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)…

Is the travel-agency model sustainable?

When was the last time you used a travel agent? I asked that question in my book “Decoding Air Travel.” Last month, President Obama asked it, too, and the American Society of Travel Agents speedily protested. So let’s examine the modern — or perhaps not modern enough — travel-agency system and the value it brings.

Many young people don’t even remember the time when using a travel agent was the only practical way to book a trip. While many consumers today book their own travel, using travel agencies is still quite prevalent in the corporate world. However, many business travelers I know are unhappy with their company’s travel agency. It’s clear the current system isn’t working well anymore for a variety of reasons. Without taking sides, let’s look at those reasons from the perspective of travel agencies and their customers…

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…

The risks of third-party airline bookings

Long before the current American Airlines campaign to shake up the data distribution system, airline agents often refused to change tickets issued by travel agencies and third-party websites, such as Expedia and Orbitz. Dealing with those companies’ agents can be frustrating, and many fliers call the airlines for help directly, only to be sent back to the “original booking source.” Why?

Because once the airline takes control of the ticket, it effectively releases the original booking source from its responsibilities as the issuing agent — and when the booking source loses control of the ticket, it will no longer keep track of your reservation. So if there is a schedule change, that source won’t alert you, because it won’t know itself that a change has affected you…

When airfares jump on you for no reason

I’ve always brushed off suggestions that airline websites are deliberately programmed to increase the fare if you don’t take their initial offer immediately. But I’ve become suspicious since Air Canada’s site recently jacked up a ticket price on me by hundreds of dollars in seconds, even as its lowest published fare and the flight inventory remained unchanged.

Airlines have gone to great lengths in recent years to encourage customers to book tickets on their websites, and that can certainly save travelers time and hassle in the event of any changes to a ticketed reservation. However, to their utter shame, many carriers haven’t built reliable and user-friendly sites. In fact, some airlines, such as South Korea’s Asiana, have outsourced their entire online booking process — at least in the U.S. market — to a third-party travel agency, which charges its own booking fees…

Corporate travel’s lack of innovation

Why have corporate travel managers become so prone to inertia and averse to innovation in recent years? Why are numerous companies spending millions of dollars more on travel than necessary? Is it time for the travel manager’s job description to change? I’ve been trying to find answers to these questions since I dedicated myself to travel education and training this summer, through my Kralev International advisory services.

But it was a post by Scott Gillespie, who writes a blog on procurement and corporate travel management, that prompted me to air my thoughts in public. Although my arguments aren’t quite what he had in mind, I was happy to see that others share my concerns about corporate complacency…