Questioning the travel industry status quo, one blog post at a time

Posts Tagged ‘Airlines’

In my opinion, Global Distribution System (GDS) companies wield significant horizontal and vertical market power over the airline ticket market serviced by travel agencies. The GDSs have three primary customers—airlines, travel agencies, and third-party technology providers. Over time, the GDSs have intentionally crafted their relationships with their customers to build and solidify a market structure impenetrable to competition. This deliberate process was put in place as each commercial relationship came up for renewal.

The net effect of having a “tied-up marketplace” is harm to consumers. They find themselves having fewer airline product options and paying higher airline ticket prices than they otherwise would, given an open and competitive ticket distribution market. Additionally, the ticket distribution market suffers with a higher-than-necessary cost structure due to the GDSs blocking innovation and lower-cost distribution alternatives.

The Circle That Ties

To preserve their market power and block competition, the GDSs have implemented contractual hooks into each of their commercial relationships with airlines, travel agencies, and third-party technology providers.  Read the rest of this entry »

Why are airlines and travel agencies unhappy with the state of travel distribution? Ask the Question!

We’re right in the middle of a firestorm around airline merchandising and ancillary fees, yet who’s mad as hell at their best customers? Ask the Question!