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

Posts Tagged ‘travel industry’

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 »

© ysk_hrsw_i - Fotolia.com

© ysk_hrsw_i – Fotolia.com

Well here we are in a new year and still no outrage! We reported over a month ago that, according to transcripts from the AA v. Sabre case, Sabre, through boycotts and biasing, might have seriously impacted those all along the travel supply chain.

According to the documents, airline partners of AA were allegedly subject to biasing. Consumers were allegedly denied transparent and unbiased flight information. Corporations with contractual obligations to American had, it appears in some cases, AA flights withheld completely from corporate travelers seeking to book. And let’s not forget that the transcripts suggest travel agencies unknowingly had their point-of-sale displays tampered with.

Are we the only ones who find it odd that such serious GDS actions—actions that apparently impacted parties across the entire supply chain—are not being met with outrage and demand for serious investigation by industry advocacy groups such as BTC, ITSA, GBTA and ACTE?

Or is our industry outrage really that selective…?

Somebody should Ask The Question.

Great article exposing ulterior motives behind the Open Allies lobbying effort and the overall DOT fight. It is refreshing to see some bold reporting in the travel space!

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Virtually everyone agrees that travelers need to be able to compare the true cost of airfares, plus baggage fees and seat selections, in a transparent manner without getting gouged along the way with hidden extras.

Open Allies for Airfare Transparency, a coalition of industry associations, corporations and travel agencies, advocates that the Department of Transportation step in to ensure that airlines distribute all of their seat and bag-fee information through the GDSs. Open Allies is making much of a Harris Interactive 2012 traveler experiences survey that found that 94% of the 2,310 adults queried who booked summer travel using an online travel agency endorsed the notion that “all airline fee information should be available to travel agents and online travel websites.”

The online survey, conducted September 4 to 6 by Harris Interactive, was commissioned by a founding member of Open Allies, the Interactive Travel Services Association, whose members include global distribution systems such as Sabre, Travelport, and Amadeus, and their OTA clients, including Expedia, Orbitz Worldwide, Priceline, and Travelocity.

Lots of allies doing the GDSs’ bidding

Founded in early 2011, Open Allies, too, despite its roster of nearly 400 trade associations, travel agencies and corporations, has been spearheaded by the GDSs, the American Society of Travel Agents, and the Business Travel Coalition, all of which have collaborated before on similar lobbying efforts. The stakeholders’ primary interest is making sure that the current methods of airline ticket distribution remain the same and that airlines do not sell direct to consumers — even if that lowers prices for consumers.

Read the rest of the post at skift.com.

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!

© Glenda Powers - Fotolia.com

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Did you see Friday’s Beat commentary by Joe Da Rosa from Balboa Travel, in which Joe voiced his strong opposition to the commoditization of travel agency services?

Now I’ve known Joe for ages—all the way back to my System One and Amadeus days. Anyone who meets Joe instantly knows he is a professional, a gentleman, and a leader… and from what I know of Joe, it takes quite a bit for him to “get his dander up.” So, knowing Joe, his agitation must be justified, and, in this case, I think he’s absolutely right.

Travel agencies invest in people and resources. They work very hard to compete for their business, and the last thing they need is for anyone to view their products and services as commodities. It is absurd, preposterous, outrageous… and if the holidays weren’t upon us, I would really go off here.

Read the rest of this entry »

I’m not sure if you caught IATA’s recent paper, “A Road Map to Prepare for Tomorrow’s Passenger: Five Goals Towards Sustainable Profits and Better Service,” but I must say I was more than impressed. My hat goes off to IATA for understanding that the status quo is no longer working for airlines, distributors, and the consumers they serve.

The paper, part of IATA’s Simplifying the Business (StB) program, looks to “define the next wave of projects that will allow the industry to save costs, improve service and prepare for tomorrow’s passenger.”

There are several key words there that make me believe IATA really gets it. Save costs—a clear need for an industry that is still using old and expensive technology. Improve service­—in case you haven’t noticed, the airline industry isn’t exactly winning over consumers, but we have the ability to change that. Tomorrow’s passenger—yes, yes, yes! Exactly! What consumers have come to expect is well beyond what we’re providing today. We have to recognize and anticipate the needs of tomorrow’s passenger today, and by doing so we will also save costs and improve service.

© Marek - Fotolia.com

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In case you haven’t heard, the Open AXIS Group just released a new white paper titled Distribution 2.0, Direct Connect and Travel Sellers: A Reference for Travel Agents. As a member of the Open AXIS Group, we fully support this measure of attempting to provide in-depth and clear-cut information when it comes to the modernization of the travel supply chain.

I encourage all of you who work in travel, especially travel agents, to go to http://openaxisgroup.org/white-paper.html, download the paper, and, hopefully, have your questions answered about the Distribution 2.0 movement.

I’d write more, but I’m still too stuffed from all the hot dogs and apple pie I ate over the 4th of July weekend. Ugh…

Download Distribution 2.0, Direct Connect and Travel Sellers: A Reference for Travel Agents


You can just imagine my delight when I read the Beat article titled, Travelport: Innovation Comes With A Price. I was almost giddy. A GDS finally discussing innovation investment! According to Travelport’s chief, a new world is coming “with Universal Desktop, Universal API, new types of content and so forth.” Yet, all this new content connectivity (music to my ears, by the way) “comes with a price.” Well, yeah, innovation ain’t free. We’ve been innovating for a number of years and our investors will certainly tell you “innovation comes with a price.” But I thought the principle of innovation was to make an investment up-front in order to reap the benefits on the back end. But anyway, I’m digressing. It’s just interesting to note where this particular GDS is saying this price for innovation will come from. It sounds like the travel agencies may be paying the GDS for innovative technology solutions. Read the rest of this entry »

Farelogix disputes BTC after BTC disputes BA’s Richard Tams’ claims that the current travel distribution model is broken.

When many of your customers (customers who pay you A LOT of money) are unhappy with you, unhappy to the point of filing an antitrust lawsuit, I’d say something is at least askew, if not broken.

And calling the current model “broken” is not “fashionable,” as BTC’s Mitchell claims. Skinny ties are fashionable. Calling the model broken is an assessment by several of the world’s largest airlines and industry analysts.

But I must be a benighted person because I had to look up ‘benightedness.’ However, accusing those who take issue with the current distribution model of being ignorant borders on downright vitriol.

Do the GDS provide a valuable service model? They sure do. Do they need to update? They sure do. They claim taking XML connections is no issue. But if it’s not an issue, why not take the connections? These new airline direct XML connections allow for a more personalized shopping experience, far greater pricing transparency and easier reporting of the abundant optional services offered by airlines. All this can be accomplished by simply taking the XML.

Is the distribution model “broken?” Perhaps. But to dispute a claim from an airline (that pays the GDSs’ bills) that the model is broken, now I dispute that.