ancillary revenue

Is the airline market really not working?

The travel-agency community has been fuming for years over its inability to sell airline products that used to be included in ticket prices but no longer are, and with good reason. A travel agent’s value is diminished by such a significant limitation. The airlines, in turn, refuse to make those products available through distribution channels they don’t control because of high costs. So what’s the solution?

According to the American Society of Travel Agents, the answer is government regulation. “The airline marketplace is simply not working,” the organization’s senior vice president, Paul Ruden, wrote today on its website. Even though the Department of Transportation (DOT) is considering mandatory disclosure of extra fees for seat assignments, luggage, premium economy seats, etc., it’s unlikely it will force the airlines to sell those products through the currently dominant third-party distribution channels.

Let’s look at the problem through each player’s prism. If you use a travel agency — traditional or online — you expect full service. You don’t want to be told that your agent can only issue a ticket, but for anything else you need to buy, you have to go to the airline’s website. Then why would you want to pay an agent to book your travel? The other option is for the agent to go on the airline website and make those additional purchases, but that would take more time, and the agency would make no commission. Naturally, agents prefer to accomplish all their transactions in one place, and to get paid for what they sell — that place is a third-party Global Distribution System (GDS)…

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American wins first battle in data war

The new airline data distribution model I predicted in February has just become a reality. Expedia, the most popular online travel agency, agreed this week to carry American Airlines data hosted by the carrier’s “Direct Connect” channel. Expedia’s consolation prize is that it will use Global Distribution System (GDS) aggregation technology.

Since Dec. 31, when its contract with American expired and it decided not to renew it, Expedia had been resisting the airline’s attempts to move to a direct channel. Why? Because it wanted to continue to receive sizable kickbacks from Sabre, the GDS it uses to display and book flights. American insists on “Direct Connect” for two reasons…

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GDS travel-booking model faces change

Don’t be afraid — this is the message I have for travelers who may be concerned about losing the ability for comparison-shopping because of the war between American Airlines and online travel agencies. The longtime Global Distribution Systems (GDS) model is about to change, and many people stand to lose lots of money. That’s why they are trying to scare you.

For decades, the GDS model has been the norm for distributing airline data and booking flights, which has given the three main GDS companies in the world — Sabre, Amadeus and Travelport — enormous power. You might have heard that American was on Sabre and United on Apollo, which is now part of Traveport…

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Is India going too far in curbing airfares?

The Indian government has done what authorities in most market economies would rarely dare to try — it has forced Indian carriers to slash domestic airfares by as much as a quarter, and to publish fare ranges on every route on their websites regardless of travel dates. While helping consumers is admirable, is New Delhi crossing a line?

Angered by the pricing policies of India’s airlines, including low-cost carriers IndiGo, SpiceJet and GoAir, the Directorate General of Civil Aviation (DGCA) gave them an ultimatum last weekend to lower fares or face severe consequences, the Indian press reported. Within hours, fares dropped between 20 and 25 percent…

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