other. Big deal. But then it hit me like a 2,000 page legal brief.

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If the GDS spend all this money competing against each other for travel agency business, then how much do the GDSs spend competing for airline distribution business?

This question now haunts me. I am sure it will consume most of your waking hours just as it does mine. So let’s try to answer the question. Hmmmmm… better get out the abacus for this calculation. Read the rest of this entry »

I attended the Innovation in Airline Distribution 2012 Conference right here in my home city of Miami. The conference organizers did an admirable job of pulling together a nice balance of the provocative and the educational. I, of course, was part of the educational track.

As this conference focused on airline business, there was much attention paid to airline merchandising, optional services, and distribution. There was also plenty of discussion about personalizing offers to customers, listening to the customer, anticipating the needs of the customer, and ultimately giving the customer a relevant offer. I was quite impressed with the quality of the discussion.

It was, however, a bit surprising that most of the discussion seemed to be focused on what airlines were doing and wanted to do on their websites. When the discussion turned to getting their products to travel agencies the atmosphere turned, well, less enthusiastic. Why?

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I recently read The Beat’s article about Sabre’s plans to beef-up its virtual meetings product with booking capabilities. Pretty cool stuff, if you ask me. But given that the majority of Sabre’s (and the other GDSs’) revenue today comes from airlines, one could probably safely assume that the funds needed by the GDS to invest in and develop this new business line came directly from the airlines. Which is the basis of my question: Should the GDS be in the teleconferencing business? After all, it is a business that is in direct competition with their core customers’ business. More Teleconferencing = Less Airline Travel.

One really doesn’t even have to think too long about this question. The answer is obvious.

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Did you know travel agents are working around the GDS to meet customer demand for booking airline ancillary products and services? In fact, “nine in 10 corporate agents and more than 70% of leisure retail agents have booked air ancillaries over the past year.”

Wait. That quote can’t be right. I must have read it wrong. Due to technological limitations that restrict the meaningful display of ancillaries in the GDS, almost no airline ancillaries are available for sale through GDSs. I know because the GDSs and their allies are trying to push for government regulation to require airlines to distribute and display their ancillary products and services through the… well, let’s just say the less-than-modern GDS channel.

But no, I read this recent Travel Weekly article three times and that’s what the quote says. The article reports on a PhoCusWright study that states, among other things, “Agents’ willingness to book [ancillary products] without compensation implies that the demand for handling ancillaries as part of the flight reservation is customer-driven.” So there we have it! Despite these agencies getting no help from their GDS, they are finding ways to sell ancillaries. It’s really no surprise when you think about it. Travelers, like all consumers, want choices and options, and travel agents are once again demonstrating resilience when it comes to meeting the needs of their customers!

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Debate is never in short supply in our industry, and a topic of choice these days is what some are calling “Ancillaries Vs. Merchandising.” So—surprise, surprise—I figured I’d weigh in on the subject. Maybe we should start with some basic definitions, and you know where I always turn for the most accurate 411…Wikipedia. Wiki says… an ancillary provides necessary support to the operation of an organization. Yuck, who wants to pay for that? It’s no wonder airline consumers don’t like “ancillaries” if all they are is support for the airline. Where is the consumer in all that?

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Maybe the term “merchandising” shines a different light. Wiki says that merchandising is any practice which contributes to the sale of products to a retail consumer. Okay, that’s a bit better. At least there’s the notion of a consumer in that one.

Here’s what I think we should do. Let’s only use the term “ancillary” to mean the actual product or service an airline can offer that compliments the purchase of the airline seat. In fact, I think we should drop the term “ancillary” all together and just say “product” or “service.” Ancillary reminds me of the old airline term “change of gauge” (which basically means changing planes to a connecting flight). Why do we insist on continuing to use so many consumer-unfriendly terms? Are we trying to scare consumers off or just continue to confuse them with these archaic terms and processes?  Read the rest of this entry »

To borrow a line from almost every late night talk show host, “I couldn’t make this stuff up.” But I can blog it!

I’ve been accused from time to time of being a purveyor of black magic, a spellbinder of XML incantations, an agitator, a snake oil salesperson, an innovation bigot, and a man with a bobblehead’s brain. But one thing I’ve never been called is a “flip-flopper.” I tend to stick with my basic belief that through a combination of innovation, creativity, great people and a competitive landscape, valuable and far-reaching strides are happening in airline distribution… all to the benefit of airlines, travel agencies, and consumers. I wish I could say the same about some other folks in the industry.

Glass Concept Home by Santambrogiomilano

Anyone not living in a cave is aware of the tremendous distraction taking place in our industry by cries that airlines are “hiding fees.” It’s getting so bad that a huge lobbying effort is taking place to get the US Department of Transportation (DOT) to mandate new onerous regulations on disclosure and transparency… all under that guise that it’s to “protect consumers.” There seems to be a virtual swinging door at DOT headquarters with pleas from ITSA, ASTA, BTC, and the GDSs to force, through regulations, the airlines to be more transparent and disclose all airline optional services and related fees.

Of course, this is all in the name of “consumer protection.”

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Bobblehead (aka The Innovator) was out on a walk the other day and ran across an old friend. They talked about change in airline distribution, new websites, and, most importantly, how innovation aids transparency, consumer choice, and comparison shopping.

Or view on YouTube here.

I just ordered a wireless TV receiver so I can move my TV to the patio and watch my Miami Heat games uninterrupted. A wireless TV receiver… How does that even work? Well, one reason it works is because there are some fairly standard WAP (Wireless Application Protocol) communications for these sorts of things.

Yet, the whole concept of “standards” continues to dog our industry. A recent example of our trouble with standards was reported on February 22 in the The Beat. United is migrating to a new reservation system, and there will be casualties—namely, Sabre agents won’t be able to sell UA Economy Plus for some undetermined period of time. Why? Well since you’re asking me, I’d be of the opinion that Sabre developed the application specifically to a proprietary backend process within Apollo (United’s current reservation system provider), which as of March 3 will no longer be supporting United’s reservations system. Sabre’s stated reason is that it built United’s capability to sell Economy Plus seats “before industry technology standards existed,” thus making the solution “specifically designed for the reservation system they used at the time.” Some would refer to this development as a “hard-coded” solution. And for those that don’t know, those types of solutions are not flexible or portable. Read the rest of this entry »

Articles about travel agents and ancillaries have been all over the web lately. First I read this one. Then I read this. And then this. I felt like I was reading the same article over and over and over. Then it hit me — Groundhog Day.

No, I’m not talking about the day when we pull Punxsutawney Phil from his burrow in Pennsylvania to see if he’ll see his shadow or not. I’m talking about the hilarious movie Groundhog Day (yes, the movie takes place on Punxsutawney Phil’s special day). In the movie Bill Murray keeps living the same day over and over… and over. And it seems to me that the conversation surrounding travel agents and ancillaries is stuck in a similar pattern. Read the rest of this entry »

Air & Business Travel News posted a “News Story” this week that cites a large TMCs annual Travel Management Priorities report. According to the report, “Comparing travel costs between suppliers will be ‘more difficult’ for buyers this year because of extra charges and airlines’ attempts to move to ‘direct connect’ distribution.

Unfortunately, this large TMC’s report just hit the tip of the iceberg. We did some research and took some surveys* about what else will be ‘more difficult’ because of Direct Connect. I hope you’re sitting down. The results might just shock you!

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