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Wednesday, August 17, 2011

I feel like we are watching a slow motion train wreck

American Airlines reassures agencies over Sabre impasse | Tnooz (click here to read Tnooz article)

The interesting thing about this whole debate is that the whole argument about "direct connect" is really about "GDS bypass".  This is NOT a discussion about technology folks.  It is - plain and simple - a business model issue.

There is absolutely nothing "direct" about what AA is proposing to travel agencies/TMCs and corporations.

FACT:  Today AA is hosted on the Sabre reservations system.

Now I realize they are working with HP to build a replacement, but today, they operate on the same base technology as Sabre agents.  It doesn't get more direct than that. 

FACT:  Much of the work that has been done on the availability and pricing side of their website, and the support of ancillary product sales has been done by ITA Software, now owned by Google.   ITA connects to Sabre.

FACT:  The various "direct connect" solutions that are proposed by AA on their Technology Pavilion connect to AA through Farelogix. 

I happen to believe that it is brilliant to outsource your distribution to a third party and have everyone connect to one place.  The hotels set the precedent with Pegasus (then THISCO) in the late 80s.  That allowed them to focus on putting heads in beds.  If AA can focus on making its customers happy, I am all for it.  Farelogix has not only a great technology team, but an amazing cartoonist!  I've long been a fan and supporter of Farelogix and what they have been trying to accomplish in the marketplace.

FACT:  With time and money (and the return on investment motivation) the GDSs can do anything that any other technology company can do.

....But ask them to do work for less money and I'll bet you continue to get pushback.

FACT:  Travel agencies are being asked to sell AA and to use a booking methodology that is outside of their current workflow.

For the most part, AA does not pay a travel agent/TMC to sell a domestic airline ticket.  The GDSs generally levy a fee on agencies that put passive segments in their PNR for the purpose of QC, invoicing or accounting.  So not only do they not get paid, but it costs them to service those airlines (which by the way includes Southwest and others) that would like to be booked outside the GDS.

FACT:  Brick and mortar agency bookings bring in substantially more money to the airline than an online booking.

Stay tuned.....  I'll be posting the 2nd quarter ARC stats by agency type in my next blog.  It is hard to believe that AA's numbers could possibly be different than the aggregate of the 14,500 agencies in the US.

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