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

Posts Tagged ‘Hidden Fees’

Last week, The Travel Business section of The Economist posted an article that looks at the distribution landscape of the airline industry. We think the article is fantastic and definitely worth a read!


AIRLINES are wonderful generators of profit—for everyone except themselves. Even in good times their margins are as thin as a boarding pass, and in recent years they have more often lost money (see chart). Averaged over the past four decades, the net profit margin of the world’s airlines, taken together, has been a measly 0.1%. By contrast, other bits of the travel business that depend on the airlines—such as aircraft-makers, travel agents, airports, caterers and maintenance firms—have done very nicely.

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Close your eyes for a minute and imagine you are the new brand manager for Tide laundry detergent. First, congrats on the promotion. Second, laundry detergent is generally considered a commodity, but Tide and other detergent manufacturers have spent millions of dollars creating brand image and developing brand loyalty… just like the airlines have done. These laundry detergent manufacturers spend a lot of money for one main purpose: to secure repeat purchase behavior… just like the airlines do.

Back to Tide and your first day on the job. You’re running ten minutes late and you’ve spilled coffee on your shirt. You have a meeting with your main distribution provider, Big T’s Trucking Company. Well thank goodness you work at Tide now because I’m sure they have one of those Tide Sticks laying around somewhere. Anyway, you’ve been told that Tide uses 3 primary trucking companies that manage over 60% of your distribution, but Big T is the largest. Read the rest of this entry »

On March 30, 2011, a group of top GDS executives from Sabre, Travelport and Amadeus and their attorneys gathered at the New Executive Office Building (which by the way, is far from being new) in Washington, DC. The building is home to the Executive Branch’s Office of Management and Budget, or OMB.

Not too long ago there would only be two places you would see GDS executives of this stature gathered in a single spot. One would be at a travel industry conference. They would be on stage, battling it out as fierce competitors over who has the better technology and who can offer travel agencies, airlines and other travel suppliers the best distribution value. The other would be at the felt playing a high-stakes game of poker. I miss those days, but I digress.

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GDSs and their coalitions worked so hard building the story to tell the world how airlines are deceiving consumers with hidden fees, and that airline direct connect will create a huge lack of transparency. Well, turns out the ones really biasing information and avoiding transparency may be, according to the DOT, the GDSs and some OTAs themselves. 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!